Raising Money Online – Advice for Startups
themacro.com
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Without fanfare from Crunchbase or the rest of the peanut gallery I was able to find Regulation D documents and pitch decks for those companies on sites like Wefunder.com and other "data rooms", the finance sector term for "overpriced shared file repository so potential investors can look at private securities offerings".
Wefunder would be one of "those sites" you mentioned, and these are 8 figure deals.
These companies are indistinct from any other tech company, so its happening. You might just be missing good deals
According to Crunchbase several of these companies still only have a seed round completed. So much for their scraping.
We recently closed $1m each for three different companies. Here are our stats: https://wefunder.com/stats
What does that last bit mean, regarding "repurchase the crowdfunded securities"? Do smaller investors run the risk of losing their shares entirely during a later-stage deal with a VC that wants to clean up the cap table?
[1] https://blog.wefunder.com/founders-the-strengths-and-dangers...
The Fix Congress Act being debated in Congress may solve this problem.
This makes sense. One good signal of whether you should invest is whether you love the product.
That's clever.
I would also highlight that both issuers (entrepreneurs) and investors ought to focus on the revenue models of the platform. Broker-dealer (and RIA) platforms typically take commissions on each dollar raised by an issuer, must perform regulatory required due diligence and their activities are monitored by the SEC or FINRA, as the case may be, and they are responsible for overseeing those platforms activities and compliance with the rules. Same holds true for Title III platforms which must by statute be approved by FINRA.
Certain Reg D platforms and Title II platforms generate revenue like a venture fund or real estate firm benefit only from the profits generated in excess of the original investment amount of the investors (a so-called profits participation). While I fully agree with your observation of the benefits to investors, along with the lead investors and syndication generally, it is important to also note that these platforms do not necessarily have to be licensed as broker-dealers consequently. Perfectly lawful in most cases.
These platforms consequently have different economic incentives and liability profiles.
We specifically developed iDisclose to drive down the cost of legal disclosure to be consistent with this new online ecosystem but maintain high quality disclosure through a TurboTax like process to reduce potential liability to the issuer and the platforms.
BTW, all of the platforms which you referenced should be acknowledged for their excellence and pioneering approach to this new online investment world.
Would love to answer any further questions you can find me here or @douglasellenoff
Related to the topic, Wheely's (YC S15) recently raised €850 000 on Swedish local "crowd investment" site Funded by me [0].
[0] https://www.fundedbyme.com/en/campaign/7681/wheelys-cafe-wor...
A company needs to do their own promotion among investors to raise money, there aren't waves of investors at these sites eager for new opportunities.
This is actually how Kickstarter works, and the reason that effective promoters are the ones who succeed at raising money, rather than the cleverest inventors.
> FundersClub, Wefunder, and other sites like SeedInvest, CircleUp, and EquityNet offer crowdfunded investments on their sites that are mechanically similar to KickStarter.
Generally, it's a pretty good investment signal when you personally love using a product. So lots of customers invest for most high-quality companies.
Regardless, something to be aware of as a founder considering options.
We've already had a company that raised $1 million from Title III that then raised $5 million from professional investors.