Startups

(L-R) CircleUp COO Rory Eakin and CEO Ryan Caldbeck with an array of products made by companies that raised equity funding on their site. CircleUp Network Inc.

An early player in equity crowdfunding, CircleUpNetwork Inc.. has raised $14 million in Series B financing, according to the companys co-founders.

CircleUp helps consumer brands, especially food and packaged goods makers, to raise capital online from accredited angel investors who they would otherwise probably never meet. The startup raised $7.5 million in Series A funding last year.

Canaan Partners led the Series B investment in CircleUp, joined by all of the startups earlier backersGoogle Ventures, Union Square Ventures, Maveron and Rose Park Advisors.

The San Francisco company plans to use the capital for hiring, and to build new tools and services that will help investors and entrepreneurs make sense of what comprises a typical valuation in a consumer goods company within their category.

According to CircleUp co-founder and Chief Operating Officer Rory Eakin, since CircleUp launched in April 2012, the site raised more than $30 million in equity financing for over 30 individual companies. These included Sustain. Klymit. SmartyPants Vitamins. 18 Rabbits and Willa Skincare. respectively the makers of condoms, camping gear, gummy vitamins, organic snacks, soaps and sunscreens.

CircleUp-funded companies make hundreds of products and distribute them to thousands of stores and online retailers, Mr. Eakin said.

In March 2013, CircleUp had nine companies seeking funding on its site. Today, 60 companies are actively fundraising there.

CircleUp conducts extensive due diligence before allowing companies to use its platform, so these numbers do not reflect the number of businesses that applied for consideration, the COO noted, only an increase in the number of deals CircleUp is offering its investors. He said CircleUp accepts about 2% of applicants.

The 25-employee San Francisco startup declined to disclose the number of accredited angel investors who use CircleUp, but said the number of verified, accredited investors on the site tripled over the past year, and the amount they invested collectively quadrupled over the past year.

CircleUp Chief Executive Ryan Caldbeck said he was especially proud of the performance of companies that CircleUp funded. The average revenue growth rate of these companies, post-investment, he said was 80% year-over-year. The companies also achieved a margin increase in the year after investment from 34% gross margins to 39%, he said.

Dan Ciporin a General Partner with Canaan Partners (and former chairman and CEO of Shopping.com) will join the board of CircleUp with his firms investment.

Mr. Ciporin said he was excited about CircleUps potential to disintermediate [traditional] financial services, and act as an important enabling technology in equity financing.

Unlike platforms that have offered equity crowdfunding for tech startups, he believes CircleUp is offering deals that will prove accessible to the vast majority of investors.

High quality companies are always of interest, but it can be hard to understand what is high quality in early-stage tech unless you are a pro. Investors can try a sample, when it comes to food and packaged goods, and have more confidence in what theyre about to invest in, he said.

Investors and executives declined to disclose valuation or other terms of the deal.