Crowdfunder isn’t technically an online investment platform (they don’t handle the actual documentation and transaction), but they are a way for accredited investors to browse a wide range of startup investments, as well as invest in a broadly diversified fund.
- Website: https://crowdfunder.com
- Investment Types: Investment Funds and Startups/Business Financing
- Security Types: Convertible, Debt, and Equity
- Sectors: Advertising, Cleantech, Construction, Ed-Tech, Energy, Fashion, Fintech, Food/Beverage, Gaming, Healthcare, Hospitality, Marketing, Mobile, Real Estate, and Technology
- Minimum Investment: 1000
- Must be accredited
- Wide selection of companies raising (almost 100 as of this writing)
- Opportunity to invest alongside name-brand VCs like YCombinator and Highway1
- Detailed and digestible investor presentations
- Excellent investor and entrepreneur education content
- Offers broadly diversified VC fund
- Only open to accredited investors
- No direct due diligence on companies raising
- Startups are high-risk, low liquidity investments
- Actual transactions happen offline with company
Crowdfunder offers a wide selection of Reg D investment offerings, covering a range of industries and a breadth of funding stages (from “pre-seed” through “Series C”). Many of their listing are Y-Combinator grads. They also offer a “VC Index Fund” for investors who want someone else to choose the investments.
Crowdfunder isn’t technically an online investment platform, as they don’t handle any of the actual documentation or transaction details (like funds transfers or reporting). As they state in their investor FAQ:
Crowdfunder is a marketing and engagement tool for company Deals, with a growing crowd of accredited investors actively investing in Deals.
Crowdfunder has a lot in common with AngelList, including the reliance on lead investors for deal curation and diligence, though AngelList has a lot more tools around reporting and deal execution.
Types of investments Crowdfunder offers
Crowdfunder lists a wide variety of companies, including those raising early-stage (seed), Series A, and Series B capital. Most companies are tech startups, but Crowdfunder also accepts social enterprises, small/local businesses and film/entertainment offerings (as of this writing, one of the offerings listed is a Las Vegas poker room).
What do you get when investing with Crowdfunder?
Details vary by investment, with companies listed on Crowdfunder offering Equity, Convertible Notes (including SAFEs), Debt, and even some Revenue Shares. In most cases, investors will be investing through a special-purpose entity (SPE) like an LLC, rather than directly owning an interest in the startup.
Crowdfunder fee structure
Crowdfunder does not charge any fees directly to investors. They charge various listing fees to companies to post opportunities on their platform. Prospective investors should carefully review the terms of any investment to understand any other fees (including carried interest) associated with an investment.
Potential returns and cashflow
Investments found via Crowdfunder are high-risk investments in startups, and as noted below, Crowdfunder itself does not perform [b]any[/b] due diligence or review of companies before listing them. Besides a small number of revenue share or debt offerings, most investments listed on Crowdfunder have no explicit expectation of payments, dividends, or other cash flow. While some investors achieve excellent returns from startup investing, that is a rare outcome and requires substantial diversification over time combined with very careful investment selection.
Breadth of offerings on Crowdfunder
Crowdfunder lists a very wide selection of companies raising money (almost 100 as of this writing), and provides a number of sorting and filtering tools for investors to narrow their choices (and to set alerts for new companies added).
Regulatory framework and due diligence expectations
Notably Crowdfunder itself does not facilitate the fundraising itself (they act more like a directory or marketplace for matching investors and companies raising). While their disclaimer references Regulation A+ offerings, I was not able to find any Reg A+ offerings among those actively raising. In any case, Crowdfunder itself is not a broker-dealer or registered investment adviser (though they do have a subsidiary, CFI Securities, listed on FINRA’s BrokerCheck), and besides identifying lead investors to bring deals to the platform, does not perform any curation or due diligence. As stated in their Investor FAQ:
Crowdfunder does not do any due diligence on deals that raise on the platform. Most deals, however, have a lead investor that has done diligence on the company ahead of making their investment.
You may be able to invest in Crowdfunder using a Self-Directed IRA or 401K. To learn more about using a Self-Directed retirement account for alternative investments, visit our friends at Rocket Dollar.