One of the major goals of online startup investing is to make this asset class accessible. For decades, only wealthy angel investors and venture capitalists (VCs) could fund startups. But when equity crowdfunding went live in 2016, that finally changed. However, it’s important that we continue to monitor the accessibility of the online private market. And looking at the breakdown of investment minimums — the smallest amount of money an investor can commit to a raise — is a good way of doing that. (Note: we based our assessment of “top platform” on this Chart of the Week from October where we identified the platforms with the highest deal flow in 2022 to date.)
There is no mandatory investment minimum that raises must have, so there is quite a range of amounts across platforms and raises. ChipBrain on Netcapital, for example, gives investors the option to invest by buying a single share for just $4.74. On the other end of the spectrum are raises like Naqi Logix with minimums of $1,500. Overall, the average investment minimum across the 880 raises these platforms have hosted in 2022 is $216.
Breaking these minimums down across the most popular platforms tells an interesting story. Wefunder had the most deals with minimums at or below $100 (it also had the most deals in general). Wefunder’s value proposition — “angel investing for everyone” — certainly holds up when you consider the number of deals the platform hosts with low barriers to entry. Wefunder tends to focus on early stage startups pursuing Regulation Crowdfunding (Reg CF) raises. And that helps with offering low investment minimums. Startups looking to raise $5 million or less may be more comfortable with receiving many small investments than companies looking for much greater funding. Some startups also use Reg CF rounds as a kind of marketing effort, so again, small checks would hold appeal.
Like Wefunder, many of the deals on Republic and Netcapital have minimums around $100. StartEngine and Dalmore Group stand out because the majority of their deals have investment minimums of $250 or more. But this isn’t too surprising, considering that both platforms host a number of Regulation A (Reg A) deals. Startups tend to use Reg A raises to receive large amounts of capital from a combination of accredited and nonaccredited investors. Requiring larger checks could make achieving these large raise goals — which often range between $10 million to $50 million — more doable.
This data is a good reminder that not all platforms are created equal. Like the startups that I regularly evaluate, platforms have their own ways of differentiating amongst competition. For some platforms, accessibility is paramount. For others, more mature companies that want to bring in larger checks are a focal point. If you’ve planned your investment strategy with set initial checks in mind, then seeing how investment minimums vary across platforms can help you identify where you’re most likely to find deals that fit your strategy. The KingsCrowd Companies Search tool also makes it easy to filter deals by investment minimum (as well as regulation type, industry, platform, and lots more).
Perhaps most importantly, this data proves that the promise of accessibility in online startup investing remains strong. Nearly 700 of the 880 deals in this data had investment minimums of $250 or less! It’s good to see that after nearly seven years of online startup investing, the goals of democratization and accessibility haven’t been lost as the market grew.
Note: All data on online startup investing used for the Chart of the Week comes from the KingsCrowd database and represents a snapshot of the US crowdfunding market.
Platform is defined here as the SEC-registered intermediary (broker-dealer or funding portal), or if none, the primary non-broker or non-funding portal platform conducting the offering.
Olivia is a member of the Republic Venture Fellows and Associates 2022 cohort. The purpose of the program is give participants the opportunity to learn venture fundamentals from a variety of speakers and to get hands-on experience sourcing deals and performing due diligence. Her participation in the program is in no way an endorsement of the Republic platform or KingsCrowd-rated deals on the Republic platform.
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About: Olivia Strobl
Olivia comes to KingsCrowd with a background in venture capital and technology. She spent time at Glasswing Ventures, an AI-focused venture fund in Boston, before joining the KingsCrowd team. There she helped develop machine learning algorithms for the opportunity qualification of preseed and seed-stage startup companies. Prior to her time at Glasswing, Olivia worked in a lab studying the neural correlates of attention. She holds a degree in Neuroscience from Wellesley College.