Can the investment conditions posted by Spreds change?
Yes! But always in the sense of improvement for the Crowd investor.
Whatever the round of financing, Spreds Finance SA (Crowd) always invests at the same conditions as the other investors who participate in the round of financing. Sometimes it happens that the entrepreneurs stage their campaign on Spreds before they have finalised the discussions undertaken with their Co-Investor(s) or Other Investors. Not all of the conditions have been totally fixed.
However, Spreds Finance will never invest if there is a deterioration in the conditions for you.
Company XYZ wants to raise 500,00 EUR of capital to finance its activities. It has decided to launch a Crowdequity campaign for between 50,000 EUR and 100,000 EUR via Spreds and in parallel is finalising its discussions with other investors for the remaining sum (between 400,000 EUR and 450,000 EUR).
The existing shareholders of XYZ believe that the value before the capital increase (Pre-Money Valuation) of the company shares equals 500,000 EUR. To this is added the 500,000 EUR sought outside. The valuation of the company after the increase in capital is therefore estimated to be 1,000,000 EUR.
On this basis it prepared its Memorandum of Investment. If the funds are successfully raised, Spreds Finance will hold for the account of the Crowd between 5% (50,000 EUR/1,000,000 EUR) and 10% (100,000 EUR/1,000,000 EUR) of the company’s capital.
However, in the case that the other investors succeed in negotiating with the entrepreneur(s) and existing shareholders a lower valuation and agree on the amount of 250,000 EUR before the increase of capital instead of 500,000 EUR described in the beginning. The valuation of the company after raising capital with thus come to 750,000 EUR instead of the 1,000,000 EUR initially .
Spreds Finance will invest despite the fact that the conditions have changed since they have now improved for the Crowd investor. In fact, Spreds Finance will now hold between 6.67% (50,000 EUR/750,000 EUR) and 13.33% (100,000 EUR/750,000 EUR) of the company’s capital.