Crowdfunding, Venture Capital, and Angel Investing: Complementary or Competition?

BY SALVADOR BRIGGMAN CEO , CB Insights published an interesting article on August 11th, 2014 about the 443 hardware projects that have raised over $100K on Kickstarter or Indiegogo, as studied by Matthew Witheiler of Flybridge Capital. The CB Insights team expanded on the collected data by examining how many of the 443 companies have raised outside venture capital equity financing.

So far, of the 443 companies, 9.5% have gone on to raise venture capital to the tune of $321 million (total). Also, they discovered that Kickstarter hardware campaigns raised 5x more in investor funding than Indiegogo campaigns.

What’s crazy is that these numbers are only increasing!


“In 2014, investor deal activity to crowdfunded hardware companies is on pace to break 2013’s record with 19 deals already in the first seven months of the year. If the current run-rate continues through the end of the year, 2014 will see over 30 deals.” – Source.

There’s been some speculation in the past that equity crowdfunding might replace angel or venture capital investing for startups. Particularly, the JOBS Act, which when in effect, will allow ordinary americans to invest in startup companies, has been seen as a potential disrupter for well-established financial industries.

Will equity crowdfunding replace angel investing?
First of all, I think that Ryan Caldbeck, the CEO and founder of the equity crowdfunding platform CircleUp did an awesome breakdown of the benefits and drawbacks of equity crowdfunding for angels angels and VCs in his Forbes article.

Who are the Angels:

– Typically invest less than $1 million in startup companies.

– 756,000 angel investors in the U.S. who have made an angel investment in 2013 (source)

– Wealthy individuals that make $200,000 or more in base salary every year, or maintain a net worth of over $1,000,000.

– 5-7.2 million accredidted investors in US that could participate in angel investing (2013).

Their main issues:

– Good deal flow (identifying and getting in touch with quality companies) – See Paul Graham’s essay on how to be an angel investor.

– Lack of investment liquidity.

– Potential for being diluted at later stages in the startup.

In its current form, equity crowdfunding enables angel investors to find new quality companies and cut deals. Just look at the recent PonoMusic equity crowdfunding offering on CrowdFunder, which has raised $3.6 million from accredited investors at the time of writing.

Read More:

Tags: , , , , , ,


DVS Gaming (registration) (blog)Crowdfunding: How Does it Help Indie Developers?DVS Gaming (registration) (blog)2012 is when crowdfunding really blew up, prior to 2012 the average amount of money devs would receive could range from 10k-100k. By today's standards, that's stil [...]

LivemintFinding the right balance on crowdfundingLivemintSecurities market regulator Sebi (Securities and Exchange Board of India) has been trying to get a handle on digital platform-based crowdfunding since at least 2014, when it issued a cautiously positive consultation paper. It fl [...]

U.S. News & World ReportNo Cash for Hate, Say Mainstream Crowdfunding FirmsU.S. News & World ReportThe block on mainstream crowdfunding is just the latest blow to far-right activists operating online. In the last 24 hours, neo-Nazi website the Daily Stormer had its domain regi [...]

FortuneUncensored Social Network Gab Raises $1 Million in Crowdfunding CampaignFortuneA crowdfunding campaign for Gab, a Twitter-like social network that touts its commitment to freedom of speech, surpassed $1 million yesterday. The company claims it is politically neutral and committ [...]

Baltimore SunHarford still opposes crowdfunding sites for school donationsBaltimore SunRaising money through online crowdfunding sites is an ideal way for teachers to find the funds to purchase classroom materials and should be restored, the head of the Harford County teachers' u [...]

Crain's Cleveland Business'Smaller' gifts can go long way for Clinic's crowdfunding platformCrain's Cleveland BusinessFor an institution accustomed to securing multimillion-dollar donations, Cleveland Clinic's latest fundraising effort has some relatively [...]

FanRag Sports (blog)Is crowdfunding women's hockey the new normal?FanRag Sports (blog)The Western Collegiate Hockey Association is a women's college conference founded in 1999. In 18 competing seasons, the WCHA has won 16 national titles. Only twice has an NCAA women's [...]

League: Warriors legend Monty Betham drops crowdfunding bidNew Zealand HeraldFormer Warriors Monty Betham has pulled the pin on his quest to launch a crowdfunding campaign to buy the Warriors. With Warriors owner Eric Watson locked in negotiations to sell, Betham made a plea to league [...]

ForbesWhat Works In Equity Crowdfunding -- Insights From ResearchForbesAs we have recently celebrated the fourth anniversary of the signing of the JOBS Act into law, it is a good time to take stock of the effect that the legislature had on equity crowdfunding in the United States. It [...]

The Northern Daily LeaderThe perks and pitfalls of crowdfundingThe Northern Daily LeaderWith a few clicks, would-be entrepreneurs, artists and charities can launch a project and start crowdfunding. All they need to do is nominate a dollar goal to raise within a certain time, and list [...]

CFB Finance


  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

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 |