This Crowdfunder Review will help you learn more about Crowdfunder's investment offerings, including how the alternative investments on Crowdfunder are structured, and what your potential returns might be. You can read more about the criteria we use to review investment platforms here.
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.
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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.
How does Crowdfunder make money?
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
This review was first published on 24 March 2017.