Equity crowdfunding firm dumps seed & startups for safer middle-market deals

By Lisa Walls-Hester on Thursday 13 April 2017

Savings and Investment

Growth equity is much more enticing than a hope and a prayer

Crowdfund.co announces a strategic move away from the seed and startup capital world to focus more heavily on post-revenue and more profitable companies in the middle market.

It’s a trend across all the major platforms. Startups are increasingly hard to find as the platforms prefer to work with companies with proven concepts and successfully trading businesses.

Crowdfund.co says the move away from startups is due in part to the overall malaise seen in debt and equity crowdfunding and was motivated by several internal factors at the firm.

First is the higher risk factor attached to startups. Second, it says growth equity is much more enticing than a hope and a prayer. Finally, the firm’s founders also recognize that crowdfunding has not fully matured as rapidly as many had anticipated. This general market malaise has created some hesitancy on the part of both investors and entrepreneurs alike.

Principal of Deal Capital Partners and Crowdfund.co, Nate Nead said: “There are plenty of opportunities in the middle-market with boring, steady-state product and services businesses. Many steady, growing and profitable companies still require debt and equity capital infusions and equity crowdfunding and be a means of filling a much-needed gap in the market.”

"If you look at the areas where equity crowdfunding is most succeeding, you will notice a couple of key features," Carl Christensen, VP of Corporate Strategy says. "First, most of the deals are either fully-baked with a quality team. You cannot expect to fund by just posting to a crowdfunding website and praying," he says. "Second, many of the best deals either have history, revenues, cashflow or they are collateralized by some asset e.g. real estate or equipment. 

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