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TODAY'S OTHER NEWS

Watchdog to probe merger of popular agency crowdfunding sites

The Competitions and Markets Authority is to probe the proposed merger of two crowdfunding sites used by numerous property industry companies.

Crowdcube and Seedrs are already the two largest equity crowdfunding platforms in the UK and have been used by numerous agencies in the past.

Just over two years the online agency Emoov, under its previous ownership, made its final crowdfunding pitch on Crwodcube a few months before going into administration. And the flat-sharing website ideal flatmate last year raised over £750,000 via Seedrs.

Now both Crowdcube and Seedrs wish to merge and have requested the CMA fast-track its investigation into whether such a merger would break competition rules.

The CMA has now accepted the companies’ request, saying such a merger “gives rise to a realistic prospect of a substantial lessening of competition in the supply of equity crowdfunding platforms” available to small and medium sized companies, and to investors." 

“It found that the merging companies would have a very high combined share of supply in the UK, and evidence from the companies’ internal documents and third parties suggest the companies are very close competitors” says the authority.

It continues: “The CMA is therefore concerned that, if completed, the deal could result in SMEs and investors losing out as a result of fewer choices, higher fees and poorer quality services. The merger will now be referred for an in-depth Phase 2 investigation, which is overseen by an independent group of panel members.”

If competition concerns are found by the CMA, an independent group will set out potential options for addressing these concerns.

“Crowdcube and Seedrs are well-known names in the equity crowdfunding world and are two of the biggest platform providers in this market. Their services are used by thousands of investors and businesses, particularly early stage start-up SME businesses that tend to have limited options for raising investment. We’ve found a real risk that the merger could lead to less choice for SMEs and investors” explains Andrea Gomes da Silva of the CMA.

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