Due Diligence requirements for pitch videos on Seedrs & Crowdcube.

After creating 50 crowdfunding video productions to help launch campaigns on both Seedrs & Crowdcube, we often to see patterns emerge.

One that is quite common is when a Founder discovers that their campaign manager wants to ‘approve’ the script for their video prior to shooting.

Immediately their minds’ race…  Huh?  Why?  What are they looking for?

‘The facts, ma’am – just the facts.’

The reason the platforms are asking for a copy of the script prior to shooting is so they can ‘sign off’ on any statements. Or in other words, perform due diligence on behalf of their investors / platform users as mandated by the FCA who have recently tighten the rules on advertising and promoting financial products directly to the public.

This often causes alarm, as Founders worry it will take ages and their launch will be delayed. But we can assure you, you are in good hands with Mabinogi and there is nothing to worry about.

Our scripts are written to make passing due diligence more likely and our shoots are designed to be flexible enough to handle any last minute changes all the way up to and including in post-production.

The first step is once Mabinogi Productions drafts the script for your pitch – based on our discussions, your pitch deck, website and any other materials you can provide – we will encourage you to submit it to Seedrs or CC for review.

Even if the script is not 100% perfect, it is important to get it in the hands of your campaign manager ASAP.  Drafts can change, but usually the things that Seedrs and Crowdcube are looking for will not.

Remember they are mostly looking for numbers. For statements of fact. For things that might mislead investors.

They are not interested in providing ‘creative input’.

They are not interested in ‘shots’ or ‘locations’ or ‘contributors’.

These are of no concern in the due diligence process.

Now once they do get the draft script, it is then broken down line by line into a master spreadsheet that your campaign manager will use to help keep your launch on track from pre-launch -> private launch -> public launch -> completion.

It is going to look a bit like this one for HouseStars:

Now the usual response from founders is a mix of shock and exasperation –

What the F*ck ?  I have to prove everything single thing with evidence!

ALSO you just said you know how to write these things so we don’t fail due diligence!

We do… but the answer is unfortunately still yes, even though we have written your script with the aim (note our clever use of ‘aim’ —  it will come back shortly) of making due diligence more easy, you will still have to provide evidence for every declarative statement and number in the video whether spoken or presented as text on screen.

So if you say you are a Phd…  They will want verifiable evidence of this. 

Now again fortunately for you, the team here at Mabinogi can guide you through this sea of red (evidence required) to the open skies of blue (fair, clear & not misleading).

The key is the following:

• Have a link / screenshot of any data you have sourced or sited in your pitch deck – Example
  • If you say the market is £7.5bn in the UK, you will need to show where you got the figure. This could be as simple as an article in The Times, an academic journal or even a Government website. https://www.statista.com is quite good for macro numbers and trends.

• Use conditional language to modify any declarative statement into an aspirational one – Example
  • We will triple our growth in the next two years! * RED FLAG *
  • We aim to triple our growth in the next two years! * BLUE SKIES *

Easy-peasy.  Lemon-Squeezy.

You can also use Seedrs most popular modifier at the moment — “We believe”

We believe that with your investment we can triple our growth in the next 2 years.

Now our expertise in creating crowdfunding videos doesn’t just extend to a few modifiers.

We also have several other tricks up our sleeve to ensure that even after we shoot, you will have the flexibility to deal with any last minute due diligence questions from Seedrs or Crowdcube.

One of our favourite is the use of numbers on screen instead of spoken. Especially if you are getting push back on your evidence from Seedrs.  It happens and we recommend pushing back where necessary if you are well evidenced. But just in case you can’t reach a consensus prior to the shoot, we do things like this below:

This is an example of a statement that Seedrs is still pushing back on because of lack of evidence for a claim that you had 1,230,000 user visit your website last year.

• • Last year 1,230,000 users visited our website.

To be careful we would instead record a take that says:

• • Last year over a million users visited our website.

And we can then still put a number on screen in post-production once you have agreed the final figure with Seedrs.

Anyway we trust this article has been helpful.

We know launching a campaign is hugely stressful, and we aim at all times to lighten the load for Founders by providing our experience, enthusiasm and unwavering positivity to help you achieve your crowdfunding goals.

BTW if you want to have some nightmares… look at the size of Seedrs disclaimer!

SEEDRS DISCLAIMER IMPORTANT INFO

This campaign for START UP XXXX  has been approved by Seedrs Limited (“Seedrs”, “us” or “we”), as of 11 September 2023 as a financial promotion. Seedrs is authorised and regulated by the Financial Conduct Authority. In approving this campaign, Seedrs has concluded that the information, taken as a whole, is “fair, clear and not misleading.” This means that for factual statements we have reviewed evidence of their accuracy, and that for aspirational statements we believe they are phrased appropriately in light of their speculative nature. You should note that in the case of factual statements, the evidence we review is provided by the business, and we do not audit it, which means that we may not be able to identify forged or altered evidence. You should further note that in the case of aspirational statements, the nature of the type of businesses presented on the Seedrs platform is such that they are likely to have high ambitions, and we may approve statements that convey those ambitions even where we do not believe, or we do not have a view on whether it is likely, that they will be fully realised. The pre-money valuation and investment sought in the campaign are those set by the business: they are not reviewed or established by us, and the valuation is not an independent view of what the business is worth. Given the nature and type of businesses presented on the Seedrs platform, it is possible that the business has very little cash remaining prior to receiving this investment, and the investment sought may be necessary for the business’s on-going existence.

The Discussion Forum and Documents sections above and any additional documents available for download do not constitute part of the campaign, and they have not been reviewed or approved by Seedrs. Any responses in the Discussion Forum or Documents section by the entrepreneur and any documents downloaded on request constitute “one-off communications” and should be treated in the same way as if you had a one-on-one email conversation with the relevant entrepreneur without any involvement from us. In addition, no other information set forth outside of the campaign – including in documents provided by the entrepreneur, on the business’s website, in social media profiles or elsewhere – constitutes part of the campaign, and it has not been reviewed or approved by Seedrs. Seedrs takes no responsibility for the statements made in the Discussion Forum and Documents sections by the entrepreneur or for documents or other information provided by or about the business outside of the campaign. The information contained within this campaign may not be used – and has not been approved – for any purpose other than in considering whether you should make an investment in START UP XXXX  through the Seedrs platform. Any investment in START UP XXXX carries risks, including loss of capital, illiquidity, lack of dividends and dilution, and should be done only as part of a diversified portfolio.

Please read the Risk Warnings before investing. Investments should only be made by investors who understand these risks. Tax treatment depends on individual circumstances and is subject to change in future. This campaign is not an offer to the public and is only available to investors who have become authorised to invest on the Seedrs platform. All investment activities conducted in relation to this campaign take place within the United Kingdom and any persons resident outside the United Kingdom should ensure that they are not subject to any local regulations before investing. If the campaign is a cohort campaign, it is not structured as a collective investment scheme; the investments will be made directly into each investee entity, there is no fund manager, and investments and profits (if any) will not be pooled.

In accordance with Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”), the securities described in this campaign have not been registered under section 5 of the Securities Act. The securities therefore may not be offered or sold in the United States or to U.S. persons (other than distributors) unless the securities are registered under the Securities Act or are exempt from registration under the Securities Act. Hedging transactions involving the securities may not be conducted unless in compliance with the Securities Act.