Regulatory Holdup Not Slowing Down Fundraises in the US Equity Space

By AltFi on Friday 10 October 2014

Savings and Investment

US equity crowdfunding platforms are apparently thriving in spite of SEC regulatory delays. 

Crowdfunder has raised $3.5 million in a Series A funding round. The platform had previously raised $1.6 million, and aimed to raise $2.5 million through this most recent round of funding. But due to huge investor demand the round was opened up to additional investment and finished up oversubscribed at $3.5 million.

The money will be used to continue the platform’s growth in funding companies from the tech, digital, and entertainment sectors – which comprise Crowdfunder’s core areas of interest. The financing was secured from “a combination of VC funds, notable investors like Tim Draper, and a crowd of individual accredited investors”.

William Quigley, Managing Director of Clearstone Venture Partners – one of the main participants in the funding round, commented:

“Crowdfunder is a terrific resource for time strapped entrepreneurs. In a matter of weeks, a start-up can fill its coffers with the capital it needs to build and launch a new product or service.”

“In a matter of minutes I am able to identify the best new business concepts and most talented entrepreneurs who fit my investment profile.”

Crowdfunder is one of the leading equity crowdfunding platforms in the US and assisted the government with the writing of the JOBS act.

The platform boasts a network of over 70,000 ‘crowdfunders’. It’s not clear how many of these are accredited. Some retail investors may have signed up for interest in order to wait for Title III of the JOBS Act to come into effect.

Crowdfunder actively engages with companies who have already raised money via rewards-based crowdfunding, through websites such as Kickstarter or Indiegogo. The platform is targeting companies that want to raise more funds in a way that allows them to continually re-engage with investors.

To this point the platform has posted a towering average deal size of $1.6 million. SEC regulations – which currently permit only institutions and accredited investors to invest via equity-based platforms – have probably played a part in driving up that average fundraise. It has to be a big ticket deal to lure the institutions.

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