Venture Capital Firm and Crowdfunding Platform Come Together To Transform Startup Financing

Utah-Business-Sept-2008-todd-Crosland---IBFX-Fastest-Growing-Company-compressorVenture capital and crowdfunding are typically thought of as an unlikely match. Crowdfunding is largely driven by the concept of democratization of finance, in which the power is placed into the hands of the people. This ideology is the polar opposite of venture capital, a sector in which many professionals would likely consider crowdfunding to be based on grandiose and utopian concepts.

But surprisingly enough, the two have come together in a new and revolutionary initiative. Collaborative Fund, a New York City-based venture capital firm and an early investor in Lyft, Kickstarter, and Reddit, will be partnering with a San Francisco-based equity crowdfunding company called CircleUp.

Collaborative Fund will receive access to the approximately 200 startups on CircleUp, which it analyzes using proprietary algorithmic technology. About 92,000 data points per company are compiled and analyzed by CircleUp. These data points include financials, brand, leadership, customer engagement, and deal and exit potential.

Craig Shapiro, the founder and managing partner of Collaborative Fund, stated that he would never be able to be as efficient as he is if he didn’t have the technology of CircleUp. When CircleUp features startups on its platform, it gets a number of investors with deep pockets putting money behind these startups.  This increases exposure for consumer-product startups.

The venture capitalists play an important role in getting investors. If investors see that a professional venture capitalist has shown interest, they are more likely to invest in a startup. The more money that is invested in startups on CircleUp, the more money the fundraising platform earns. This is because CircleUp earns 5 percent commission on average. This adds up considering that Circle Up has helped over 160 companies raise more than $180 million.

This partnership is likely a bit of foreshadowing for innovations to come in the future. This may be a new chapter for the methods by which startups gain access to money, and the way that investors find startups that are seeking capital. This process is likely to make private financing accessible to a larger group of people.

CircleUp does not use the term “equity crowdfunding” to describe their business. Instead, they market themselves as a pioneer company for “marketplace investing”. The reason for this is that “crowdfunding”, to many people, implies the size of the investments being made. The average investment on CircleUp is currently higher than $100,000, a giant step up from the $15,000 on average that was being invested four years ago when CircleUp began. The term “marketplace investing” shows that the Internet has made it easier than ever before for investors find companies seeking investment.

The relationship between crowdfunding and venture capital is mutually beneficial. Crowdfunding, or marketplace investing, brings investors and entrepreneurs together. Venture capital firms bring greater amounts of money, as well as mentorship in guiding and advising startups.

While this is a harbinger for the future, not all venture capital firms will partner with crowdfunding platforms. Some venture firms will resist change while other will adapt. Nonetheless, this  type of partnership is showing a lot of promise. Collaborative Fund’s partnership with CircleUp is proof that in the future we may be able to eliminate the disconnect between the venture capital and crowdfunding industries.


Venture Capital in Trouble?

It is nearly impossible to accurately predict what will happen to the venture capital industry in the future. Many startup companies rely on venture capital to launch, so what happens when the venture capital industry becomes even more selective?

Prompting these questions are analysts who have been announcing that the venture capital investment cycle was recently at a peak, and the only way it can go is down. This is based on data about venture capital funding from the end of 2015 being compared to that of 2014. The numbers show, for example, that the amount of money give to startups before launch dropped by almost 30 billion dollars in 2015.

However, this does not mean that investors are getting stingy. Rather, in 2015, investors gave 3 billion dollars more to venture capital funding than they did in the year 2014. Still, the number of venture capital firm exits is way down from where it was in 2014, and major public stock markets have not been flowing in any dramatically positive directions.

Surprisingly, the technology sector, a leader in the venture capital world, is also suffering. Revenue in this sector fell in 2015 and sales rose only a little above 3%. This number is not something many people would take note of, much less look at in a positive light.

Furthermore, interest rates have risen, which makes investors less willing to many risky investments. The Initial Public Offering (or IPO) market is also down on its luck. There was an almost 60 billion dollar drop in the value of deals in the economy in 2015. Startups that have traded at a lower than expected value run rampant in the market, even ones that were predicted to trade at high values.

So, what does this all mean? Is venture capital as we know it officially defunct?

Many believe it is. Some experts think that there was an initial ‘honeymoon’ period for startups in which companies were valued at a level that they could not maintain and, now, we know better. Others think it is too early to call any period in venture capital funding a ‘peak.’ The industry is so new that this lull could just be a bump in the road.

Either way, a decrease in venture capital funding is not the calamity that it once was for startups. Many startup companies have gotten more creative in their funding methods, and are therefore able to function with very little or no venture capital funding at all.

As for where the venture capital industry will go in 2016, we will just have to wait and see.

For more information on the venture capital lull, check out this article on Newsfactor.

Venture Capitalist’s Predictions for 2015

Todd-Crosland-venture-capital-trends-2015Venture Capitalist, Sergio Monsalve, predicts 5 trends that will create a large stir in 2015. As companies continue their fast-paced scaling and innovation, below 5 industry trends that Sergio expects to see develop further in 2015.

1)   Watch out for software!  – 2014 saw a lot of mergers and acquisitions for hardware, but Sergio expects that to shift more into software based ventures.   He also predicts that the hardware Internet of things will become more of a commodity. We can already see this in the smart watch industry as FitBit and Apple are becoming more focused on commoditized offerings.

2)   Online education will make major strides – Online education is expected to reach $107 billion by the end of 2015, which represents an increase of 200% in three years. Stanford’s Graduate School of Business is leading the way by announcing their online school for company executives.

3)   A new generation of marketplace will emerge – Emerging marketplaces like Udemy and Minted have the potential to take over last generation’s marketplaces of eBay and Craigslist. Major online marketplaces will continue to make a major dent in the economy and grow at a faster rate, with the potential to surpass Apple and Alibaba.

4)   The NASDAQ will flatline – Multiple people are talking about a bubble that is forming, but Sergio believes that the NASDAQ will stay relatively flat and might even decline a bit. Sergio does believe that there will be quite a bit of volatility in 2015. The IPO standards will be greater to let a little air out of the potential asset bubble.

5)   Indian Startups – 2015 will be a strong year for the digital economy in India. India recently had an election that people are feeling confident about. This paired with their growing technology sector will certainly take advantage of the global digital economy. Venture Capital has increased tremendously in India as venture capitalists are looking globally to find the next big digital market.

Todd Crosland Launches Seed Equity Ventures

Todd Crosland Seed Equity VenturesAugust 19th, 2014 Todd Crosland announced the official launch of his new U.S. Registered Broker-dealer, Seed Equity Ventures. Seed Equity uses an equity-based crowdfunding platform to connect startup companies with venture capital from all over the globe.

Venture capital is fairly limited on a global scale. The majority of venture capital is located in the United States. There are only a couple thousand venture capital firms that control the fate of millions of startups each year. Young entrepreneurs from countries other than the United States are almost forced to move to the US so that they can gain the appropriate funding for their company. Todd Crosland’s vision is to create a global platform so that entrepreneurs and investors from all over the world could easily find each other without having to travel long distances.

On Seed Equity’s platform, startup entrepreneurs are able to share information about their company, run due diligence, apply for funding, and close investment agreements with investors from around the world.

Crowdfunding and global venture capital are surging in today’s startup industry, so Seed Equities launch seems to be coming at a good time. Last year, US investment on equity-based crowdfunding platforms reached $200 million. Analysts say that this number should double this year.

Todd Crosland stresses that Seed Equity Ventures is one of the first equity-based crowdfunding platforms that is focusing globally rather than domestically in the United States. The company currently holds two offices in Salt Lake City and San Francisco, and there are plans in motion to open up a third office in Tel Aviv, Israel.

The platform is backed by a team lead by Clifton Crosland, a Stanford graduate with a degree in computer science. This team helped Todd Crosland gain the Ernst and Young Entrepreneur of the Year award for his efforts in developing Interbank FX, a Retail Foreign Exchange Dealer.