Equity Crowdfunding has been the go-to way for startups to raise money to realize and grow their idea. It works as the founders promote their businesses on various crowdfunding platforms, ask for funds from a large group of people interested in the particular company, and give them the option to contribute a certain amount of money of their choice based on this process.
In this article, we are going to learn more about success stories in equity crowdfunding and what we can learn from them.
Let’s get started.
What is Equity Crowdfunding & Why is it so Popular?
Equity crowdfunding is a type of crowdfunding where businesses can sell shares and equity in the company to investors to raise money. As we reiterate earlier, equity crowdfunding has become quite popular among startups and investors. The reason for this is, unlike any other type of crowdfunding, for example, the one we regularly see on Kickstarter, where we only donate money, and that’s it, whereas equity crowdfunding is a type of investment. Investors can expect to get some return on their investment when the company grows or when they sell their shares back to the company or other investors.
Besides, with traditional venture capital, businesses often have to give up a significant amount of equity (and control) in return for funding. With equity crowdfunding, businesses can keep more control over their company while still raising money from outside investors.
Equity crowdfunding is a way for businesses to connect with a large number of potential investors at once. In the past, companies seeking investment would have to pitch their business to a small group of venture capitalists or angel investors. But with equity crowdfunding, businesses can reach out to thousands or even millions of potential investors through online platforms like Wefunder and SeedInvest.
Apart from that, this type of crowdfunding is becoming more popular because it’s becoming easier to execute it. The 2012 Jumpstart Our Business Startups (JOBS) Act made equity crowdfunding more accessible for companies by relaxing regulations around investment eligibility and amounts. And as more platforms have launched to facilitate equity crowdfunding, businesses have become easier to connect with potential investors.
8 Best Successful Campaigns in Equity Crowdfunding
Revolut is a global neobank and financial technology company that offers banking services. A shining example in the fintech world, Revolut started its journey through equity crowdfunding. In 2016, the London-based startup launched its campaign on Crowdcube, seeking £1 million.
Within ten days, Revolut raised an overwhelming £3.8 million from over 4,000 investors.
Today, the company has over 15 million users worldwide and is valued at approximately $33 billion, making the early crowd investors see a significant return on their investments.
Zenefits is an award-winning HR management system. It serves as an excellent illustration of how an equity crowdfunding platform like WeFunder, can pave the way to more significant achievements.
In 2013, Zenefits secured about $50,000 through the platform, a modest sum that later catalyzed more substantial investments. Following this, the company attracted an additional $483 million in assets — a considerable portion of this capital can be traced back to early initiatives funded by the initial $50,000.
Presently, Zenefits boasts a valuation exceeding $4 billion. This valuation signifies a monumental win for the initial nine investors who contributed through WeFunder and symbolized a triumph for the company itself. Their initial seed funding originated from the community, fitting for a company called “The People Platform.”
A finance company that raised $11 million through two funding rounds on the Republic.co platform. Robinhood is currently valued at $11.7 billion and is owned mainly by major venture capital groups. The company provides commission-free trades of stocks, exchange-traded funds, and cryptocurrencies, as well as individual retirement accounts.
However, it is crucial to remember that equity crowdfunding played a significant role in the journey towards building the empire!
Knightscope, an autonomous security robot company, amassed over $21M in their most recent funding round. This doesn’t even account for the additional $43.5M they had previously garnered through crowdfunding.
While the company has a considerable journey ahead before reaching the colossal stature investors envision, its current valuation is $447M.
Given the increasing shift towards AI learning in various operations, there’s no basis to assume that Knightscope’s expansion will decelerate shortly.
A healthcare company that raised over $3 million on SeedInvest. HelloMD aims to build the largest marketplace for cannabis consumers, a promising venture considering the cannabis industry’s revenue forecast of $84 billion by 2028.
SeedInvest may not be as frequently mentioned as other equity crowdfunding platforms, yet HelloMD is a testament to the dynamic activities unfolding within the sector.
An art collective that raised $1.32 million on WeFunder. Meow Wolf creates immersive themed entertainment spaces across the U.S.
Meow Wolf had an excellent business strategy, fully justifying the funding they received. However, this demonstrates that the tech industry isn’t the only one making strides.
A wealth of innovation is occurring across various sectors, and investors on crowdfunding platforms are ready and willing to support these ventures!
Investors on the equity crowdfunding platform OurCrowd managed to secure shares in Uber through a unique circumstance. They were early investors in JUMP, an electric bike-sharing firm, which Uber later acquired. This acquisition allowed OurCrowd to triple its position in Uber, leading to significant returns during Uber’s IPO in May 2019.
Equity crowdfunding is making waves in Australia as well. Jayride, an Australian transfer comparison website, secured around A$665,000 in funding across three raises on the equity crowdfunding website VentureCrowd. Following a A$1.5 million IPO in 2018, the company was listed on the Australian Securities Exchange (ASX), providing investors with their first opportunity for a successful exit.
Equity crowdfunding is an exciting and increasingly popular method of raising capital that has the potential to democratize investment opportunities and fuel innovation and growth. The success stories highlighted in this article testify to its potential and provide valuable lessons for both businesses considering this form of fundraising and potential investors.
The appeal of equity crowdfunding lies in its potential for high returns and the opportunity it provides for investors to participate in a company’s growth journey.
These stories underscore the potential of equity crowdfunding as a viable and effective fundraising strategy. They also highlight the importance of a strong business plan and the ability to effectively communicate a company’s vision and potential to a broad audience of potential investors.
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