Crowdfunding Investment Platforms to Watch
With Title II of the JOBS Act having been enacted just after midnight today - there are some significant changes happening in the world of startup fundraising and investing. The opening up for general solicitation means that now companies can publicize their fundraising needs and actively seek investment through more ‘traditional’ advertising. If you are interested in being a part of this new boom in activity, as either an accredited investor, or a cash-raising entrepreneur, here are some platforms worth looking into.
Their home page says it all: “Public Fundraising. It’s here. Tell the world you’re raising money.” In a nutshell, Angel List is a platform for startups to connect with investors, and for investors to shop around for deals. This website is likely to become THE conduit for online startup investment, so having a presence on there will become increasingly vital.
Crowdfunder, at its most basic is a platform to connect investors with small businesses and startups. However, it offers far more with over 31,000 investors and entrepreneurs and over $15,000,000 in active fundraising. Crowdfunder will likely prove to be the second most significant platform for online startup investment.
A fairly different model, FundersClub acts just as an “Angel Group” would, and pools investor money together to purchase equity in vetted companies - if a company gets recommended for investment, voting takes place that determines whether or not investment happens. With a five percent investment rate, FundersClub is selective. This platform might be one of the more sensible platforms for the inexperienced investor.
Much like the other platforms, WeFunder acts as a hub to connect investors with entrepreneurs and startups. With backing from the legendary “Y Combinator” accelerator, WeFunder has some serious credibility. Unlike the other platforms, WeFunder already has contingency plans and strategy to accommodate Title III of the JOBS Act, meaning they will be able to quickly add non-accredited investors and enable even more substantial crowdfunding to take place.
This platform is more focused on startups offering consumer-goods. Like the other platforms, CircleUp connects startups to investors, but unlike the others, it also has a serious focus on connecting startups with mentors to help them along. CircleUp might yet gain an advantage in early-stage deal flow due to its appeal to the early-stage entrepreneurs.
All said and done, Title II of the JOBS Act is definitely significant. What it doesn’t offer though is the highly vetted process that is exemplified by a quality Venture Capital firm, nor does it present investors with a systematic process for due diligence - making the process potentially risky. While the notion of seed-round funding being crowdsourced is promising, the watchful eye of an experienced VC firm, combined with the direction and guidance of veteran partners cannot be overlooked. Investment money still needs to be “smart money” and investors and entrepreneurs alike will always benefit from having brains behind the ‘bills’.