Crowdfunding has been around since 2008 with the launch of indiegogo, followed by Kickstarter which launched in 2009.
The early crowdfunding websites offered users free perks, and goods in exchange for funding their business venture. Most of these start-ups fizzled out after a few months but some of these were widely successful. One of the most notable success stories is the virtual reality headset Oculus which raised over $2.4 million on Kickstarter in a campaign that also caught the attention of Mark Zuckerberg. Shortly thereafter Oculus was acquired by Facebook for $3B. This was a monumental acquisition for a start-up with a great vision and zero profits.
Unfortunately, while the Facebook acquisition of Oculus was life changing for the Oculus team, the early backers of the project on Kickstarter received nothing, as no equity was offered for their initial backing of this project.
In 2012 the JOBS Act passed which opened the doors to crowdfunding websites offering early investors equity. Now investors from all over the world have the opportunity to support start-ups who are too small to access traditional venture funding.
These equity crowdfunding websites serve an important purpose as they are directly responsible for nurturing entrepreneurs while offering investment opportunities to investors who are not based in Silicon Valley.
#1 – SeedInvest
SeedInvest differentiates themselves by focusing on only having handpicked start-ups in upcoming industries. If you want to invest in the future of tech this is one of your best options. The industries that are often featured include:
- Augmented Reality
- 3d Printing
- Artificial Intelligence
- Space Technologies
They’ve helped over 150 companies raise capital, and the team is great at filtering out most companies that apply, to offer investors a curated list of world class companies to invest in.
#2 – Microventures
This website is different than the rest of this list as they offer two different focuses and they target accredited investors only.
The main focus is on Late Stage companies. Some of the late stage companies which have been featured include:
- Honest Company
This offers the easiest possible route to investing in phenomenal late stage companies which are often only a few years away from going IPO. The minimum investment is often in the $5000 to $50000 range, with the minimum depending on the interest level and the company.
They also offer investment opportunities in Early Stage companies with minimum investments in the $3000 to $5000 range. These companies are often in Fintech, robotics, 3-D printing, etc. The quality of these Early-Stage companies is high and is also handpicked.
#3 – WeFunder
They were responsible for helping to write the JOBS Act, and are one of the oldest companies in the crowdfunding space. There’s been some huge success stories on this website.
In April 2013 Zenefits raised at a $9M valuation, and only 2 years later in May 2015 they raised an additional $500M and were valued at $4.5B. This means if you had invested $10000, you would have received a cool return of $500,000 in a 2 year period.
WeFunder came out of the Y Combinator accelerator program, which is the most famous and successful accelerator program in the world. Some success stories from here include AirBNB, DropBox, Stripe, coinbase, etc.
The reason this is important is that Y Combinator companies support each other in what is a giant ecosystem. Many of the start-ups on WeFunder are Y Combinator graduates (such as Zenefits).
#4 – Fundable
One of the oldest platforms on this list, Fundable launched on May 22, 2012. Since then they have been offering access to a notable list of companies in every industry that you can conceive of. I’ve seen everything from solar power fields to revolutionary 3D printed prosthetics.
Fundable is a crowdfunding website which offers an extensive live of companies to choose from.
#5 – StartEngine
Over 90M has been raised by 265+ companies. They even recently successfully raised a$10M STO for themselves.
While this is a great platform they are not as selective as the rest of the equity crowdfunding websites on this list, so you do have to be more careful and perform extreme due diligence in who you invest in. That being said there are some gems to be found. Hackernoon recently successfully completed a $1.07M raise. I do find that they have too many companies listed, which makes perusing the list a bit exhausting.
These are the top 5 crowdfunding websites which I believe offer investors the best access to investment opportunities. You should always perform proper due diligence, and understand that Early Stage investing is high risk, and that you are more likely than not to lose access to all of your capital. You should also expect that it takes 7 to 10 years to earn a return on any of these investments.
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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.
SeedInvest Gaining Momentum
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.
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