When she found herself off work with back problems Simmons & Simmons associate Karen Kerrigan hatched a plan: she would leave the law and set up a community forum for people experiencing the same kind of pain as her.
Although she ultimately returned to Simmons’ financial markets litigation group, Kerrigan had got as far as looking at funding options for her idea, which is when she came across alternative investment company Seedrs. When the crowdfunder then advertised for an in-house lawyer she didn’t have to think long about applying.
“I was caught between thinking do I start my own thing or go to work in-house,” she says. “This seemed like the perfect bridge because it was working for a start-up – there were only eight people in the office at that time.
“I never saw myself becoming a partner because I struggled with the hierarchy if I’m honest. I’d had experience of working in-house at Barclays and I really enjoyed not being bracketed in that one-year PQE position while also being involved in the business.
“The thing that I love about Seedrs is that everything I do has an impact. I know that I’m not sitting there for two days drafting something that goes into a black hole.”
The premise of the business is simple: entrepreneurs seeking finance can make their case via Seedrs’ website, with investors being able to put in anything from £10 up to the full amount sought. According to Kerrigan it is “essentially a matchmaking platform”.
So far around 100 businesses ranging from a diamond producer to a dating app to Northern Ireland’s first producer of blue cheese have raised cash on the site, with Seedrs making its money by taking 7.5 per cent of everything raised as well as 7.5 per cent of any profits made by the investors.
A lot of the work Kerrigan does is based around the fact that investing in start-ups is risky – as she says, “most fail, but there’s also the opportunity to get huge returns”. So while she sends some corporate and regulatory work to Penningtons Manches and tax work to investment boutique RW Blears, a lot of her day-to-day work is concerned with regulatory compliance and tax issues as well as drafting investor agreements and drawing up contracts.
A major area of compliance relates to the people investing via the site, who have to either self-certify that they are high-net-worth or sophisticated investors, or else complete an online questionnaire to demonstrate that they understand the risks involved. Once they are authorised for investment, they will be issued with standard contracts signed off by Kerrigan.
“The contracts are all generated through the website – when people enter their details and choose a company to invest in they’re automatically filled in,” she says. “Seedrs is different to other crowdfunding platforms out there because once the form is completed we can manage the investment through its lifetime. That means we represent a couple of hundred investors but the company only has Seedrs on its shareholder certificate and that means they don’t have to get lots of different permissions to do anything.”
Crowdfunding is still evolving as an alternative financing vehicle, and Kerrigan has a prime spot from which to watch it grow and develop. At the same time, with crowdfunding appealing to a broad range of inventors and entrepreneurs, she is involved with businesses that are at the vanguard of their respective industries.
Future Ad Labs is one. Having raised £60,000 via Seedrs in 2012, the self-styled next-generation advertising business has recently come back for a second round that will not only drive its own innovation but has seen Seedrs innovate too.
“We’ve just launched our first convertible product [for Future Ad Labs],” says Kerrigan. “It’s often used in Silicon Valley for bridge finance. People invest now for shares to be issued later and those who invest now get a discount and valuation cap. We’re the first platform to do that.”
Future Ad Labs will put the cash to use exploring ways to create marketing opportunities, for example replacing with an interactive game the random numbers and letters that some websites require to be entered before letting users proceed. One such game would require the mouse to be used to virtually put mayonnaise on a sandwich, satisfying the website that it’s a real person operating the mouse while allowing a maker of mayonnaise to advertise its product.
It is no surprise that Seedrs itself has got in on the action, raising £2.5m for its own business at the end of last year.
“We thought about venture capital investment but the great thing about raising money through crowdfunding is that you can combine it with marketing,” says Kerrigan. “We raised that money very quickly – it came from about 900 investors in two weeks.
“There’s nothing like proving it works by doing it yourself.”
2013-present:Legal and financial director at Seedrs
2011-2013: Financial markets litigation associate at Simmons & Simmons
2009-2011: Trainee at Simmons, including a secondment to Barclays Bank