Why crowdfunding fits in with Angels, VCs

Ryan Caldbeck has plenty of reason to think crowdfunding can play well with the existing funding ecosystem. After all, he runs CircleUp, an equity crowdfunding platform focused on consumer and retail companies.

But his position at CircleUp, and previous 10 years in private equity, give him pretty good insight on just how crowdfunding will work with angels, VCs and private equity firms. He shares that insight in a post on Forbes and finds, perhaps not too surprisingly, that crowdfunders and existing players will actually play well together.

For angel investors, he sees crowdfunding as a boon because it will produce deal flow more easily than the current system. Here’s Caldbeck:

We have found that angels love well curated equity-crowdfunding sites. Why? The answer is deal flow. Sure, there are a handful of angels in Silicon Valley (think Ron Conway) who see great tech deals before others and who have established such a prominent brand that companies come calling on them. For the vast majority of angels, however, and especially those outside the friendly confines of the Valley, it is both difficult and time consuming to generate quality deal flow. This is where great equity crowdfunding sites come in: a well curated site saves time, and extends the reach, for angel investors.
VCs, he writes, won’t be much affected by crowdfunding, because they’re focused on tech companies, there’s already plenty of funding out there for quality tech firms, and if a tech firm has to go to a crowdfunding site to raise money, chances are VCs would pass on that company.

As for private equity, Caldbeck thinks the deals on crowdfunding platforms just aren’t big enough. Here he is again:

Many private equity firms are already strong advocates of equity crowdfunding sites. In a space like consumer where we are focused, there is virtually no PE firm that can invest in companies with less than $5 or $10 million in revenue (which is exactly why we created our platform). However, as an investor at Encore Consumer Capital and TSG Consumer Partners, I received phone calls every day from growing consumer companies with $1 million in revenue that I would have to turn away. Now, PE firms can refer this deal flow to a trusted equity crowdfunding site.
Ultimately, those companies that raised money on crowdfunding platforms will be favorably disposed toward the private equity firms that referred them, and when they get big enough, may be willing to do deals with those firms.

Source: Kent Bernhard Jr. – Upstart Business Journal Money & Finance Editor
Link: http://upstart.bizjournals.com/money/loot/2013/08/09/why-crowdfunding-fits-in-with-angels.html?page=all


AZCentral.comTiny companies lure investors under Arizona crowdfunding lawAZCentral.comInvestors who make bets under the state's one-year-old crowdfunding law certainly have the potential to get in on the ground floor, but they must be patient and might not receive any returns. Th [...]

BloombergCouples Desperate For Children Turn to Crowdfunding FertilityBloombergCrowdfunding has become a popular mechanism for many couples who can't afford the high costs of IVF, or adoption and surrogacy. “It's not an easy thing to share publicly,” says Crystal Barrett, 33 [...]

WTTV CBS4IndyCrowdfunding effort to save Dorothy's iconic ruby red slippers from 'Wizard of Oz' raises $300000WTTV CBS4IndyThe Smithsonian has launched a campaign on Kickstarter aimed at raising $300,000 to preserve the ruby red slippers worn by Judy Garland in the belo [...]

Crowdfund InsiderMassive Rule 147 Amendments May Be On The Horizon Impacting ...Crowdfund InsiderAlmost a year ago, the SEC proposed certain amendments to the current Rule 147 which were intended to help foster, and increase the viability of, Intrastat.and more » [...]

Mountain XpressFaces in the crowd: WNC crowdfunding initatives | Mountain XpressMountain XpressEach week, Xpress highlights notable WNC crowdsourcing initiatives that may inspire readers to become new faces in the crowd. This week features a feature ...and more » [...]

MarketWatchWhy a crowdfunding site is giving out $10000 scholarshipsMarketWatchCrowdfunding site GoFundMe announced Thursday that it will award $10,000 to 10 students with pages on their site that fundraise for education. The award is part of a contest the site held throughout Septemb [...]

Android Authority (blog)Crowdfunding project of the week: Remix IO is an Android 4K set-top ...Android Authority (blog)The 'Crowdfunding project of the week' series is where we highlight some of the hottest campaigns from sites like Kickstarter and Indiegogo. There's pl [...]

Huffington PostReal Estate Crowdfunding's Pathway of ChangeHuffington Post“Crowdfunding is just the Internet,” stated Attorney Mark Roderick as he opened last month's RealCap Chicago. RealCap is an annual conference that joins crowdfunding leaders and innovators to propel th [...]

WestwordProgressive-Rock Band Marillion Pioneered CrowdfundingWestwordThat was the beginning of crowdfunding for us — and for every band, really.” When it came time for the recording and release of the followup to the 1999 marillion.com record, Kelly and the band realized that one of [...]

BBC NewsNHS trust 'relies' on crowdfunding to equip wardBBC NewsAn NHS trust has launched a crowdfunding appeal to buy equipment for a new hospital unit because "it cannot get started without donations". The Royal National Orthopaedic Hospital (RNOH) in Stanmore, n [...]

CFB Finance

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |