Crowdfunding: One year later.
The U.S. Small Business Administration Office of Advocacy has released new analysis of all regulation crowdfunding filings that occurred during the first year (Since May 2016) Interesting takeaways for startups and investors.
A total of 326 businesses attempted to raise capital through equity crowdfunding campaigns during the first year of Regulation Crowdfunding.
17 businesses conducted more than one crowdfunding campaign, producing a total of 343 filings between May 2016-2017.
In aggregate, crowdfunding firms raised investments totaling more than $30 million dollars during this one year period. Crowdfunding firms reported employing a total of 1,574 people, with an average of five employees per firm.
About 83 percent of crowdfunding businesses listed a male as the issuer’s signing executive (with titles such as “Chief Executive Officer,” “Founder,” and “President”). 56 firms (17 percent) listed a female signing executive on their crowdfunding filing.
43 percent of crowdfunding businesses were as young as one-year-old when they filed paperwork to initiate a crowdfunding campaign, and 88 percent were five years or younger.
In terms of structure, 71% of startups were structured as corporations, 28% were structured as limited liability companies (LLCs), and only 1% were structured as limited partnerships (LPs).
Among the 343 regulation crowdfunding offerings available during the first year, the most common types of securities offered were common stock (34%), Simple Agreements for Future Equity (25%), and debt (22%), together representing over 80% of all transactions.
What we think about all this?
Venture capital is primarily concentrated in tech hubs like San Francisco, New York City, Boston, Chicago, Miami, and Austin. It seems as though equity crowdfunding follows the same regional trend, with fewer startups hailing from suburban or rural areas, which we think is a mistake from the part of investors and crowdfunding platforms, as they had the intentions of “democratizing” investments.
Likewise, whereas women have previously found success with crowdfunding, equity crowdfunding seems to revert back to venture capital statistics, where women are regularly underrepresented. That said, some funding portals are making strides to change this; of the 37 startups with successful raises through First Democracy VC, 16% were founded by women.
Download the full report: One Year of Equity Crowdfunding: Initial Market Development trends.