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“Three things cannot long be hidden: the sun, the moon, the truth” Paraphrasing of Buddha (Gradual Sayings, Volume I)

"You're not going to get rich renting out your time. You must own equity - a piece of a business - to gain your financial freedom." Naval Ravikant

Democratized access to startup investments was not achieved by the JOBS Act. In 2018 Venture Capital reached $130.9 Billion in funding in the US, according to PitchBook, while in 2017 only $260.9 million was funded globally through equity based funding portals according to the University of Cambridge’s Center for Alternate Finance. If you’re one of the 92% of the US population that is not an “accredited investor” in the US who wants to invest in exciting new companies it may not be clear where to start and how to get involved. In a world of swirling stories of spectacular successes (and failures), a myriad of new investing portals, and a constantly changing landscape, it’s not clear where to go and who to trust.

At Fund Wisdom, we provide market insights so that investors, fund managers, entrepreneurs, and analysts can make informed decisions, accessing the best opportunities available. Our goal with this article is to share the market data behind each of the top equity portals. We appreciate any feedback in the comments or contacting us direct.

Accredited Investing Portals and “Equity Crowdfunding”

Investing portals started by serving only accredited investors. Equitynet was founded in 2005. Not long after rewards-based crowdfunding grew in popularity through sites like Kickstarter, (founded in 2009) dozens of equity focused investing platforms started to appear, like AngelList founded in 2010. The creation of the JOBS Act and Title III in 2016 helped to provide access to a small set of offerings to non-accredited investors. We break out our ranks into Accredited Investing Portals and Non Accredited Equity Crowdfunding Portals.

How We Built the List

The U.S. SEC EDGAR database provides a centralized resource for public filing information. It provides transparency but the data is not quality controlled, organized, and no public government funded reporting system exists currently. We have built a database and identified others that look to provide information on how much money is moving through today’s equity portals.

Different vendors, portals, analysts, and academics provide excellent insights and reports to compare our findings. Organizations such as Crowditz by KingsCrowd, StartEngine Index, and academic efforts such as the University of Cambridge’s Center for Alternate Finance were integral in performing this analysis. To them and all the journalists, bloggers, and sites in this exciting space, we would like to say, thank you.

We are focused on equity crowdfunding and have excluded portals focused on debt (loans), real estate, reward-based crowdfunding (like Kickstarter). Put simply, we are looking for the opportunities available to anyone to buy shares of a company, just like buying their stock on an established exchange.

Additionally, we are focused on opportunities in the United States. There is a large and growing equity crowdfunding market in the UK and Europe, Asia, and even in Latin America. We look to eventually broaden our scope into those markets.

The Top-10 Unaccredited Equity Crowdfunding Portals of 2018

The table below ranks the largest equity portals, based on campaigns funded in 2018.

2018 Top Equity Crowdfunding Sites, Platforms, Portals, Investing Engines

Portal

2018 Funded

Wefunder

$25,800,000

StartEngine

$17,900,000

SeedInvest

$13,900,000

Republic

$8,100,000

NextSeed

$4,900,000

Microventures

$4,400,000

NetCapital

$2,900,000

Fundanna

$2,300,000

TruCrowd

$500,000

Growth Fountain

$300,000

   

Total:

$81,000,000

In 2018, the top three portals combined for 71% of the total funded by all portals, with Wefunder and StartEngine combined for just over half (at 54%) of the total, and Wefunder alone responsible for 32% of the market.

Note that the total amount raised (at $81m) in 2018 is close to the estimate provided by StartEngine in their publications about industry volumes, and also corresponds to the industry data publicized by Crowdfund Capital Advisors. The commonality between the three sources gives us confidence that our data is, at least, roughly accurate. Also, for those wondering why some large and well-known portals like Fundable (which claims to have raised just over $500m since they launched) are absent from this list, we remind you that we are focused on the non-accredited market, and Fundable admits only accredited investors.

Some portals hold funds in escrow during the funding process and may ultimately return funds to investors for several reasons. For this analysis we look at assets raised for funded projects through online portals available to all investors.

Sherwood Neiss of Crowd Capital Advisors did a great review mid-way through 2018 of the industry and top providers along with Venture Beat. This is particularly useful as he breaks down number of deals funded and success rate.

2019

Portal

2019 Funded

Wefunder

$9,900,000

StartEngine

$5,600,000

Republic

$3,100,000

NetCapital

$2,200,000

SeedInvest

$1,700,000

Microventures

$800,000

NextSeed

$400,000

TruCrowd

$300,000

Fundanna

$200,000

Growth Fountain

$0

   

Total:

$24,200,000

 

The first three months of 2019 have a similar ranking, with Wefunder and StartEngine in the top 2 slots, but Republic has risen to third while SeedInvest has fallen to 5th. Volumes are up year-on-year however, with a little over $21m raised in the first quarter of 2018 versus just over $24m in 2019. Should the higher volumes continue, 2019 could see non-accredited equity investment top $100m.

 

 

 

 

Top 10 Accredited Equity Investing Portals

We share this detailed analysis from 2014 - 2015 as at the time the information on funding rounds was much easier to gather as it was mostly public. From the below screenshot you can see where we had been collecting performance data across accredited focused portals and you can access that live here.

There are a number of challenges we faced trying to summarize funds raised by accredited equity portals. For example, money can be raised outside of the portal but historically many referenced the full round raised by the business and not just what was transacted online, through the platform. We look to measure the impact the platform has on the investment process and separate that from traditional funding channels. Another area we look to provide further insights is the investment funds or syndicates established by portals and the affects they have on the market.

Companies Funded screenshot accredited

We are working to uncover additional data to improve our rank soon.

 

Evolution of the rankings

In the chart below, we have plotted the percent market share that each platform held each month for the last 15 months (the 12 months of 2018 and the first three months of 2019). Wefunder maintained a commanding lead, only raising less than StartEngine in November and January of 2018. Wefunder is such a large presence in the market that it simultaneously leads the industry market volume, and its share: If Wefunder has a good month, so does the market, and vice versa. It is also interesting to note that SeedInvest looks to have steadily lost marketshare, beginning in the second half of 2018, and that share has been taken up by StartEngine and, to a lesser extent, by Republic. What is very clear is that the equity crowdfunding market has been and remains dominated by Wefunder, StartEngine, and SeedInvest, with the three combining for just over 70% of the market in both 2018 and the first quarter of 2019. For non-accredited investors looking to buy equity, these are the portals with the volume, but that doesn't necessarily mean value.

Equity Crowdfunding over time

We would like to note that the implications of the recent sale of SeedInvest to Circle (one of the leading cryptocurrency firms) is uncertain. Perhaps anticipation of the merger is responsible for its lost market share. Or perhaps, once merged, the combined entities will have greater reach in both of their specialties, creating a true synergy. Reportedly, SeedInvest will (at least for the time being) remain a separate entity focused on raising capital, presumably adding opportunities in the cryptocurrency space in time. However, mergers often have unexpected consequences, both good and bad. Let us know what you think.

 

Innovative Startup Investing 2019 and Beyond

In the US the JOBS Act fell short of democratizing access to startup investments, but it has created opportunity for a small set of individuals looking to capitalize on the potential startup companies can unlock. The creation of cryptocurrency and companies that are building a network through blockchain technology offering a form of equity in coins have seen a far greater flow of capital. Many of the equity focused portals are offering crypto and several, like Coinlist, are specializing in Security Token Offerings. While the set of investments to non-accredited investors and therefor the market in these portals is currently small we will continue to provide this type of analysis based on your feedback.

We will keep you updated on both the evolution of the overall equity crowdfunding market and our work to improve the data, find insights, and make equity investing more accessible. In the meantime, we welcome your questions and your comments.

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