UK Funding Platforms Call Off $190M Deal Over Antitrust Concerns

British start-up crowdfunding platforms Crowdcube and Seedrs agreed Thursday, March 25, to terminate their £140 million (US$192 million) merger, a day after regulators raised competition concerns with the deal.

The UK Competition and Markets Authority (CMA) on Wednesday stated that it was inclined to block the deal, claiming it would lead to a “substantial lessening of competition” in the equity crowdfunding space. Were the two businesses to combine, they would control at least 90% of the market, the CMA stated.

Crowdcube and Seedrs first announced plans to merge in October. The two platforms have been used by a number of well-known UK start-ups, including the digital banks Revolut and Monzo, to raise capital without having to tap venture capital or angel investors directly.

But in its provisional findings, the CMA stated the deal “could result in UK SMEs and investors losing out as a result of higher fees and less innovation.”

“The CMA’s initial view is that blocking the merger may be the only way of addressing these competition concerns,” the watchdog added.

Both Crowdcube and Seedrs stated they were disappointed with the CMA’s decision. Crowdcube told CNBC that it could still thrive as an independent business and “remains in a very strong financial position.”

“We continue to invest in our people and products and we expect to be profitable again in the first half of 2021 with an unprecedented level of high profile European businesses set to fundraise with us in the coming weeks,” a spokesperson added.

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