What kind of companies are applying for Equity Crowdfunding?
Some of the most interesting and surprising startups raising funds and their success may surprise you. Venture Capital firms are raising money via Reg CF, why aren't you?
What kind of companies are applying for Equity Crowdfunding?
On average, I review 80-100 applications a month of companies that seek to engage in our help in creating and managing their equity crowdfunding campaign. Of those, about 40-50% are scheduled for a call and of those we only choose to engage with about 12%.
Our criteria will be covered in another entry. I want to share the diverse, smart, simple, and intense founders that are looking at Reg CF for raising capital.
Let’s begin by looking at Sircles, “The Social Recommendations App Designed To Destroy Yelp!”. In fact that’s the bold headline of their current campaign which has raised $1,158,440 so far, and taking the #SharingIsCaring hashtag to new levels.
A positive review site for friends to make recommendations on restaurants, entertainment and small businesses to a user’s circle of friends, the company sees itself as an alternative to Yelp because it doesn’t allow for reviews, only recommendations. The premise of Sircles is that it is inherently positive, because users only recommend businesses they like.
Rentberry was one of much talked about companies in 2020 raising funds via equity crowdfunding. A blockchain long-term rental platform where transparency is key with rental applications, price negotiations, security deposits, and maintenance requests are all out in the open for renters, agents and landlords. The most intriguing feature of all, is the price negotiation uniting tenants and landlords .
Think of it as “eBay for property rental” Truly innovative and raised $1.9M+ (before increase regulations allowing companies to raise up to $5M)
Now comes the companies that I’ve met with, some of which have become clients and will be launching soon, and some were just not ready yet. (Names of companies will not be revealed)
There’s the founder who has has technology that is being used in Europe to help self driving cars have a more accurate 360° view, an actual Indy racing team with a unique brand, a nursing product loved by mothers, and the latest and greatest way of producing and storing solar energy.
These companies are not all tech-based or even early stage startups.
One company is focusing on the little guy, the small and medium size businesses that find it difficult to stand above the noise on the larger online networking platforms and are going against the grain by not monetizing with advertising. Another found it frustrating to keep his Airbnbs clean after each visit and the cleaning companies didn’t understand the needs of short terms rentals. So, he created his own company to service this community.
Air-purifiers, gender neutral clothing lines, specialty yogurt products, a movie that is currently casting well-known actors for roles, and a way to construct buildings out of bamboo material are the ideas and businesses that come my way. And the most common question I am asked is;
What do you think about our business and do you think it can raise $1 - $5 million?
My answer is always the same.
It doesn’t matter what I think and there is no way to tell if your company will be successful in raising capital this way.
What matters is what the investors of the crowd think. And by crafting a compelling narrative of your company’s story, creating a campaign page that simply reveals why your company would be a good investment, and a few other criteria and data-driven strategies, there is a higher percentage of being able to raise the funds you need.
A perfect example of this is Clics, a company that automates mixing hair colors for salons. Looking like a Cappuccino machine, Clics help salons reduce cost and waste.
Cool? Not really unless you own a salon.
Functional? Yes. But raising $1.47M+?
The campaign caught the attention of Brian Claypool a nationally regarded civil rights trial attorney turned Angel investor that got him to invest $1 million into Clics via their crowdfunding campaign.
So….get your story straight, make sure you have a compelling business structure and impressive team, then maybe Reg CF is for you.
Venture Capital firms are raising money via Reg CF, why aren't you?
Chisos Capital Management, an investment company for early stage entrepreneurs, has a crowdfunding campaign to invest in idea-stage startups and side-hustle businesses. “The current approach to seed early stage venture capital is exclusionary at best,” said co-founder and CEO William Stringer, adding that it results in a funding gap for entrepreneurs. “Banks aren’t interested in financing young businesses as they require a track record.”Other VC’s have turned to equity crowdfunding as a way to quickly raise funds. Backstage Capital is a Venture Capital firm focused on people of color, women and LGBTQ+ founders and raised the max $5 million shortly after new regulations raised the limit from $1M to $5M in March.
To date, Chisos has received about 400 applications, invested in 10 companies and handed out an average check of $40,000 each. The sweet spot is for checks in the $15,000 to $50,000 range.
Stringer said he came up with the name for Chisos Capital from the Chisos Mountains in Big Bend National Park, located in southwestern Texas along the border with Mexico.
Chisos investments include startups focused on software, health care, music, data analytics, legal productivity software and a virtual fishing app.