A Year in Review: Regulation Crowdfunding Means Business
Take a look at the first results and successes from a year of regulation crowdfunding.
A mere ten months ago Regulation Crowdfunding opened for business. Last month, the SEC published the first results.
Here’s what we learned:
This way of raising capital is working. In seven months, 33 pioneering companies raised over $10M in capital.
The majority of companies doing this are offering straight equity. Of the companies that raised, 53% offered straight equity while 26% used a convertible note and 20% offered debt.
Most companies raising are small and mighty. Most companies that raised through Reg CF have 3 employees or less, and less than $50,000 in assets. Most are startups that had close to 80% in median sales growth last year. Only 15% had previously raised directly from angels or professional investors.
Most companies start with a goal of $100K or less. Of companies that issued offerings, 78% set a goal of $100K or less, opting to extend their goal to $1M later on.
When companies meet their goals, they usually raise beyond them. For companies who met their minimums, the target median raise was $53,000, but the median amount actually raised was $171,000. The average amount raised across all companies who were funded was $303,000.
Regulation Crowdfunding is growing. There were 163 offerings by 156 companies (some companies made a few offerings) in just 10 months — a net total that has increased every month.
California wins. It is not surprising that 30% of the companies who chose to raise money this way came from California. The next biggest state is New York with 9%.
It seems equity crowdfunding is working as intended, providing entrepreneurs the capital they need to become successful. The clear next step is to let the rest of the country know that finally companies can raise money and pursue their dreams. This is great news!