November 2017, A Record Month for Equity Crowdfunding

Enabled by the 2012 JOBS Act, Equity Crowdfunding finally became a reality in the U.S. in May of 2016 when title III of the Act was activated. This opened up the potential pool of start-up investors to include non-accredited investors for the first time. With that legislation in place, several portals came online to help start-ups raise money through crowdfunding. Those include MicroVentures, Netcapital, NextSeed, Republic, SeedInvest, StartEngine, truCrowd, and Wefunder. Crowditz tracks every investment transaction across each of these sites weekly, creating an index to understand the state of equity crowdfunding. Each month since we began, the total invested dollars per month has increased. This month (November 2017) appears to be the beginning of an inflection point. Nearly 10 MM dollars were invested through the equity crowdfunding portals, often in increments of as little as $100. If this trajectory continues, crowdfunding will be a big disruptor in the start-up investing industry.

Here’s 5 reasons we’re bullish on equity crowdfunding in 2018:

• Steady increase of investment dollars each month

• Record number of SEC filings this quarter for new companies about to begin crowdfunding

• A near 10 MM dollar month, up from 0 just 18 months ago!

• The breadth of companies continues to grow. We’ve seen medical device companies like Zoi and Yopi, food and beverage companies including 4 Pure and Ceres Greens along with more traditional tech companies such as Yecup and SimpleForms. We’re tracking 17 unique categories of companies, each of which has seen deals in the last 3 months.

• There’s a network effect happening. With each new deal, the company themselves brings their own network to the platform. Once they invest in the company they know, the likelihood of an investment in another company increases. This is going to grow exponentially and we’re starting to see that take shape.

10 MM isn’t a huge number relative to the total seed investments which according to this Pitchbook post showed more than 6.6 billion dollars in seed investments in 2016 but given that this is only in its first 18 months, the 10 MM mark has the arrow pointed in the right direction. Stay tuned to Crowditz to track the growth of equity crowdfunding in 2018, it looks to be an exciting year.