SeedInvest, the equity crowdfunding platform based in New York that helps other startups (like Vengo Labs) raise rounds, is today launching a campaign on its own platform to complete an intended $3 million Series A round. The startup has already had $2 million committed from VCs Scout Ventures, Great Oaks Venture Capital, Avenue A Ventures, Archer Gray and Krillion Ventures.
The funding will be used to expand the kinds of services that SeedInvest offers both to startups and investors, and comes in advance of a change later this year, courtesy of the JOBS Act, where non-accredited investors will also be able to make investments on the platform. “As soon as the final portion of the JOBS Act kicks-in, we will open SeedInvest to 240 million Americans who will be able to invest in startup companies for the very first time,” Ryan Feit, CEO and co-founder of SeedInvest, said in a statement. Feit tells me that the fundraise “will enable us to grow our team in order to support our rapidly growing investor base.” SeedInvest aims to double its employee base over the next six months.
There have been a number of crowdfunding platforms for startups that have sprouted up in the wake of the JOBS Act, with others including AngelList and InvestPrive in Europe (which played a part in AdQuantic raising money prior to selling to Criteo, from what we understand).
The features that Feit says differentiates SeedInvest from the others is that many rivals keep 20% of any returns through carried interest, while SeedInvest is completely free for investors. SeedInvest was founded by former professional investors and “we choose only the best quality startups to crowdfund through our platform,” Feit tells me. “Historically, just 3% of all companies that have applied to raise capital on SeedInvest have been published for fundraising.” He says that these differences allows SeedInvest “to attract larger, more sophisticated investors, as evidenced by an average check size of $23,000 last month and investments as large as $550,000.”
Since opening for business in February 2013, SeedInvest has reported $1 million in backing for itself, and helped startups raise $15 million in total, although it claims a much more lofty $128 million+ in “collective investor interest,” which I believe refers to how much money potentially there is for investment on the platform, given the right opportunities. It makes money from offering more premium services for startups listing on the platform, as well as investors investing in it; Feit hasn’t broken down for me how many typically take premium services from SeedInvest today. A typical month, say March, saw 60 investments made on the platform, with the number growing 350% in the first quarter of this year over a year ago.
Feit says that to help vet both startups and investors, especially as its net widens later this year, SeedInvest will conduct “background and bad-actor checks on all issuers to ensure they are legit.” Each company will require a “substantial amount of detailed disclosure.”
As part of this round, Bradley Harrison, managing partner at Scout Ventures, is joining SeedInvest’s board. “SeedInvest has both the right team and vision to capitalize on one of the largest shifts of economic power to retail investors that we have experienced in our lifetime,” he said in a statement. “Their results clearly prove that they are addressing a huge problem for both investors and entrepreneurs.”
More on the company in this video.