How to Invest in Paddy Power’s New Start-up ASX
Paddy Power is a name that is very familiar in business and gambling circles from his many years as Head of Communications for Paddy Power plc., later to be named Paddy Power Betfair, and eventually Flutter plc.
Flutter plc is now a FTSE 100 company, meaning it is in the top 100 publicly quoted companies in the UK. It has a market capitalisation of £27 billion – which is bigger than Ryanair, Bank of Ireland and AIB Bank combined!
After 25 very successful years at the company, Paddy Power has now set up his own venture and, unsurprisingly, has assembled a highly impressive team to work with him on this.
New Venture – ASX
His new venture is called ASX and it is a ‘Virtual stock market’ which will allow users to buy shares in players and teams based on expected performance.
ASX launched an equity crowdfunding campaign on the Spark Crowdfunding platform on 7th May 2021 to raise €500,000. The campaign was due to run for 30 days but ended after just 24 hours, at which point over €600,000 had been raised from 206 investors for an average investment amount of €3,068.
Many investors were disappointed to have missed out on this opportunity to invest.
Another Opportunity to Invest
Although ASX requires no further funding at this time, the company has decided to offer an additional allocation of between €500,000 and €1m to investors who would like to invest at this time.
Unlike the first campaign that completed on 8th May, there is no fixed share price being put on the shares for this new campaign. Instead, investments today will be converted into shares at a 25% discount to the share price when ASX does its next major fundraising exercise, which is expected to be in 12-18 months.
For example, if the ASX share price at the next fundraising is €4, investors who invest at this time will have their investment today converted into ASX shares at a price of €3 at the time of the next fundraising. A 25% discount equates to a 33% return on your investment. In other words, if you buy €1,000 worth of shares today, these shares will be valued at €1,333 at the time of the next fundraising.
Paddy Power is personally investing €50,000 in this second campaign.
Campaign is Live and Open for Investment
The campaign is now open for investment and you can watch the campaign video (and invest) here.
The campaign opened on 23rd May and within 12 hours had already raised over €500,000. The campaign will close if a maximum of €1m is reached or within 30 days.
ASX is an EIIS qualifying company, which means investors can recover 40% of the value of their investment in the form of a tax rebate, when their investment is converted into shares. For example, an investment of €1,000 would receive a Tax Rebate of €400 (Irish taxpayers only).
The minimum investment is just €100. Investors pay no commission on their investments with Spark Crowdfunding.
How to Invest
This investment opportunity is exclusive to members of the Spark Crowdfunding platform. It takes less than 3 minutes to open an account and registration is free. Click here to register.
Investments below €5,000 may be made by Debit/Credit Card. For amounts in excess of €5,000 investors will be sent a unique IBAN code. All payments are handled by Stripe.
Please contact Chris Burge at email@example.com if you have any questions. We’d love to hear from you.
SAFE Investment Instrument for Beginners - All You Need To Know
A SAFE stands for a “simple agreement for future equity”. The mechanism was authored by Y Combinator lawyer Carolynn Levy and open sourced. It was created and published as a simple replacement for convertible loan notes (CLNs).
A SAFE is an agreement between an investor and a company that provides rights to the investor for future equity in the company similar to a warrant, except without determining a specific price per share (or a valuation) at the time of the initial investment.
This element (no valuation) is key especially in start-ups in certain sectors where the future earnings of the company are very difficult to quantify.
In practice a SAFE enables a start-up company and an investor to accomplish the same general goal as a convertible loan note, though a SAFE is not a debt instrument.
The SAFE investor receives the future shares (typically at a discounted price) when a priced round of investment or liquidity event occurs. SAFEs are intended to provide a simpler mechanism for start-ups to seek initial funding than convertible notes.
SAFEs solve a number of issues that convertible loan notes have for start-up companies. Because SAFEs are not debt instruments, they remove the threat of insolvency that a convertible loan note can cause, and they remove the need for founders to go back to investors to request maturity date extensions (this also saves investors from having to deal with extension paperwork). Additionally, SAFEs reduce the amount of legal cost and negotiation time by simplifying the agreement relative to most convertible loan notes.
Unlike a convertible loan note, a SAFE is not a loan; it is more like a warrant. In particular, there is no interest paid and no maturity date, and therefore SAFEs are not subject to the regulations that debt may be in many jurisdictions.
While the SAFE may not be suitable for all financing situations, the terms are intended to be balanced, taking into account both the start-up’s and the investors’ interests. There is a trade-off between simplicity and comprehensiveness, so while not every edge case is addressed, it is believed the SAFE covers the most pertinent and common issues.
How to Invest in Companies That Enterprise Ireland Invests In
If you are an ordinary private individual with anything from €100 to €100,000 available to invest in high growth Irish companies, how can you gain access to these types of investment opportunities?
Spark Crowdfunding has a solution.
In February 2021, Pitchbook, a leading Venture Capital (VC) and Private Equity Investment Platform, reported that Enterprise Ireland ranked first in the world of venture capital investors by deal count, a fantastic achievement by the Irish organisation.
One of the ways by which Enterprise Ireland invests in Irish Start-ups is through its High Potential Start-up programme. This programme typically sees Enterprise Ireland invest alongside other investors that the Start-Up is required to identify. In fact, it is usually a condition of the Enterprise Ireland investment that the Start-Up must bring to the table a matching amount of investment to that which Enterprise Ireland is investing.
So, for example, if Enterprise Ireland is investing €250,000, the founder of the Start-up is required to find investors also willing to invest €250,000 in the business. This is known as ‘matched funding’.
Very often, these early-stage companies do not have access to investors who can help provide this €250,000 that can unlock the €250,000 from Enterprise Ireland. There are many ways in which they can secure these funds, but, increasingly, Irish Start-ups are turning to Spark Crowdfunding to gain access to a large database of private investors who can help.
Over the past two years, 16 Enterprise Ireland funded companies have successfully raised investment funding on the Spark Crowdfunding platform, for the first time giving small and medium-sized Irish investors access to a broad variety of new and exciting investment opportunities.
But, in addition to gaining access to investment opportunities favoured by Enterprise Ireland, what are the other benefits for Irish investors that Spark Crowdfunding can offer?
7 Benefits for Irish Investors
1. Pay No Commission to Invest
Investors pay no commission when investing with Spark Crowdfunding. 100% of your investment goes into purchasing the shares. Only the company raising investment funds pays any commission.
2. Receive a 40% Tax Rebate on the Investment
Almost all of the investment opportunities on the Spark Crowdfunding platform are EIIS qualifying companies. This means that Irish investors can reclaim 40% of the value of their investment in the form of a tax refund. In other words, if you invest €1,000 in a campaign, you receive a tax rebate of €400, which means your maximum loss is €600.
3. Unlimited Upside Potential
While the EIIS tax rebate limits your loss to 60% of your investment on the downside, there is no limit to the upside potential of your investment. As an ordinary shareholder in the company you continue to benefit for as long as the share price continues to rise – there is no cap on how much you can make.
4. Small Minimum Investment amount
As part of our mission to make investment opportunities accessible to investors of all sizes, we have put a minimum investment amount of just €100 on campaigns on the Spark Crowdfunding platform. You could say we are trying to democratise Dragons’ Den!
5. Build your own Private Portfolio of Shares
With a very low minimum investment size and no commission to pay on investing, Spark Crowdfunding makes it very easy for private investors to build their own portfolio of shares across a wide variety of companies, from tech to retail and everything in between. Moreover, every company that raises funds on the Spark Crowdfunding platform is required to provide its shareholders with a Quarterly update on how the business is performing, so you will receive regular progress reports from the founders.
6. Free to Join
There are no fees to join Spark Crowdfunding, nor do we charge maintenance fees to operate an account. We don’t hold Client Funds and you only ever transfer funds when you wish to make an investment.
7. Invitations to Investor Webinars
As a valued member of Spark Crowdfunding, you will receive regular invitations to attend our Investor Webinars and ask questions of the promoters looking to raise new funds.
Join thousands of other Irish investors and get with the crowd!
If it’s good enough for the largest Venture Capitalist in the world by deal count ……………………!
Click here to join Spark Crowdfunding for free. It takes less than 2 minutes to register and receive regular notifications of new investment opportunities from as little as €100.
How Awesome is the EIIS Scheme for Irish Investors?
“If you invest €10,000 in that company, you will receive €4,000 back in the form of a tax rebate, so you’re actually buying €10,000 worth of shares for €6,000. In other words, you can buy those shares at a 40% discount.”
That’s how the conversation started.
I was aware that the Government had some incentive scheme to encourage investors to buy shares in private companies, but I didn’t realise it was that good!!
“Are you serious? There is surely a catch somewhere”, I retorted.
“There’s no catch, although you only get €3,000 back from the Revenue in the first year, and only if you hold onto the shares for 4 years will you receive the final €1,000. The only other requirement is that the Company you are investing in has been approved by the Revenue to participate in this Scheme”, he said.
This scheme is known as the Employment and Investment Incentive Scheme, or EIIS for short.
As the name suggests, it was designed by the Irish Government to encourage investors to invest in small and medium sized Irish companies, which are basically the life blood of the country.
The best way to explain it is with an example.
Example of the EIIS in action
Fleet is an Irish person to person car sharing app which connects people who want to rent out their car with people who are looking to rent a car.
Fleet has been approved by the Revenue Commissioners in Ireland as an EIIS qualifying company, by virtue of its trading activities.
Fleet is raising €275,000 in return for 20% of the company on the Spark Crowdfunding platform.
An investor decides to invest €5,000 in Fleet.
Assuming the investor pays Income Tax in Ireland, he/she will be immediately entitled to a refund of €1,500 (i.e. 30% of €5,000) from the Revenue for making this investment.
If the investor holds the shares for 4 years, then they can reclaim an additional €500 (i.e. 10%) from the Revenue in that year.
What is the Net Effect of this?
Essentially, the investor is purchasing the shares at a 40% discount to the company valuation.
This is a very appealing tax benefit to investing in companies on the Spark Crowdfunding platform. Further information on the EIIS Scheme may be found in this Guide from the Revenue Commissioners.
If you are interested in signing up as an investor with Spark or would like to know more about raising funds for your business, please click on either of the buttons below: