Symbid was first covered in the P2P-Banking blog two weeks ago. I  interviewed Korstiaan Zandvliet to get a deeper insight into the service.

What is Symbid about?

Symbid is the first online investment platform where the crowd directly invests in the equity of a start-up or existing company! Everybody can be an investor, each part has a nominal value of 20 EUR and you decide how many parts you would like to invest. The minimum is 20 EUR, the maximum is 2,500,000 EUR! The Symbid way of directly investing in equity is unique. It makes investors partial owners of the fully financed (newly founded) company. Entrepreneurs use Symbid as a quick, simple and fun new way to obtain start or growth capital with help from the crowd. Additionally, once fully funded an entrepreneur has the luxury to interact with his community of investors within a closed online collaboration workspace!

How did you get the idea for Symbid?

During my master degree in Entrepreneurship and new business venturing I noticed that many of my classmates did have an entrepreneurial dream but were reluctant to act upon it due to financial constrains. On the other hand I noticed that people became more connected using social networks such as Facebook and Twitter. By combining these ideas I came to the conclusion that social networks could also be used to communicate investment propositions to a large audience.

What’s the process for entrepreneurs?

Symbid provides an online platform where companies and individuals are able to submit a business idea (proposition). When you register your idea at Symbid, you indicate how much capital is required to start or grow your business. Users search for ideas they believe are viable in generating future profits. Investing is possible from €20,- per part and payable through all accepted payment methods.

Symbid uses a secure separate bank account for all investments on the platform. This way investors and entrepreneurs are assured that investments are used for no other purpose than the financing of business ideas. Until the funding goal is met, an investor has the possibility to freely withdraw his investment from Idea A and for example invest it in Idea B. This situation could occur when an entrepreneur has not made the right adjustments to satisfy his investor. When the target amount is met, the total invested amount, investments are fixed and can no longer be withdrawn.

When an idea is fully funded and all the final investors are known, they are gathered in one legal entity. The process occurs online and is completed when the entrepreneur and investors are being granted access to a secured online collaboration community. Subsequently, the entity buys the predetermined amount of shares with the attracted funding. People within the collaboration community can join forces to bring the newborn company to a successful organization. This online community offers various collaboration tools to actively manage and monitor the progress of the company and interact as one with the entrepreneur or management team. Every individual share is tradable, which makes it even more interesting to invest through Symbid and become a shareholder in a newly founded or existing company.

How is Symbid more attractive than other potential sources of capital (VCs, business angels, banks, …) for founders?

With Symbid, entrepreneurs are able to onboard a large group of shareholders combined into one entity. This group of people can be used for market research but also as launching customer group.  By giving away equity to his investors, the entrepreneur can make sure all incentives and motivations are aligned from an entrepreneur perspective as well as from an investor perspective. Hereby an entrepreneur’s crowd becomes a think-tank for the respective company.

In comparison to the cost of capital, the 5% success fee is for most businesses lower than the average costs of receiving capital via a bank. If these businesses would get financing from the bank at all.

Who is able to invest? And what are the advantages?

Symbid allows investments from 20 Euro onward. Everyone can invest however for the moment we only serve Dutch companies. All investments done via Symbid are transferred into shares with voting rights, direct transfer- ability and dividends. This leads to the highest chance of a sound financial return, financing success and liquidity.

Symbid does not validate any claims/plans by the entrepreneurs. There are no collaterals. Why are you sure that Symbid offers a good investment opportunity at an acceptable risk and what safeguards are there against fraud attempts.

Correct, all our checks and balances are diverted to the end of the crowdfunding process. So the crowd actually provides the first check-up for every proposition. Once a proposition reaches completion the due diligence is being done. Dependent on the scope of the project and the capital needs, this can vary from a self assessment to an administrative due diligence.

So what ROI do you estimate investors will be able to achieve?

The ROI varies per project, so this depends on the specific proposition.

Which marketing measures do you plan? Will it be harder to attract entrepreneurs or investors?

The main marketing challenge is to create a large crowd. Therefore Symbid offers its platform and legal construction to media parties and other niche specific companies. The main advantage of such a partnering model is that every partner brings in its own crowd. By combining all these crowds on www.symbid.com, we’ve created a vivid environment for investors.

Are the high funding targets a barrier for getting a P2P Equity model of the ground? It might take weeks if not months to get the first idea fully funded. Are entrepreneurs prepared to wait patiently for funding in a fast moving environment?

Obviously financing a company is more capital intensive than let’s say financing a creative project. However entrepreneurs with new ideas are being submitted on a daily basis.

What was the greatest challenge so far in the course of developing Symbid?

Our greatest challenge so far was the legal construction regarding equity-based investments. Together with our team, BDO and AKD we were able to tackle any regulatory problems regarding equity-based crowdfunding.

Where do you see Symbid in 3 years? Is P2P Equity a threat to VCs?

In three years Symbid will become market leader for equity-based crowdfunding. We strongly feel that our model is suitable for a global roll-out. In terms of P2P Equity being a threat for VC’s, I’ve to say no. I feel that P2P Equity could provide a valuable financing alternative for entrepreneurs next to VC’s, PE and banks. Thereby P2P Equity doesn’t exclude VC or PE participations.

Thank you for the interview!