2,790 crowdsourcing and crowdfunding sites
Equity-based crowdfunding is hardly a new phenomenon. ASSOB, an equity-based platform based in Australia, launched in 2005 and has helped secure funding for nearly 200 companies, 86 percent of which are still around today. There are several other equity-based platforms in operation, including SEEDUPS, Crowdcube and Symbid. None of them operate in the United States, however, because until recently U.S. securities laws prohibited equity-based crowdfunding. But on April 5, President Obama signed the JOBS Act, which will legalize equity-based crowdfunding in the United States in early 2013.
Why the delay? The SEC needs time to interpret the Act and clarify the rules and regulations that will govern this burgeoning financial industry. But that hasn’t stopped a fresh collection of crowdfunding platforms, each with the intention of becoming the Kickstarter of equity, from preemptively emerging to fill the U.S. void. Here are four recently launched platforms worth watching.
The Los Angeles-based crowdfunder, which launched a few days ago, is encouraging entrepreneurs and companies to set up a “fundraising profile” now and start acquiring support from angels, VCs and plain-old crowdfunders. If startups begin to network now, the thinking goes, they’ll be able to raise the most capital when the starting gun fires. Until the JOBS Act’s crowdfunding exemption goes into effect, however, crowdfunder plans to hold contests in which startups compete for cash prizes — and, of course, the attention of the crowd. The site’s Crowdstart LA contest, which focuses on the Los Angeles startup scene, is underway now and offers a $25,000 grand prize. To learn more about the platform, check out our recent discussion with crowdfunder co-founder and CEO Chance Barnett.
Based in Columbus, Ohio, Fundable combines the “classic” crowdfunding model — that is, the pledge-based model used by Kickstarter and its ilk — with equity crowdfunding for investors, which will come into fruition as soon as the SEC implements the JOBS Act’s crowdfunding exemption. Interestingly, equity-based crowdfunding wasn’t even on Fundable’s radar until Congress approved the JOBS Act in late March. While merging the two models has the obvious benefit of allowing the site to begin effective operation now, Fundable co-founder and CEO Wil Schroter thinks offering both has additional benefits, too. Offering rewards over equity makes more sense for consumer product businesses, he recently told Betakit.
Headquartered in San Diego, START.ac claims to improve on the crowdfunding status quo in 10 distinct ways. Notably, the platform plans to integrate a mentor program, ensuring “project drivers” will receive assistance from experienced executives and entrepreneurs. START.ac will also have a “PayItForward Fund,” allowing its crowd to select and donate to specific altruistic causes. The site’s “Prompt Pay Program” — which promises to pay project drivers as soon as they reach their funding goals — seems a bit problematic, however, given that the SEC will require a significant “cooling off” period after a crowdfunded business closes a funding round. This window will give the platform, its crowd and regulatory bodies some time to detect fraud or other mendacious behavior — and may require START.ac to cut its promised quick-pay feature.
PeoplesVC, which operates out of Peterborough, New Hampshire, opened its digital doors last week. In spite of its website, which looks like it was cobbled together in the late 1990s, the company announced “better-than-expected” results following its launch. Sure, PeoplesVC is an underdog, but it has plenty of time to get its act together before the new law goes into effect. When Kickstarter launched in 2009, it was also an underdog (to the then-dominant IndieGoGo).
We know one thing for sure: next year will be a momentous time for the crowdfunding industry at large.