5 More Actionable Facts to help Strategize using Regulation CF (aka Crowdfunding)

Regulation CF - Crowdfunding5 More Actionable Facts to help Strategize using Regulation CF (aka Crowdfunding)

Since my October 7 post on LinkedIn Pulse, “7 Actionable Facts About Equity Crowdfunding to Raise Capital in the U.S.”, the funding raised by Regulation CF crowdfunding has accelerated further.

As of October 11, 2016, investors funded 40 companies in Regulation CF offerings in the U.S., with a total of $9,168,519 invested. This is the total invested into companies that reached their minimum funding target.

Here’s some interesting stats from Wefunder, the leading Regulation CF portal: There was only 6,963 unique Regulation CF investors, with 75% investing less than $500 per deal and 31% invested exactly $100 per deal. Since Wefunder received $7,168,489 in total commitments, each investor on the average invested $1,030. This implies that each investor invested in three to ten companies. Investors are going to the site and creating a small portfolio out of the companies they find there. This increases the opportunity for offering companies that list their offers before the marketplace gets too crowded.

Here’s the latest 5 Actionable Facts to help you strategize:

  1. 64% of companies who have attempted a Regulation CF raise so far have reached their minimum targets. This will rise. The percentage of successes will also be under downward pressure as more companies open their offers. Now’s the time to get started before the market is flush with competing offers.
  2. Of that, 72% of the companies were listed on Wefunder.com, and 76% of the dollars were raised on Wefunder.com. There are three companies that raised $1 Million already, an artificial pancreas, a Hollywood studio, and a brewery. All funded on Wefunder. Wefunder remains the leader.
  3. Nextseed.com and Startengine.com moving up on the rail. Nextseed accounted for 12% of the companies funded and 12% of the dollars. Startengine accounted for 8% of the companies funded and 10% of the dollars. Since Nextseed.com and Startengine.com have begun to move up in the rankings, it’s worth it to check out what they may be offering to compete with Wefunder.com.
  4. Also interesting is 74% of the successful offers were equity offers, and the remaining were debt offers. Debt offers would include revenue-sharing contracts (“revenue royalties”) but we don’t have stats on how many revenue-sharing contracts were funded. In any case, you can use Regulation CF to raise funds through debt or revenue sharing as well as equity.
  5. The range of company types that succeed in Regulation CF offers continues to expand. As of today, here’s the list:
  • Outdoor equipment – 3
  • Fitness supplies and services – 2
  • Education -1
  • Liquor – 8
  • Hospitality (restaurants and hotels) – 3
  • Consumer Tech – 6
  • Other consumer products and services – 5
  • Business Tech – 3
  • Other business products and services – 3
  • Biotech – 2
  • Funds – 2
  • Other – 2

Liquor startups account for 8 out of 40, and tech does not dominate with a total of 9 companies serving both businesses and consumers.

The takeaway here is; if the public can understand your business, Regulation CF can be used providing you can get your business, project or idea started with less than $1,000,000.

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