Fundraising · Crowdfunding

What are the best equity crowdfunding platforms?

Benji Decker Entrepreneur. Developer. Trouble maker.

August 26th, 2014

We're trying to do some fundraising for our startup, and I came across this helpful article about several of the prominent alternatives:
http://quickbooks.intuit.com/r/money/4-online-platforms-for-raising-startup-capital/

Of these options, Fundable seems like the most impressive... but trying to decide if it's worth the $299/mo?  Are there other options that may be better?

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Steve Sheehan Founder at launchU

August 29th, 2014

Crowdfunding, especially for a startup, is unique to each individual and company. 

Most crowdfunding platforms, at least the more established and popular ones, have essentially become preordering platforms. Without the promise of a product of reward, you will find a hard time raising money in the viral fashion a lot of them want you to believe is a probable outcome.

The key is to be on a platform that best represents your company  and has an audience of contributors who align with your current position and value proposal.

Kickstarter, Indiegogo, and Tilt open are good if you have a product you can distribute soon after raising your funds. They fall under the preordering type of platform. 

If you are a startup working on your product (could be tangible, could not) and don't plan on having physical rewards and packages to offer contributors in a timely manner, those type of platforms will do you little good unless you have deep connections and a preexisting group of supporters. In fact, a lot of crowdfunding platforms won't even let you participate unless you can offer a product, service, or good in exchange for contributions.

Offering equity is an entirely different form of crowdfunding. You'll want to use a platform like fundable. Even angellist has features that resemble crowdfunfing, although not in the traditional sense. These platforms have an audience of contributors who are looking for investments, not just a way to preorder a product you may or may not be ready to deliver. 

There will be costs associated with both types of platforms, whether it's a monthly fee or commission from the funds you raise. But ultimately from a crowdfunding site, you want to choose the values and mindset of the inherent contributing audience. And that will outweigh any cost of participation because it will ultimately determine your success. 


Mark Devlin CEO of Newslines

August 29th, 2014

EquityNet, was very poor. I got no contacts. They subscribed me to an extra month and wouldn't refund me, even though I only used part of it. They force companies to use their proprietary business plan format, which takes ages to fill out, and is, IMHO, a security risk.

Crowfunder looks slick, but when you look closer there are very few deals actually that are actively raising funding, and those don't appear to have actually raised anything using the site. Don't be fooled by high-profile investments they say they have done. Those needs tons of external PR to work.

SeedInvest rejected my application because they didn't like my business model! That was after the founder pinged me on Twitter. They wasted hours of my time.

Gust is just a place to put your documents.

AngelList only appears to work if you are already in the club, or if you have generated a lot of PR.

Fundable looks like it will work best with actual products. It's not clear whether projects that are marked as "funded" were actually funded through Fundable. When you click on "Funded", only a few seem to have used their system, and those are Kickstarter-like products.

All of these will work better if you already have generated a lot of PR or have a strong userbase who is also willing to invest.

Mark Devlin CEO of Newslines

August 29th, 2014

Benji: I am interested in how you get on with Fundable. I think it is important for you to get actual examples from them of companies that have actually been funded through their equity program before you spend all that money.

Rob PhD Cofounder at AgFunder

August 29th, 2014

As the CEO of AgFunder, I'm going to be totally biased and ad AgFunder to the list. Since Feb 2014, listed companies have raised and closed over $5.3M and our members have over $700M in investable capital. However, I'm going to assume you don't have an ag or agtech startup, so here's my thoughts:

AngelList
> More of a directory for identifying investors. It's worth it to keep your AL profile up to date as investors will often reach out. It can also be a great source for identifying investors.

CircleUp
> Focused on consumer packaged goods. Unlike AngelList which has a lot of noise, these are curated opportunities and investors will be more active

SeedInvest
> I've met their CEO Ryan Feit once, they're doing a good job with execution.

OurCrowd
> Focused on Israeli startups, but they seem to be able to marshal capital around these opportunities.

FundersClub
> You'll likely need to be coming out of Y-Combinator or 500 Startups, otherwise forget it.

Realty Mogul
> I'm guessing you're not working on real estate, but if you are, Jillian and the team there are killing it. This has the potential to be Lending Club II.









Steve Sheehan Founder at launchU

August 30th, 2014

Mr. Allen- it is dependent on the nature of the product you are offering, but an excepted delivery date that exceeds a year may be too long. At least from the standpoint of a casual contributor. It is not uncommon for companies or campaign creators to delay the delivery of rewards-up to 4-6 months from when it was initially stated is a timeframe that is regularly experienced. 

The problem with reward-based crowdfunding is that your contributors become customers. That has a lot of positive implications if you are confident in the delivery of your product and just need to raise the capital to deliver it to the market. But as expected, certain situations occur where your delivery is delayed, and it can have a negative impact on your business and your customers' perception of your business. If it is not handled properly, it can become a nightmare.

The key is to be in constant contact with your contributors. Make them aware of where you are, problems you are facing, and being transparent about the process. These are your early adopters, so you want to be honest and straightforward with them. 



Benji Decker Entrepreneur. Developer. Trouble maker.

August 29th, 2014

Thanks so much for your great feedback!  

Mark, your assessment in particular seems spot on -- thanks so much for your impressions.  We actually had the same experience with SeedInvest... they dicked us around a ton, made us spend a bunch of time and resources, and then refused to even let us do anything last minute.

I've been talking with the Fundable folks, and at this point, and I think may actually be leaning toward doing their premium package?  It costs $1800, which isn't nothing obviously, although it does seem to come with a lot of resources, including hands on support with finding PR outlets and investor leads.

Gonna reach out to some sample clients on their platform and get their impressions... will report back with findings!

Megs Shah Founder and CEO at Kidhoo.co

August 29th, 2014

Wow, thanks for sharing your experiences with seedinvest, I was going to start my fundraiser there but after reading this will reconsider! 

Andrew Bloch Founder of LabVegas

August 29th, 2014

Check out http://crowdfunder.com. Neil Young's startup PonoMusic is raising more money there than they got in Kickstarter preorders.

(Disclaimer: I'm a small investor in crowdfunder.)

S. McIntire Allen

August 30th, 2014

Any experiences or feedback on https://www.headfunder.com?

Eugene Gekhter CEO, Memorable. Founder, SharePay.

August 26th, 2014

Try tilt.com.
They have an API which allows you to host the entire process on your own website's domain, making it uber-cool.