Consider the following:
Company A is offering 10% equity in its business for £10,000, each share costs £20 so there are 500 shares up for grabs.
Company B is also offering 10% equity for £10,000, each share costs £50 so there are 200 shares up for grabs.
Which company is worth more?
In my world, they’re worth the same, but in the parallel universe that form the CrowdCube discussion boards, it seems some ‘investors’ think share price alone has a bearing on the overall ‘value’ of the company. You’d think someone from CrowdCube would step in and kindly offer an explanation, of course, they don’t so every company has to explain the same thing only for it to fall on what I can assume to be deaf ears.
As an ECF investor, I know the risks and like to think I have a reasonable grasp on how shares work, I think we’re supposed to attest to as much when we sign up. With investors frequenting the platform who think the share price means anything in isolation you have to start questioning the due diligence process, and I’m not just talking about CrowdCube here, the Seedrs discussions are just as bad.
As platform providers, do Seedrs and CrowdCube have the power to prevent people from investing if they think they are doing so irresponsibly and without understanding what they are doing? As FCA regulated entities, I would assume that they hold this power – I wonder if they’ve ever used it?