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Intelligent equity funding firm that stands out from the crowd

last modified Oct 07, 2014 12:45 PM
The origins of SyndicateRoom started with a simple question – if I have £1,000, why can’t I invest it in the same early stage companies as some of Cambridge’s most high-profile business angels?

 

The answer was in the vision and persistence of Gonçalo de Vasconcelos, and the help of ideaSpace and its mentors, that led to the founding of SyndicateRoom, an “intelligent equity crowdfunding” company that has helped to raise £10m in less than a year.

Gonçalo, originally from Portugal and with a degree in civil engineering, came to London to continue his studies and moved to Cambridge to do an MBA at the Judge Business School. It was the potent combination of the university and the city’s business angels that inspired Gonçalo to set up his firm.

He says: “When I was doing my MBA, I started working with quite a few of the business angels in Cambridge. I could see what they were investing in – I said I wanted to invest £500 or £1,000. But it was clear that it was a ‘no go’ unless you had thousands to invest.”

Gonçalo wanted to break down those barriers to smaller investors and an important step in launching his firm came when he joined ideaSpace in November 2012.

“I joined for a number of reasons. I was working on my own from home. I needed to talk to people and meet people and be in a place where entrepreneurs are. I was much more efficient working there – and thanks to Hermann Hauser, ideaSpace is affordable,” says Gonçalo.

He raised some seed money, met Tom Britton at a University networking event and the pair became joint founders of Syndicate Room, with Gonçalo as CEO and Tom as chief technical officer.

First big break and a magical milestone

“We went live in September 2013. The beginning was tough but we got a big break with the help of Peter Cowley, one of our seed investors and a part of the ideaSpace network,” says Gonçalo.

That big break was Captive Media, an advertising platform turned down by investors on the TV show Dragons’ Den – it was the first successfully funded deal on SyndicateRoom, closing in just 27 days and raising £300,000.

Gonçalo recalls: “We closed the deal, I rang the ideaSpace bell and we opened a bottle to celebrate. I was there in my T-shirt and hoodie, and then Hermann Hauser and Lord Sainsbury visited by chance. Then we hit the news. That deal gave us visibility. The help of a business angel was crucial. Peter Cowley’s help made all the difference – just an hour a week of his time.”

Several successful funding rounds have followed that first deal. In September 2014, just short of the first anniversary of setting up the company, SyndicateRoom and its lead investors passed the £10m mark in money raised for 18 companies.

Gonçalo says: “We were telling investors we would raise £1m or £1.5m in our first year – we have been proved wrong but they don’t mind. That’s eight times what we were expecting to raise in our first year. We passed that magical milestone before the company was one year old.”

A vision for investors

SyndicateRoom attracts seasoned business angels who invest their own capital. They share all the risk and rewards with other investors – if they make money, the crowd makes money too. SyndicateRoom members get exactly the same share class and rights as professional investors.

SyndicateRoom does not charge members, who can invest from £1,000 upwards, for using its platform. The company has a flat fee of 5% on the funds raised through its platform only, which Gonçalo says is at the lower end of the industry standard of 5% to 8%.

Gonçalo says: “There are many people out there investing modest amounts. If you syndicate all those £5,000 investors, it can add up to a significant amount in no time. We are the bridge between the very wealthy individuals in the investment world and those who are not so well connected.

“The vision of SyndicateRoom is to allow well-informed investors to invest small amounts alongside the professionals. We want people to be able to invest in the same early stage companies the professionals are investing their own money in.

“Some people were sceptical but we got a lot of support from the Cambridge business community – not just financial support but their time – and I can’t highlight enough how crucial that was as we were developing our model.”

He acknowledges the help of Peter Cowley and David Gill, another member of the entrepreneurial community at ideaSpace, and the management team, headed by director Stew McTavish, who Gonçalo says “helped us take the pulse of what was going in Cambridge.”

The Cambridge brand also helps: “If you say you have an MBA from Cambridge, it opens doors.”

The company has grown in size to nine people in September 2014, along with non-executive directors (including David Gill), advisors (including Peter Cowley) and consultants for specific projects. Gonçalo says there is “no shortage of companies looking for investment” but adds: “The number that pass our due diligence is small.”

Syndicating success

The SyndicateRoom model has been disruptive, as acknowledged by Hermann Hauser, founder of ARM. He says: “ARM disrupted the microprocessor business. SyndicateRoom is doing the same for financing British innovation.”

In a short time the company has established itself in the market. Gonçalo says: “We have the momentum. There will be copycats, that happens with any successful company, but copying is not easy. It’s all about delivery and traction. We have a track record – why would you go to another company that has never closed a deal?

“We have closed more than 90% of the deals that we list. That is down to quality, we filter our companies carefully – that is our key differentiator.”

In the middle of 2014, it was time for SyndicateRoom to move on from ideaSpace to new offices on Cambridge’s Regent Street. Gonçalo says: “ideaSpace was perfect for us and it has a time and place in the history of the company. The only reason we moved out was because the team grew and it was the right time to leave.

“We are going to keep on pushing ahead. It’s been a good beginning. With the team that we have, we will be doing some very interesting things in the future.”

Make the most of the community

Gonçalo’s advice to ideaSpace members is to make the most of the wealth of experience its community can offer.

“Reach out to the community, even over an informal coffee – that is how ideas spark. People maybe don’t realise the power of that. Just say to them: ‘I know you are busy, can I meet you for just half an hour?’ I’m very grateful to people like David Gill and Peter Cowley. You would pay £500 an hour or more for that sort of advice. But here it’s free, so use it.”

For more on SyndicateRoom see www.syndicateroom.com

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