Crowdfunder, the Venice-based crowdfunding platform which helps to connect entrepreneurs and investors, particularly in the area of local investment, has raised an additional million in seed funding, the company is announcing today. The funds will help the company further expand its activities outside the U.S., as well as continue development of its subscription-based fundraising and marketing platform for entrepreneurs.
Participating in the round were 500 Startups / 500 Mexico, Rob Nail (CEO of Singularity University), K5 Ventures, Ben Goldhirsh (CEO of GOOD), Sharon Chang (CEO of Yoxi), a Banamex Director (a small business bank in Mexico), and other U.S. and Latin American individual investors.
The company says this brings its total raise to date to just under $2 million.
Founded in 2011, and launched the following spring, Crowdfunder’s initial focus was on making connections between startups, small businesses, and other for-profit enterprises through local events. While still an ongoing focus today, changes to the regulatory environment around six months allowed the platform to open up more broadly to accredited investors.
Specifically, the SEC issued “No-Action” letters, plus Crowdfunder benefitted from Title 2 of the JOBS Act, which allows companies to now publicly solicit funding.
Since then, Crowdfunder has funded 13 deals in the seed and Series A stage, with an average deal size of about $1.2 million. The majority of those are tech startups, but others are social enterprises and small businesses. To date, $55 million in investment deal flow has come through Crowdfunder, the company says.
Today, Crowdfunder has seen 40,000 entrepreneurs and investors on its platform, which includes 7,000 companies who have signed up, some of which have converted to paying accounts. A smaller portion of these accounts are active at present, as the companies generally pay the premium during their active fundraising process. Instead of taking a percentage of the funds raised, Crowdfunder instead charges companies a flat fee based on how much they’re raising, and other factors, like whether or not they want a featured position on the site.
Its packages start at $99/month and go up to $999/month, the latter which is more typically used by those funding their Series A. Thanks to the new investment, the plan is now introduce an additional tier to this service which will better centralize the fundraising process for entrepreneurs into more of a CRM system, by allowing them to tap into their social networks, and pull in their Gmail contacts to help figure out who you know who’s also an accredited investor.
Like competitor AngelList offers via its Syndicates, Crowdfunder also offers a way for individuals to invest smaller amounts into larger entities which then, in turn, invest in a given company or companies. On Crowdfunder, these are called “Microfunds,” and there are today just a small handful of these operating, but according to CEO Chance Barnett another 40 are in evaluation.
Crowfunder’s round comes at a time when the online fundraising process is going through radical shifts, thanks to new regulations. Others like FundersClub and WeFunder, have benefitted as well, while consumer-facing platforms like Kickstarter, Crowdtilt and Indiegogo have brought more attention to the crowdfunding industry as a whole. (The latter two, of course, having recently raised significant rounds of their own). And of course, when it comes to tech startups in particular, AngelList is becoming the platform to beat, it seems.
Barnett explains where he sees Crowdfunder fitting into this larger arena, saying, “we found a sweet spot between the $300,000 and $2.5 million range. Quite a few people have already been on AngelList who were able to come to Crowdfunder and accelerate and get traction.” The reason, in part, is because of Crowdfunder’s network of more local investors.
The company supports independently run local events – like a “pitch contest in a box” – which take place on Crowdfunder. And it co-leads larger events under the CROWDFUNDx brand. For example, CROWDFUNDxWomen or CROWDIMPACT. Last year, it ran 7 events like this, each which saw an average of 2,500 online participants join.
This ability to tie into the local scene has enabled the company’s move into Mexico more recently, where it has actually received grant funding from the government. “There’s been an even stronger need for an online network to help fund those,” says Barnett of the deals taking place in Mexico. “On both sides of the marketplace, there’s been really rapid adoption that’s probably a lot faster than what we’ve seen in L.A. because there’s no one doing this in the same way there,” he explains.
Going forward, the plan is to now expand Crowdfunder further, heading into Latin America. Barnett says partners have applied from over 14 countries, and Crowdfunder will expand into three or four over the next several quarters.
The company, which has a team of 12 in the U.S. and 4 in Mexico, is also planning to double in size over the next 6 months, he adds. And when Title 3 of the JOBS Act goes live - the one which would allow anyone to invest – Barnett says his platform will be ready.
Correction: 7,000 companies have signed up for profiles. Not all converted to paying accounts as an earlier mistyped portion of this article implied. The article has been updated for accuracy.