Crowdfunding has been around since 2008 with the launch of indiegogo, followed by Kickstarter which launched in 2009.
The early crowdfunding websites offered users free perks, and goods in exchange for funding their business venture. Most of these start-ups fizzled out after a few months but some of these were widely successful. One of the most notable success stories is the virtual reality headset Oculus which raised over $2.4 million on Kickstarter in a campaign that also caught the attention of Mark Zuckerberg. Shortly thereafter Oculus was acquired by Facebook for $3B. This was a monumental acquisition for a start-up with a great vision and zero profits.
Unfortunately, while the Facebook acquisition of Oculus was life changing for the Oculus team, the early backers of the project on Kickstarter received nothing, as no equity was offered for their initial backing of this project.
In 2012 the JOBS Act passed which opened the doors to crowdfunding websites offering early investors equity. Now investors from all over the world have the opportunity to support start-ups who are too small to access traditional venture funding.
These equity crowdfunding websites serve an important purpose as they are directly responsible for nurturing entrepreneurs while offering investment opportunities to investors who are not based in Silicon Valley.
Below are in my opinion the top 5 equity crowdfunding websites. As a disclaimer, I’m an equity owner in 3 of the companies listed below (WeFunder, Microventures, StartEngine).
#1 – SeedInvest
SeedInvest differentiates themselves by focusing on only having handpicked start-ups in upcoming industries. If you want to invest in the future of tech this is one of your best options. The industries that are often featured include:
- Augmented Reality
- 3d Printing
- Artificial Intelligence
- Robotics
- Space Technologies
They’ve helped over 150 companies raise capital, and the team is great at filtering out most companies that apply, to offer investors a curated list of world class companies to invest in.
#2 – Microventures
This website is different than the rest of this list as they offer two different focuses and they target accredited investors only.
The main focus is on Late Stage companies. Some of the late stage companies which have been featured include:
- SpaceX
- LYft
- Honest Company
- Robinhood
This offers the easiest possible route to investing in phenomenal late stage companies which are often only a few years away from going IPO. The minimum investment is often in the $5000 to $50000 range, with the minimum depending on the interest level and the company.
They also offer investment opportunities in Early Stage companies with minimum investments in the $3000 to $5000 range. These companies are often in Fintech, robotics, 3-D printing, etc. The quality of these Early-Stage companies is high and is also handpicked.
#3 – WeFunder
They were responsible for helping to write the JOBS Act, and are one of the oldest companies in the crowdfunding space. There’s been some huge success stories on this website.
In April 2013 Zenefits raised at a $9M valuation, and only 2 years later in May 2015 they raised an additional $500M and were valued at $4.5B. This means if you had invested $10000, you would have received a cool return of $500,000 in a 2 year period.
WeFunder came out of the Y Combinator accelerator program, which is the most famous and successful accelerator program in the world. Some success stories from here include AirBNB, DropBox, Stripe, coinbase, etc.
The reason this is important is that Y Combinator companies support each other in what is a giant ecosystem. Many of the start-ups on WeFunder are Y Combinator graduates (such as Zenefits).
#4 – Fundable
One of the oldest platforms on this list, Fundable launched on May 22, 2012. Since then they have been offering access to a notable list of companies in every industry that you can conceive of. I’ve seen everything from solar power fields to revolutionary 3D printed prosthetics.
Fundable is a crowdfunding website which offers an extensive live of companies to choose from.
#5 – StartEngine
Over 90M has been raised by 265+ companies. They even recently successfully raised a$10M STO for themselves.
While this is a great platform they are not as selective as the rest of the equity crowdfunding websites on this list, so you do have to be more careful and perform extreme due diligence in who you invest in. That being said there are some gems to be found. Hackernoon recently successfully completed a $1.07M raise. I do find that they have too many companies listed, which makes perusing the list a bit exhausting.
Summary:
These are the top 5 crowdfunding websites which I believe offer investors the best access to investment opportunities. You should always perform proper due diligence, and understand that Early Stage investing is high risk, and that you are more likely than not to lose access to all of your capital. You should also expect that it takes 7 to 10 years to earn a return on any of these investments.
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