Ask Me Anythings
September 1, 2021

Fundraising & Crowdfunding - Chris Burge of Spark Crowdfunding

Chris Burge is the Co-Founder and CEO of Spark Crowdfunding, which is Ireland's only equity crowdfunding platform. They are based in Dublin city centre and provide an equity crowdfunding platform that enables investors to invest into various stage Irish companies and gives Irish companies the opportunity to raise new funds quickly and at a low cost to accelerate their business growth.

I was wondering how you know that your business is suitable for crowdfunding?

Crowdfundraising is a mechanism by which companies can raise modest amounts of funding from a very large number of people in a very quick time. Some people invest as little as €100, some invest as much as €100,000 (or more). All of the investors are wrapped up into a Nominee Company and you just get one line on your cap-table.

I was wondering how you know that your business is suitable for crowdfunding?

We, at Spark, are very selective as to who can get onto the Spark platform. We only take on about 1 in 10 companies who apply to us. We tend to look for companies who have scale potential. We also like to see a very ‘investable’ team and a business that has a degree of IP in it. But there are a number of criteria that we look at, so it really depends on how we see the business potential and how we think our investors will act upon the proposition too. Many variables.

The general feeling is that a crowdfunding round will limit your ability to raise VC in future as it 'complicates your cap table' & sends a negative signal about your 'investability'. I could be wrong about that, and I'm sure that VCs are promoting their own interests, but I'd be very interested to hear how you think about these issues (and if there is any data to counter it)?

Yes, we hear this too, but we have raised money for a number of businesses that have gone on to raise funds with VCs after we have raised the initial amount. In fact we have a campaign live at present that we are co-investing with 2 Dublin-based VCs. The issue of ‘complicating the cap table’ is only relevant if you have many names on the cap-table, but as I said in my response to Luke above, we wrap the 100/200/300 investors into a Nominee Co. This produces a single name on the cap-table so there is no difficulty for the VC.

What are the advantages of using your platform over new crowdfunding methods in the crypto world?

Crypto is a mechanism that, although has great potential, is still seen as a little risky for the traditional investors. We at Spark Crowdfunding are the first step from the uber-conservative ‘stock-broker’ and ‘VC-fund’ world into a more inclusive investment arena. We open up the ability for the average Joe/Jo to invest as little as €100 into very promising young companies. Heretofore, you had to have a large investment amount to invest into a young start-up (probably in excess of €25k). We have democratised the opportunity to everyone by facilitating many investors at modest amounts.

What is the best example of a company that fundraised from Spark?

The best examples are the ones that have successfully raised the required amount. In the last 12 months we have raised anything from €120,000 (HorsePay) to €2.2m (ASX). In the last 24 months we have had a 100% success rate - every company that has gone onto our platform has successfully raised their target amount.

Some platforms recommend startups secure ~60% of the fundraise in advance of launching the campaign, does Spark have a similar recommendation?

We do not require this at all. In fact many of the companies for whom we have raised money have started off with ZERO investment and we have raised the full 100% of the funding. However, of course, if there is some funding that has already been secured at the same time, same valuation and same terms, we can include it in the campaign and this of course gives other investors some comfort that others are investing and gives a good start to the campaign.

How does nominee co governance typically work? Does it have a Board?

The Nominee Co is co-ordinated by a legal firm who do this not just for Spark, but for many of the leading stock-brokers here in Ireland too. They have a board, but it is not connected to your board. The investors sit in the Nominee Co and are polled en-masse if a resolution needs to be passed. If 50% + one share votes for the resolution the whole nominee co’s shareholding will vote for the resolution. Part of our Terms say that the members of  the Nominee have the right to appoint a board member, but in reality that has never been exercised (who wants to sit on a board and have the responsibility?). In reality, it is a very benign mechanism that although protects investor interests, is very accommodating for the business.

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