Title IV Regulation A+ allows companies to raise up to $50 million per year, a process that many people refer to as “Mini-I.P.O.” Ever since the SEC announced exemptions and leverages in Regulation A+, we have been witnessing new crowdfunding platforms eager to take a plunge in the vast money pile like uncle scrooge. But it is crucial to figure out which one will help the startups reach out to the right community and get meaningful funding. We have picked top 10 crowdfunding sites with different models and focuses:
SeedInvest was established in 2011 in New York before President Barack Obama signed the JOBS ACT in 2012. The focus area of this platform is tech and consumer-facing businesses. SeedInvest is very selective when it comes to accepting issuers, as only 1% of the startups that apply to the platform are taken. The minimum investment starts at $500, and international investors are welcome. Issuers are charged 2% of the fund raised with an upper capping of $300. What is more interesting is that the fee is refunded if the fundraising goal is not achieved.
Cloudraise® by EquityTrack is in demand now as it provides a secure, standard gateway to companies conducting crowdfunding offerings on their own website without taking a percentage but a low monthly fee with no contract. Issuers are in complete control of their crowdfunding campaigns with services such as subscription, offering documents, compliance and AML checks, payment processing and even share issuance through a transfer agent – everything from start to finish is automated. Cloudraise® cost-effective and provides flexibility along with a staff with 30+ years of industry experience.
Manhattan Street Capital: Manhattan Street Capital was launched in 2015 in the Greater San Diego Area as Fund Athena. Manhattan Street Capital is now a crowdfunding platform, and Fund Athena provides services to businesses led by women. The platform caters to mid-stage and mature startups in real estate, IoT, biotechnology, blockchain, and global warming, among many others. The offerings on Manhattan Street Capital are free for investors and are open worldwide. For issuers, there is a constant fee of $25 per investment irrespective of the investment amount and the capital raise’s size. This fee is an obligation of the issuing company regardless of the success or failure of the offering. International issuers are allowed to raise capital if they have headquarters in the USA or Canada.
TruCrowd was founded in 2013 in Texas, USA, with headquarters in the Greater Chicago Area. The platform accepts international investments and is free for all. Although the Minimum Investment starts at $100, TruCrowd gives the issuer’s option to set their minimum investment and reject unwanted investors. This platform is open to all startups, including technology, entertainment, food, and transportation incorporated in any US State or District of Columbia. In case the issuer is unable to reach its funding goal, the offering expires, and the investment amount is refunded to the investors. TruCrowd Services, LLC recently joined hands with top-ten registered securities crowdfunding portals and TruCrowd, Inc. (“TCI”), to launch the ‘Keep The Light On’ campaign focused on bringing money to small businesses impacted by COVID-19. TCI and TCS have also waived all upfront fees for small companies and agreed to bill all future invoices at a discounted rate. Trucrowd also runs the cannabis led-portal Fundanna.
Wefunder was launched in 2012 and is proud to have helped Congress pass the JOBS Act. This platform covers almost every niche, and the minimum investment starts at $100. International investments are accepted but are charged a service fee between 3.5%-2%. Wefunder is the only platform to have internal Investor Clubs to benefit part-time investors to combine their investments with experienced and professional investors. Only US-based issuers can join the forum and are charged flat 7.5% if the funding is successful. At the time of writing this article, 438 startups have been funded with over $159.5 million investment.
Banq was founded in 2015 in New York and is a division of Cambria Capital, LLC, a FINRA/ SIPC member. There is an advantage with this platform as it raises funds on its own. Non-US citizens can invest using the Escrow Option. The platform has rich experience in structuring and placing public equity, private investments in public equity (PIPEs), private equity, and debt financing. The listing fee is charged from the issuer and is variable in every offering.
FlashFunders was established in 2012 in Southern California and is operated by Sutter Securities Group, Inc. The platform is open to an international crowd, and investments start from as little as $50. FlashFunders is free for investors, but issuers are charged success fees, processing fees, and service fees, which is determined by each company’s complexity. The percentage fee is subjected to change and is disclosed in the offering document of the issuer. It is an “All or None” platform meaning that the funds are transferred in an escrow account and refunded to the investors if the company does not meet its goal.
StartEngine was launched in 2015 in Los Angeles. StartEngine has a broad niche that includes technology and CBD companies, among many others. This platform again is free for investors and is open to international investment. However, only companies based in the US can raise funds here on payment of a fixed fee and a percentage of the capital raised. While all of this is fine, StartEngines’s fee structure also includes an equity share.
Fundrise was founded in 2010 in Washington, DC. This platform is focused on real estate with an impressive $4.9 billion investment and more than 130,000 individual investors when writing this article. It claims that the net dividends earned by Investors are between 8.7 – 12.4%. Fundrise has also been listed three times in the Forbes Fintech 50.
NextSeed came into existence in 2015 in Texas. The minimum investment starts at $100 with no charges but is open only to US investors. NextSeed has mostly covered segments in personal leisure, entertainment, or services, recently venturing in real estate. For issuers, there is a fixed initial fee and a variable fee of 5%-10% of the funds raised. NextSeed claims that 90% of their issuers have successfully met their investment minimum. More than 75% of the investment goes to women and minority-owned businesses.
Equity crowdfunding is a trickier proposition, and third-party platforms are prone to failure. So, startups must do their due diligence and check the credibility of the platform.