Small investors were muscled out by bigger players for app-only bank Tandem’s first crowdfunding round on Thursday, with 85% of the round filled by just five investors.
Tandem smashed its £1 million fundraising target in just 15 minutes on Friday, raising £850,337 in just 10 seconds.
Hundreds more investors entered what’s known as “overfund”, pledging money in case Tandem decided to take on more money.
Tandem’s pitch page reveals that just five investors contributed the vast majority of investment in the round — £845,014 — with four “anonymous” big ticket investments of £99,000 or more that look out of step with typical “crowd” investments. The largest investment was £399,993.60.
Crowdfunding in principle is meant to let small investors back startup they otherwise would be unable to invest in. Seedrs lets people invest from as little as £15.
Some have expressed frustration at large investors muscling in on Tandem’s crowdfunding round. One user called “Manuel di Toma” wrote on Tandem’s Seedrs page:
This process is really disappointing; I had similar issues that prevented me to bid.
I hope that Tandem will consider extending the offered equity to make everyone happy, not only institutional investors that can afford to invest hundreds of thousands of pounds but also smaller investors like me.
Tandem has now done exactly that, agreeing to extend its crowdfunding campaign to meet all the demand from investors up to the European Union cap of €5 million. Tandem had almost £2 million pledged from over 1,300 investors as of Friday afternoon.
Cofounder Ricky Knox said in an emailed statement on Friday:
I would like to thank and welcome our new Co-Founders who have invested in the future of a good bank. I have had several calls with newcomers and am delighted to say it seems they too have seen the light when it comes how a bank should be.
All too frequently I have the same conversation; the public’s relationship with their bank isn’t working, and that is why Tandem is here to dramatically improve customer’s lives by giving more control of their hard-earned cash.
With over 7,500 Co-Founders backing us, I feel confident we’re moving the right direction as we head towards launch later this year.
Yesterday saw an overwhelming interest to be part of Tandem, with that came a few technical glitches for which we apologies. The Seedrs site is up and running ready for another great day.
Seedrs was hit by technical glitches on Thursday that frustrated many. Multiple users reported error messages when trying to invest while others complained that investments were showing up multiple times on their bank statements, although Seedrs is thought to have resolved all of these issues.
Jeff Lynn, CEO and cofounder of Seedrs, said in an emailed statement:
Due to the overwhelming demand for the Tandem campaign, our platform slowed down for about two hours, and a number of investors who wanted to invest during that time weren’t able to do so. Those who were, took the campaign over its £1 million target in under 15 minutes. The platform was back up and running smoothly by mid-afternoon, and anyone who wanted to invest had the chance to do so.
We regret the slowdown and apologise to those investors who were inconvenienced by the delay. And we are working on improvements that will ensure that slowdowns like this do not occur in the case of future popular campaigns.
Tandem did not disclose financial projections on its investor page. The company has since offered to send its pitch deck to would-be investors who request it.
Tandem, which has yet to launch any products, has to date raised £22 million from investors including eBay cofounder Pierre Omidyar. The startup is valued at £65 million and was the second app-only bank to get a banking licence last year.
Tandem is one of a number of app-only banks, sometimes called neobanks, set to launch in the UK this year. Others include Mondo, Atom, and Starling. Mondo suffered similar technical problems with its crowdfunding round on Crowdcube earlier this year, eventually raising £1 million in just 96 seconds.