Microcosm - 2nd Seedrs crowd-funding round

Is there a dilution calculator?

i.e. to work out what my % would be if I don't take the pre-emption option?

Late to the party. Dug email out of spam folder. What's going on? Do I get to ban people on knitting forums yet?

The Microcosm first round offer was 10% for £50,000.

This second round is for a further 5% (for £100k), which would - without pre-emption rights being taken up - dilute all shareholders.

The total number of shares in the entire company increases so that shares totalling 5% of the company can be issued to the new investors.

So the stake owned by a first round investor reduces in terms of the overall proportion of shares in the entire company. But only by a very small amount, because the dilution effects all shareholders.

Consequently, in order to keep at the same % ownership as after the first round, you need only invest a small proportion of your initial investment.

Initial investors will have 48 hours to use their pre-emption rights. Once that period has elapsed, the offer is open to everyone.

There's an example with numbers here.

Thanks Frank - exactly what I was after. The example is good too.

Late to the party. Dug email out of spam folder. What's going on? Do I get to ban people on knitting forums yet?

Oh God. If Microcosm takes off, Hippy will grow powerful beyond imagining.

Oh God. If Microcosm takes off, Hippy will grow powerful beyond imagining.

Hippy in 12 months time:

Hippy in 12 months time:

Did VelocityBoy just post an image...??? Of... of... of...

The Microcosm first round offer was 10% for £50,000.

This second round is for a further 5% (for £100k), which would - without pre-emption rights being taken up - dilute all shareholders.

The total number of shares in the entire company increases so that shares totalling 5% of the company can be issued to the new investors.

So the stake owned by a first round investor reduces in terms of the overall proportion of shares in the entire company. But only by a very small amount, because the dilution effects all shareholders.

Consequently, in order to keep at the same % ownership as after the first round, you need only invest a small proportion of your initial investment.

Initial investors will have 48 hours to use their pre-emption rights. Once that period has elapsed, the offer is open to everyone.

There's an example with numbers here.

So is the balance of the £500k mentioned in the first post - ie £400k - going to be raised in a subsequent (third) round? If so, and if it's equity, is that going to dilute the second round investors? Or is the second round effectively going to give away 25%, 5% now and 20% deferred?

I'm a bit confused.

£500k was a theoretical value of the company as whole; VB and partners would have to sell all their shares to generate £500k at that point.

They offered 10% to people for £50k whilst retaining 90% of that theoretical value.

£500k was a theoretical value of the company as whole; VB and partners would have to sell all their shares to generate £500k at that point.

They offered 10% to people for £50k whilst retaining 90% of that theoretical value.

I'm not talking about that. I'm talking about the £500k additional funding mentioned in the first post. £100k to come through this Seedrs round and the rest through some other means. If that other means involves equity, what's the target price for the equity released?

Mate I'd leave the investment thing alone.

So is the balance of the £500k mentioned in the first post - ie £400k - going to be raised in a subsequent (third) round? If so, and if it's equity, is that going to dilute the second round investors? Or is the second round effectively going to give away 25%, 5% now and 20% deferred?

I'm a bit confused.

It comes in rounds:
1) £50k (done)
2) £100k (doing)
3) circa £400k (projected)

Internet companies go through 2 main phases and a transition period:
1) Product to market fit = find the right product for a market, test and prove that it's wanted and achieves all the goals
2) Growth = with the right product in the market, aim to acquire as much of that market as possible

And in-between those 2 phases companies need to transition from product creation to product selling... and usually that is a distinct phase by itself.

The first 2 rounds (the £50k and £100k) are aiming squarely at that first phase of building the product and having the time to test it in the market.

Once we're done with that, we know we'll need to move towards growth. That means sales people (in the form of community managers) and people to help on-board customers. As well as operations people, more hardware, etc.

The projected aim of a further round aimed more at large early-stage funds, key angels or the small VCs is about transitioning from the product dev phase to the product selling phase. The costs go up greatly then, and assuming we're growing faster than we can handle, the revenue lags behind those costs.

Hence, the idea of a bigger round in the future is to help push towards growth.

We've had some inkling that we might be able to do it sooner than we planned (raise that money), and if that's possible on our terms and fits with our expectations and goals we would do it. But our original plan was to do this towards the middle of next year, as we don't want to prematurely start aiming at growth if the product isn't ready for it.

I shared those ambitions to make sure you knew what to expect, not because we're going to rush into it.

Mate I'd leave the investment thing alone.

On what basis do you say that?

My point is simply that if there are plans to raise £400k in the immediate aftermath of raising the £100k, it would be good for the investors in the £100k round to know what the parameters of the deal for that £400k are.

Specifically, it would be good to know that the intention would be for this further round to be another up-round, meaning that if it were for equity it would value the company more highly than the current round. If that's the case it would also be good to know what the offer might be, so prospective buyers in the second round can take a view of how achievable this third round might be in the marketplace.

will seedrs send us an email when we need to make the additional payment to maintain our share value?

@VB - You've answered my question, thanks.

Basically, the third round is a way off, so you can't call the price now. I get it.

What would the subject of this email from Seedrs be? Struggling to find it in my inbox

@VB - You've answered my question, thanks.

Basically, the third round is a way off, so you can't call the price now. I get it.

We know nothing about this 3rd round, it's timing or terms. It's pure speculation at this point but reflects an understanding of what is likely to be needed at a future point in time.

What would the subject of this email from Seedrs be? Struggling to find it in my inbox

If you have many email addresses, this would be the one registered to your Seedrs account. But someone else will have to give you the subject as I also do not know that part.

It's not a "which email address did I use" issue, it's a "who did it come from, what was it called" issue.

My understanding is that the email was sent by Thomas at Seedrs.com.

Someone else will need to give you the subject and date/time of the email.

Bingo, Seedrs need to authenticate their email properly:

Seems more like a GMail false positive to me. The yellow bar gives the explanation that similar messages were reported as phishing, maybe the keywords in the Seedrs email match the keywords of some of those spam penny stocks emails.

We know nothing about this 3rd round, it's timing or terms. It's pure speculation at this point but reflects an understanding of what is likely to be needed at a future point in time.

My confusion came from your statement that you were 'raising £500k' in your first post. I took that to mean: in one round.

My confusion came from your statement that you were 'raising £500k' in your first post. I took that to mean: in one round.

Hey, I qualified that statement.

After 70% of the £100k is spent we'll be looking at the subsequent £400k.

The only reason it's mentioned is because we do have some venture capital interest, and that we may take that investment a lot sooner. This is wholly dependant on those VCs having expectations that are in-line with ours and that they understand where we are and what we're doing. We won't be taking any earlier investment if the expectations are misaligned (i.e. that the VC thinks we're in the growth phase when we're still trying to make the right product for people using it).

Seems more like a GMail false positive to me. The yellow bar gives the explanation that similar messages were reported as phishing, maybe the keywords in the Seedrs email match the keywords of some of those spam penny stocks emails.

Quite possibly- this is why it's a good idea to authenticate your outbound email, so this sort of false positive is much less likely, and you end up in the inbox rather than the spam folder.

When is the public launch happening?

2 days after the private launch.

Currently scheduled for:
3rd September private launch
5th September public launch