In a recently shared update, SeedInvest elaborated on a notable uptick in platform participation throughout 2020.
Best quarter on company record? Check. Investment volumes reaching new highs? Check. Massive investor signup, dwarfing multiple previous years combined? Check.
With people adjusting to the new world, it is clear that they are recognizing the benefits and efficiency afforded through crowdfunding. April, alone, saw roughly 25,000 new investor signups on the SeedInvest platform.
In their post, SeedInvest CEO, Ryan Feit, elaborated on how their platform differs from traditional means of raising capital.
“Unlike venture capital firms, online fundraising platforms are perfectly situated to help startups in the current, post-COVID-19 world we are in. Online fundraising platforms are not dependent on capital from a handful of pensions and endowments, but rather a large, diverse network of investors (SeedInvest has had over 350,000 investors register for example).”
“…while the traditional venture capital investment process is highly dependent on in-person meetings (which is next to impossible in the current environment), the online fundraising and investing process is inherently digitally native. Furthermore, there are a number of pending improvements to U.S. securities laws (the most significant changes since the JOBS Act was signed into law), which will turbocharge online fundraising for entrepreneurs and investors alike.”
SeedInvest is not the only platform to see a recent boost in usage. Rival crowdfunding platform, StartEngine, has seen a similar uptick.
While this positive turn may be due, mainly, to venture capitalism drying up, due to the ongoing pandemic, there is no doubt that the SEC has also played a role.
While the SEC is often viewed as a regulatory body that simply punishes those breaking the rules, they also have a direct hand in crafting friendly environments for growth. Recognizing the potential harm of COVID, they recently relaxed regulations surrounding crowdfunding. The following are a few examples of this:
- Financial statement exemptions
- Broader eligibility
- Easier ‘early closing’
While no official announcements have been made, it has long been suspected that SeedInvest owner, Circle, intends to sell the crowdfunding platform.
Reports of a possible sale surfaced after Circle began streamlining their operation in 2019. Their efforts saw the sale of popular exchange, Poloniex, as well as the departure of multiple ‘C-level’ employees.
With the recent growth seen at SeedInvest, Circle has every reason to be happy. Either they keep SeedInvest under their umbrella, and benefit from their successes, or they sell the platform, and benefit from an increased market value.
Founded in 2011, SeedInvest is a crowdfunding platform, which operates out of New York. Above all, SeedInvest acts as a bridging platform, connecting vetted investment opportunities with eligible investors.
CEO, Ryan Feit, currently oversees company operations.
In Others News
For those interested in learning more about what Crowdfunding is, and how it can transform the way we invest, make sure to peruse the following article.
Celsius Network Raises $20M on Equity Crowdfunding Platform BnkToTheFuture
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.
Celsius Network CEO, Alex Mashinsky highlighted this point upon commencement of the raise discussed here today.
— Alex Mashinsky ©️ (@Mashinsky) June 11, 2020
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.
SeedInvest Tackles Economic Inequality with ‘BlackCapital’
BlackCapital’s goal is to facilitate economic equality among black communities across the United States. It was launched in collaboration with Kevin Johnson – a former NBA All-Star, and Mayor of Sacramento.
Tackling economic inequality is no small feat. Recognizing this, SeedInvest has taken a structured approach towards its goal.
In order to positively affect the greatest number of people, SeedInvest’s BlackCapital has been structured as a two-pronged system; each of which will provide participants with access to fully-vetted, high potential start-ups. Investors can choose to invest in companies that are lead by black founders. At the time of writing, SeedInvest has three companies with black founders that are fundraising.
1. Black Capital Access
With an investment minimum of $1000, this program allows investors of any ilk the ability to create a portfolio comprised of up to 25 different start-ups raising capital through SeedInvest.
2. Black Capital Fund
With an investment minimum of $50,000, this program is geared specifically towards accredited investors. Much like BlackCapital Access, this fund will provide its participants with access to many vetted investment opportunities, along with access to a bevy of features within the SeedInvest platform.
SeedInvest notes that, until now, early-stage venture capitalism has only been accessible by roughly 2% of the population. Furthermore, this form of investing has been heartily outperforming the S&P 500 over the past two decades. By creating and promoting BlackCapital Access/Fund, with the help of Kevin Johnson, SeedInvest is hoping to increase that 2% as much as possible.
It should be interesting to see how SeedInvest continues to develop BlackCapital and if the BlackCapital initiative does in fact benefit the black community.
Given that we are currently midway through 2020, it is sad to say that many marginalized communities throughout the world still exist. Currently, in North America, black communities are in the spotlight due to a myriad of issues. SeedInvest has taken note, and it is beginning work to contribute towards forward progress.
At the Helm
While SeedInvest may be facilitating BlackCapital, the project’s creation was made possible through collaboration with Kevin Johnson. If this name sounds familiar, his past accomplishments may explain why.
- 3x NBA All-Star with the Sacramento Kings
- Mayor of Sacramento from 2008-2016
- CEO of Seven Ventures
Throughout his career, Kevin Johnson has experienced great success in many of his endeavours. For instance, along the way he has become known for developing programs which help marginalized communities gain access to better educational and economic opportunities. With this being the case, his participation in an initiative such as BlackCapital, is no surprise.
While BlackCapital is very new, we hope to see continued growth in supporting the black community by empowering black founders and black investors. We also hope to see continued growth in supporting other marginalized members of the community.
Since the ‘Jumpstart Our Business Act‘ was passed in 2012, crowdfunding has been steadily increasing in popularity. This popularity has led to the rise of various companies like SeedInvest, as they look to establish themselves as market leaders. Investing through such means can provide savvy investors with fantastic opportunities, by gaining access to companies at an early stage.
While the potential for great returns is there, it is vital to note that early stage investing is a high-risk endeavour. SeedInvest echoes this sentiment, by stating, “Only those prepared for extreme volatility, a lack of liquidity, and the risk of losing their entire investment should invest in early-stage startup investments.”
Founded in 2011, SeedInvest is a crowdfunding platform, based out of New York, New York. Through their platform, SeedInvest provides investors access to pre-vetted opportunities from promising startups.
CEO, Ryan Feit, currently oversees company operations.
In Other News
Since COVID-19 began wreaking havoc on the world as we know it, various crowdfunding platforms have noted an increase in investor activity – with SeedInvest being among these.
Accordingly, we took a brief look at these events, and how they led to a record setting quarter by SeedInvest. To learn more, click HERE.
Andrew Adcock, CEO of Crowd for Angels – Interview Series
Andrew is the Chief Executive Officer at Crowd for Angels an equity crowdfunding platform. He often attends and speaks at events on Crowdfunding, Alternative Finance and Investment. Previously, he worked at NinetyTen, a web application developer and provider of Private Social Networks, whose clients included Nokia, Channel 4 and Shop Direct
You were one of the original Co-Founders of Crowd for Angels. Can you discuss the inspiration behind launching this business?
I was indeed one of the Founding team at Crowd for Angels, but the inspiration for launching the company comes from our Director Tony de Nazareth, who combined his decades of financial knowledge with the ‘social media’ approach. This was to get the community involved when funding and supporting a business, thereby creating brand advocates that not only financially supported the aspirations of a company but also became a voice and customer of the company.
How much do you involve yourself in the pitch decks and packaging the deals that are found on Crowd for Angels?
I am involved in most companies that seek to list on Crowd for Angels. I take a genuine fascination in the lives of start-ups and companies looking to expand. Each has its own story and passion, which I am enthused by. Having raised funds for my own company and invested in many others, I hope to provide insight for the company.
What type of due diligence is performed on the companies that are listed?
A lot! Crowd for Angels breaks due diligence down into 3 key areas, firstly, we conduct factual checks such as KYC, AML, PEP, Credit Checks on the directors, reviewing accounts produced by the company and verifying facts stated on their pitch. Secondly, we conduct market checks, for instance, is the product available and as described, is there an addressable market, is the valuation reasonable, what legal challenges the company might face and is it ethical. The final check is one of sanity, which is not only tested by Crowd for Angels, but also by our Angels, who will ask the company their own questions.
What are some of the main reasons behind companies being turned down for listing on the platform?
There can be a number of reasons but a few we find most common are as follows:
- The valuation is simply too high in comparison to the companies position
- The company does not provide documentation (business plan, management accounts, incorporation documents)
- The product is too early-stage or not yet developed
- The directors have no ‘Skin in the Game’
What are the biggest benefits of equity crowdfunding?
I personally believe the biggest benefit is the ability to create brand advocates, people who support your business financially and become active customers, drawing in others to check out your brand, whether that is through word of mouth or social media.
Could you give us a success story of a company that raised funds on the Crowd for Angels platform?
One of my favourites is a company called CNPPS. A young entrepreneur, who was studying engineering at university at the time had created a permeable pavement solution that used recycled aggregate. Now that might not sound as fascinating as an app, but our world is covered in roads and pavements. His solution, used 100% recycled aggregate and was carbon negative, furthermore, it allowed water to pass through. Working with the entrepreneur we were able to raise £100,000 for a phase of testing that has now led on to a commercial contract and further funding for the company.
What made it interesting was the ethical approach the company had took to change an old industry, the tenacity the entrepreneur showed never giving up and that a business can truly be grown from the ground up, out of university none-the-less. So far in a 2 year period, the company’s valuation has increased 4 fold, delivering a solid return for the Angels involved.
Crowd for Angels is one of the few crowdfunding platforms that accept bitcoin. How many investors use bitcoin, and where do most of these investors originate from?
Yes, we have been accepting cryptocurrency as a form of payment for investment since early 2016. At that time, we integrated this payment option to allow foreign investors to invest in UK companies without the costs and time associated with international bank transfers. Initially, we saw a number of Australians, Chinese and mainly Asian investors utilise this form of payment. However, as bitcoin and other cryptocurrencies gained in popularity, we did see growth in European investors utilising cryptocurrency. Partly this is due to the gains they might have experienced and I believe the convenience cryptos offered. Now, we have over 14,000 members registered with a cryptocurrency wallet on our platform, with many of them in Europe.
A few years ago, the ANGEL token was released. What are the use cases for this token?
The ANGEL token was released to drive down the user acquisition cost of investors whilst rewarding stakeholders for interacting with our platform. It is hoped that when users interact and share content in the network, say an investment they had just made in a fledgeling company, that they would be rewarded with ANGEL. Crowd for Angels has then committed to buy back and burn ANGEL linked to the revenue generated from our pitches, thus creating a virtuous circle. We hope in the future, our Angels will also be able to use the ANGEL token as a method of payment towards an investment.
Crowdfunding utilises technology to allow the masses to invest small amounts into pitches, but the shares are usually held with a nominee and should you wish to sell them or give them to someone else, it is difficult. Therefore, the integration of digitalised assets should be a no brainer, because it potentially gives the control of the asset back to the investor and follows a set of rules, that can’t be broken. In a utopian world, you would allow investors to purchase, hold and trade any assets that they wish. With the blockchain, you benefit from an immutable ledger that would record these transactions, giving you efficiency and transparency. I believe we are only a stones throw away from some big changes.
Is there anything else that you would like to share about Crowd for Angels?
We are always open to ideas, a conversation can go a long way.
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