Two of the more popular trends to have captured the attention of investors in 2020 are Decentralized Finance (DeFi) and equity crowdfunding. The momentum behind the popularity of each does not appear to be slowing, as made evident by recent news of Celsius Network completing a capital raise in excess of $20.2M USD.
This particular raise is of interest, as it involves companies categorized as operating within DeFi (Celsius Network), and equity crowdfunding (BnkToTheFuture).
Details of the Raise
In this round of funding, Celsius Network was selling 12.41% equity. In return, the capital raise has attracted participation from over 1000 investors, which contributed over $20.2M USD.
This raise is a clear success, as the total funds generated amount to roughly 120% of the company’s target goal. While there are many factors that led to the success of this raise, the current popularity of the platform, no doubt, played a large role. Celsius Network indicates that they have now provided over $6.2B in loans, in addition to controlling over $630M in assets – demonstrating a clear demand for its services.
Of the money raised by Celsius Network, roughly 50% comes from a single investor – Tether. This investment by Tether initially prompted concerns by users of the platform, as it was feared that Celsius Network would now be subject to outside influence. One of the differentiating factors between Celsius Network and its competitors is its goal of sharing 80% of its profit among clientele. With large investors potentially holding sway over company decisions, profit distribution goals such as this could possibly be discontinued. Fear of this possibility has prompted Celsius Network CEO, Alex Mashinsky, to comment on the issue in the past.
“…we are committed to give depositors 80% and I remain the largest shareholder of Celsius but now it has plently more cash to grow faster and build better products.”
Now that its capital raise has come to a conclusion, these fears were clearly overstated, as they did nothing to slow investors from flocking to the opportunity.
While the title DeFi can be used as an umbrella term to describe any number of blockchain based financial applications, one of the most popular examples is crypto lending platforms.
Looking beyond Celsius Network, the following companies currently function as close rivals, offering similar/competing services.
With the crypto community populated by a high number of long term holders, it is no wonder that services offered by these companies are in high demand. For an investor that does not intend to trade their assets in the short term, it is an easy way to earn passive income.
DeFi is a hot sector at the moment, but what about those companies that make these capital raises possible?
In this instance, Celsius Network turned to popular platform BnkToTheFuture. Platforms such as this provide investors access to opportunities previously only accessible by wealthy venture capitalists.
Much like Celsius Network, BnkToTheFuture is not alone in its respective field. Various competitors have thrown hats into the ring, as they look to establish reputations as leaders in crowdfunding. The following are a few examples of such companies.
This popularity was recently highlighted, as StartEngine attracted the attention of a high profile businessman Kevin O’Leary, aka Mr. Wonderful. At the time, O’Leary touched on the potential of crowdfunding, stating,
“With the coronavirus pandemic causing economic uncertainty, startups and small businesses are having an incredibly hard time accessing capital, so you’re going to see a material increase in interest in crowdfunding companies like StartEngine that are solving that problem…We’re going to look back on this period as the start of the rise of equity crowdfunding, and I think it’s an industry that StartEngine is going to win.”
Founded in 2017, Celsius Network maintains operations in London, England. Above all, the team at Celsius Network strives to develop modern financial solutions, through the use of technology such as blockchain. The company is most well-known for its foray into crypto-loans, and interest bearing crypto accounts.
CEO, Alex Mashinsky, currently oversees company operations.
In Other News
For those interested in learning more about what equity crowdfunding is, and how it can change the way we invest, make sure to peruse our deep dive into the practice HERE.
If the idea of equity crowdfunding has piqued your interest after learning its ins-and-outs, the following article HERE will shed light on some of the leaders in the sector.