3c hapter - Index of

138 Locavesting
Desai believes crowdfunding’s potential is huge, and fi gures
that his company can capture 1 percent to 2 percent—or more—
of total small business lending in the United Kingdom. At least
one local government agency has expressed interest in investing
a large amount of funds through Funding Circle as a way to
support the local economy. For now, the site doesn’t have the
volume of deals to support a large infusion of capital, but, Desai
says, when it does, that kind of institutional participation could
give the site, and the concept, an enormous boost. Indeed, he
muses, in the event of another fi nancial crisis, sites like Funding
Circle could potentially provide a more effective way for governments
to inject capital into small businesses than another big
bank bailout.
A “Kiva for Equity”
While Funding Circle was making its fi rst loans in the late summer
of 2010, elsewhere in London two other Oxford grads, Jeff
Lynn and Carlos Silva, were putting together their own plans for
a startup. It will follow the script for P2P marketplaces, only this
time, for equity investments in startups. Called Seedrs, it aims to
be a sort of “Kiva for equity.” At the time of my conversation in
September with Lynn, the CEO of Seedrs, he was preparing to
register with Britain’s FSA.
Lynn, an American- born ex- pat living in London, and Silva,
who is Portuguese, fi rst considered launching in the United States.
“The U.S. is the Holy Grail for everything startup and fi nancial, so
the obvious idea would have been to do it in the U.S.,” explains
Lynn. “But the one fatal fl aw is, it can’t be done there.”
Securities regulations in the United States and United
Kingdom are actually pretty similar. Both are mainly concerned
with disclosure. If a company is going to offer shares in either
country, it needs to fi le a comprehensive prospectus as part of the
registration process. That process can cost tens of thousands of
dollars. Both countries make exceptions for very small offerings
for which registration would be too costly; the difference, explains
Lynn, is how those exemptions are structured.