Ahead of the JOBS Act Rush, CircleUp Launches Crowdfunding Platform
Crowdfunding start-ups are champing at the bit to launch portals where regular people can fund new companies. They’re just waiting for the newly passed JOBS Act to be fully implemented by the Securities and Exchange Commission.
But there’s already a new site called CircleUp that falls somewhere in between Kickstarter and SecondMarket. CircleUp vets consumer product and retail start-ups with $1 million to $5 million in revenue that are looking to raise up to $1 million. It posts them on a portal that’s accessible only to accredited investors, using standardized forms and online verification so that equity investments can be completed quickly.
(After the JOBS Act crowdfunding protocol gets figured out, the site may open to unaccredited investors, its co-founders said. For now, it is operating as a broker dealer through a relationship with WR Hambrecht.)
CircleUp has raised $1.5 million of its own funding from investors including Maveron, Triple Point Ventures, Twitter’s Elad Gil and David Topper, the former head of Capital Markets at J.P. Morgan.
But CircleUp didn’t use its own platform to raise that money, because it doesn’t meet the criteria for investment, the founders told me. Why? First, it doesn’t have an established financial track record; and second, technology businesses are hard for consumer investors to evaluate. Talk about brutal honesty!