Top 10 Crowdfunding Sites
Post on: 2 Июль, 2015 No Comment
Whether he knew it or not, President Obama created a brand new industry when he signed the JOBS act into law on April 5th. Up until now, its been illegal for private businesses to offer equity to anyone other than accredited investors in exchange for funding. As a result, crowdfunding sites (like Kickstarter and Indiegogo ) and the investment seekers that use them have been restricted to giving gimmicky thank you gifts and pre-selling new products in exchange for donations. Although this method of fundraising has proven successful for many artists, charities, and startups, the payback for the people who are giving away their money has been limited to cheap schwag and a few new toys.
The passing of the JOBS Act is about to change all of that. Once the rules are in place early next year, private businesses and startups will be able to use crowdfunding to give equity to investors who will get an actual monetary return instead of a sticker or T-shirt. This shift is expected to attract a huge influx of capital from regular Joes looking for better ways to invest than what is currently being offered by the stock market or the meager 0.5 percent interest from savings accounts.
Fred Wilson, co-founder of the venture capital firm Union Square Ventures (which has invested in Twitter , Tumblr , Foursquare. and Zynga ), predicts that once it gets up and running, the equity crowdfunding market will reach $300 billion and will be largely driven by families and individuals investing a small percentage of their assets via crowdfunding. As a point of comparison, a study from Crowdsourcing.org reports that about $1.5 billion was raised from 452 crowdfunding platforms in 2011.
The opportunity to cash in on this new industry by creating next generation equity crowdfunding platforms is substantial. Hungry tech entrepreneurs are scrambling to get out in front of this imminent boon; and the market is poised for saturation. To help you keep track of all the happenings in this space, here is a an overview of ten existing platforms that may be getting into the equity game, as well as the status of the newcomers that have been popping up daily.
Kickstarter : With more than 63,000 projects and $250 million in pledges raised, Kickstarter has emerged as a leader in the current crowdfunding craze. There has been a lot of buzz about whether they will start helping their users offer equity to investors once the new rules are in place. But in a recent interview with GigaOm. founder Perry Chan stated that Kickstarter is not interested in that model.
Indiegogo : Like Kickstarter, Indiegogo is a popular crowdfunding platform that recently raised $15 million in Series A funding. The company claims that this is the largest funding round of any crowdfunding platform to date. Indiegogo was a supporter of the JOBS Act, and founder Slava Rubin told TechCrunch that the company may very well decide to open up the platform to equity transactions in the future.
Fundable : Founded by serial entrepreneur Wil Schroter and just launched in May, Fundable is currently running a rewards-based funding platform while also offering accredited investors the opportunity to invest in small business for equity. Schroter plans to fully open the gates as an equity platform once the new law has been implemented.
Crowdfunder : This Los Angeles-based company, which also launched in May, has taken a different approach to waiting out the JOBS Act rules before it can start offering equity through the site. Companies can apply to raise funds and users can vote on those they would invest in without any transactions actually taking place. As of the end of May, nearly 2,000 companies had signed up with crowdfunders pledging $17 million in investments. Crowdfunder is also holding a series of contests in cities around the country where local businesses are judged by a panel of investors and compete for $25,000 in funding. The first event, called Crowdstart LA. took place on May 22nd and elicited over 700 submissions.
EarlyShares : In an effort to raise awareness about the JOBS Act and educate consumers about its benefits, EarlyShares recently announced a U.S. tour, hitting 24 cities in 24 weeks on a Nationwide Educational Roadshow. The company is also co-sponsoring Techweek Launch, a startup competition that offers one winner up to $100,000 in cash and prizes. Although the company claims to be the premiere Portal for Equity Based Crowdfunding they say they cant list real companies on the site and are only taking pre-registrations.
Once the rules are in place early next year, private businesses and startups will be able to use crowdfunding to give equity to investors who will get an actual monetary return instead of a sticker or T-shirt.
SeedInvest : Launched by a group of young Wall Street alums getting their MBAs at The Wharton School of the University of Pennsylvania, SeedInvest recently won third place at Philly Startup Weekend 3.0. Founder Ryan Feit said that following their win, hes had a lot of people from the Philadelphia community reach out to him about investing and is in the process of seeking a round of funding. The site is still in the pre-launch phase but entrepreneurs and business owners can apply for early access.
GetFunded : This shiny new site from Apps Genius Corp popped up just last month and is currently reviewing pre-registrations to be selected for participation in their pre-launch. In an effort to attract the best possible businesses seeking crowdfunding, the 25 companies that are chosen will each receive up to $5,000.
RelayFund : A group of venture capitalists, entrepreneurs and investment bankers have teamed up to launch RelayFund, which is the creation of investment banking firm Hartwick Capital and investor relations firm Lambert, Edwards & Associates. According to a press release. the founders view crowdfunding for equity as the next major catalyst in transforming the capital markets and connecting everyday Americans with private equity. The press release also calls RelayFund a leading online community focused on second-generation crowdfunding but the site has yet to launch.
WeFunder : Founded in January 2010 by an MIT Sloan School of Management grad and still in pre-launch, WeFunder boasts a community of 6,100 funders pledging more than $16.5 million in investments. According to Mashable. the platform combines traditional startup funding with equity crowdfunding in amounts as low as $100.
CrowdCube : Equity-based crowdfunding is already legal in the UK, and CrowdCube has been around for a few years already. Theyve raised £2.8 million for 15 companies so far. The company hasnt announced any plans to expand into the U.S. market but given their experience compared to these new domestic players, they are positioned well to do so.
There are also dozens of platforms targeted at specific niches and industries like CircleUp for consumer goods, Appsfunder for mobile apps, and New Jelly for artists.
What other equity crowdfunding platforms are on the horizon? Put it in the comments.
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Kara Scharwath is a corporate social responsibility professional and marketing consultant. She recently received her MBA in Sustainable Management from Presidio Graduate School and is currently working as a Graduate Associate in Corporate Citizenship at the Walt Disney Company. Follow her on Twitter @karameredith .