Equity crowd investors expect to hold their shares come rain, come shine, but an innovative platform from Mercia Fund Management (MFM) will allow investors to make offers for one other's holdings and negotiate transactions in unlisted assets that would otherwise be "not readily realisable" (which is the regulator's jargon for "hard to get rid of".)
Mercia invested in Impression Technologies
We told you last summer we felt the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) made the perfect match for equity crowdfunding, with tax breaks that are well constructed to let investors profit when startups succeed, and offset their losses when an investment loses value.
The MFM Virtual Share Exchange offers its clients two things dear to our hearts - liquidity and exit opportunities via a secondary market - and if we've read the publicity right, Mercia has broken new ground in offering this kind of support to early stage investors.
Mercia Fund Management is part of Mercia Technologies PLC, an AIM-listed investment house specialising in technology startups and university spin-off companies. It emerged five years ago, via a management buyout, from a venture capital provider named WM Enterprise.
We welcome this move as a step towards making markets more "human"
CEO of Mercia Technologies Mark Payton says: "The new Virtual Share Exchange provides the next step in this evolution of the Mercia portal - offering a limited degree of liquidity to an otherwise illiquid investment - to support our on-going commitment to meet the requirements of our investors and build a valuable, diverse and balanced portfolio across their investment.”
The company prides itself on its investor and adviser communication and transparency, and its investor portal won the EIS Association's Innovation Award in February this year. The Virtual Share Exchange is the latest addition to the portal.
The platform is only available to MFM's own clients, and has been designed to be asymmetric. The prospective buyer makes the first move, and anyone who holds an asset can opt to review offers from buyers. But sellers cannot broadcast their desire to sell.
We appreciate the considerable competitive advantage that MMF hopes and deserves to gain from its investments in investor communications, but we would like to see more of this sort of thing. We hope crowdfunding is going to make the stock markets human again, and we applaud this as a step in the right direction. Well-designed technology can do so much to improve investors' understanding and empower them to make decisions and take action if they decide to re-balance their portfolios.