In this week’s episode of the Investment Roundtable, Brian, Léa, and Teddy discuss two significant topics shaping the equity crowdfunding space. First, the team analyzes the implications of Honeycomb Credit’s acquisition of Raise Green, a platform focused on climate-related investments. Then, they dive into an exclusive analysis of equity investment distribution across major crowdfunding platforms like StartEngine, WeFunder, Republic, and DealMaker.

Key Insights:

  • Honeycomb Credit’s strategic acquisition of Raise Green and its impact on the impact investing landscape.
  • StartEngine’s rise as the market leader, overtaking WeFunder in equity crowdfunding.
  • The decline of Dalmore’s market share and DealMaker’s rapid growth in the space.
  • How network effects influence platform consolidation in the crowdfunding industry.

 

What does Honeycomb Credit’s acquisition of Raise Green mean for the crowdfunding industry?

Léa Bouhelier-Gautreau: This acquisition positions Honeycomb as a comprehensive impact platform, merging social and environmental investments. With Raise Green’s focus on climate-related deals, Honeycomb expands its ability to cater to investors looking for both social and environmental impact opportunities.

 

What does this mean for Raise Green’s investors?

Brian Belley: Investors on Raise Green should check their email for updates on how their investments will be managed. Typically, acquisitions involve a transfer of ownership to the acquiring platform or a transfer agent, ensuring investments remain secure.

 

What trends were highlighted in the platform market share analysis?

Léa Bouhelier-Gautreau: StartEngine now leads the equity crowdfunding market with 25% market share, overtaking WeFunder. DealMaker grew significantly to 17%, while Dalmore’s share dropped to 8%. Surprisingly, smaller platforms collectively gained market share, holding 12% compared to 5% in 2022.

What factors are driving StartEngine’s growth?

Teddy Lyons: StartEngine has expanded its offerings, including secondary market products for accredited investors, while maintaining strong growth in non-accredited equity crowdfunding. Their ability to diversify offerings has positioned them as a one-stop shop for various investor types.

 

How do network effects influence platform consolidation?

Léa Bouhelier-Gautreau: Platforms with more deals attract more investors, creating a positive feedback loop. This network effect consolidates market power into a few dominant players, similar to social media platforms. However, differentiation in platform strategies ensures smaller platforms can still thrive in specific niches.

 

Why is DealMaker gaining market share so quickly?

Brian Belley: DealMaker’s flexibility allows issuers to customize their raise pages, catering to companies with significant marketing budgets. This approach attracts larger, more established companies, especially those running Regulation A+ campaigns.