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$40M raised through regulation crowdfunding in first year

May 17, 2017

On May 16 of last year, the Securities and Exchange Commission (SEC) finally allowed both accredited and non-accredited investors to engage in regulation crowdfunding. Under the new SEC rules, startups and other private companies could offer equity in return for capital to help support business growth. As of May 2017, total contributions under the regulation crowdfunding into startups and small businesses are over the $40 million mark with an average investment of $833 per investor. Using data from the Crowdfund Capital Advisors, Catherine Yushina from Crowdfund Insider highlighted several data points about the first year of regulation crowdfunding:

  • States with the most activate crowdfunding investors are California ($15.7 million committed), Texas ($5.4 million committed), Massachusetts ($3.1 million committed), New York ($2 million committed), and Oregon ($1.2 million committed);
  • Approximately 79 percent of the successful companies were founded by teams of two or more; and,
  • Teams of five founders had the highest average raise at $408,000 while individual founders raised $353,000.

In Women & Minorities in Regulation Crowdfunding: High Success Rate Despite Low Representation & Lower Funding Levels, appearing in Crowdfund Insider, Sherwood Neiss reports the first four quarters of regulation crowdfunding data shows that companies with founders that include women and minorities have a higher percent chance at hitting their minimum funding target but represent fewer campaigns and receive less capital than companies with only white male founders. In its first four quarters, over 265 companies have engaged in a regulation crowdfunding offering with nearly 62.3 percent (165) offerings filed by founders that only included white males, the remaining 100 include at least one minority or female founder.   

When filtered for only successful campaigns – companies hit their minimum funding target, closed their offerings and received their funds (82 companies total) – Neiss found that white men raised the most with nearly $342,000 raised on average. In comparison, women- and minority-led companies raised much less:

  • Companies with at least one female founder raised $245,0000 on average; and,
  • Companies with at least one minority founder raised $178,000 on average.

On a positive note, companies led exclusively by women founders, reported a success rate of 87.5 percent compared to only 41 percent of companies led by only male founders.

 

 

 

crowdfunding, capital