A message from Odin's founders
A message from Odin's founders
An update for the startup ecosystem r.e. why Odin will be offline for a few weeks
The Odin Times is brought to you by Odin - the seamless way to raise and deploy capital in private companies, used by over 700 VCs, angel syndicates and founders globally.
We’ve already contacted our affected customers, but wanted to share the below with our community so that people have clarity and we can assuage your concerns. In short - we’ve been advised to pause onboarding of new customers by the FCA (UK financial regulator) until we make some changes to our operating model. We are complying with this advice.
We’ve got a plan in place and we’ll be back soon. It’s unfortunate, but we have to do what is right. Here are the details.
What’s happened?
We have recently had a dialogue with the FCA regarding our operating model and how we comply with regulation.
We have, of course, had consistent third party legal advice since inception, and assurances that we are compliant.
However, recently, the FCA advised us that Odin requires a specific regulatory permission (arranging deals with retail investors) that we do not have.
Neither, to our knowledge, do our primary competitors in the UK (whilst they may have slightly different operating models and regulatory advice).
Note that a “retail investor” is anyone who is not a professional investor under FCA regulation - even if they are sophisticated / high net worth.Let’s be clear on our product - we offer administrative software & services to sophisticated & high net worth angel investors, VCs and founders who would often be doing these deals with or without us - eg. via lawyers and email. We’re basically tying together a number of previously independent products and services: legal, document signature, spreadsheets, email communications, payments and a few other other workflows. We put them in one place and make it all work seamlessly with technology.
There are a number of exemptions from regulation that, our lawyers advised, we were able to benefit from. However, the FCA has taken a different view.
As a result of the FCA’s decision, we have had to introduce a temporary pause on new investments for a short period of time while we change our regulatory permissions and operating model to better comply with their requests.
Since we’ve already been engaged in this dialogue for some time, we have a plan in place. We’re aiming to be back in 2 - 6 weeks with full service.
Fintech is tricky. This sort of thing happens a lot. Most UK fintechs have had to make difficult decisions quickly following FCA requests at various times in their history. Plus, without being directly regulated, you do not have the ability to communicate with the FCA most of the time. This meant that even though we had legal advice from 2 firms, we could never be certain whether the FCA was ok with our operating model.
The positive here is that we have clarity on their recommendations so that, moving forward, we hopefully never have this issue again!
We will share more information on timelines for relaunch soon - right now we’re focused on executing on our plan and minimising customer impact.
What does this mean for Odin’s customers, practically?
Until they hear from us, they cannot launch any new deals on Odin. For anyone with a deal live that’s partially funded, we’re closing it out free of charge and offering a free rolling close once we are back online. Alternatively we are refunding them. Full customer FAQs are available here.
It shouldn’t be a big outage, and thankfully it’s during summer, which is a quieter time for venture - fewer of our customers have been affected than may have otherwise been the case.
Is Odin safe? Are people’s investments safe?
We have significant capital reserves and runway even with no revenue and no layoffs for 8 months or more, which is ample time for us to implement a solution. We have also been prepared for any worst case scenarios since day 1, although we think the risk here is minimal. It is normal for startups to experience challenges of this nature, and we think it’ll be a relatively quick fix.
Note: Any capital we hold in our designated accounts on behalf of investors / investee companies is segregated and not affected - this is not our money.
What’s next?
For now, we just need to get this out of the way.
It’s a bump in the road, and we will get it sorted.
We have had a large number of supportive messages from the community, and we’re very grateful for everyone’s offers of help! We’ve also had some upset customers and we want to say - we hear you, and we understand why you’re annoyed. We’re going to fix this as fast as possible. If you need to make alternative arrangements then please do so.
It’s a tough break, but we have to do what is right and proper, and act with integrity in the long-term interests of our customers, our shareholders, our relationship with the regulator and, of course, the entire UK / EU startup ecosystem.
We love building for you all, and we’re still only just getting started.
For the next few weeks we’ll be heads down focused on shipping improvements to the product, so that when we’re back online, it’s better than ever.
Hopefully that’s very soon.
Don't Whine...Don't complain. Work harder
Joan Didion
Thanks for reading. Please feel free to share with other founders & investors, and reach out if you’ve got questions.
And have a great summer!
Paddy, Mary & team