Equity For All: Building Knowledge Around Equity Crowdfunding
June 16, 2014
In 2012, Oculus VR raised $2.4 million for its Oculus Rift headset on the crowdfunding site Kickstarter, later famously selling to Facebook for $2 billion. Lost in the shuffle were the Kickstarter investors, who without equity were left with just a cool VR headset. Equity-based investment platforms, though, are becoming more and more popular, providing an avenue for the average investor to get a piece of the profits in startups, real estate and more. They are also gaining steam with more VC investments. SeedInvest just grabbed over $4 million, CircleUp raised $14 million and Realty Mogul brought in a $9 million financing in March. Even Indiegogo, long a major name in the crowdfunding arena and backed by firms like Institutional Venture Partners, KPCB, Insight Venture Partners and Khosla Ventures, is looking to bring equity investing to its platform. It’s new, it’s exciting and it’s even getting its own regulations from the SEC.
In any emerging market, confusion over how it works and any regulations can cause major headaches. Investment firms spend huge amounts of time on due diligence, making sure they know the ins and outs of a market and potential targets. In equity-based crowdfunding, however, it isn’t million-dollar funds gaining or losing money, it's individuals, and investments can be made with the click of a mouse. Crowdability is a new company working to make sure everyone knows what they are getting themselves into before they put their savings into a new startup, and they just announced $1 million in seed funding. Crowdability's knowledge and information only site lists recent crowdfunded deals, links news and provides resources to explain the equity crowdfunding space. It also gives users tips and advice so they know the general workings of different deals and their possible downfalls. Crowdability is carving out its niche as the network around the industry continues to be built, looking like the next step in the maturing process of equity crowdfunding. Knowledge is power and, in this case, could be the difference between a good investment and working until you're 80.