In recent years, investment crowdfunding has become essential for democratizing access to capital, allowing small businesses and startups to realize sustainable growth. For consulting firms focused on innovation, economic policy, and small business development, investment crowdfunding represents a pivotal strategy for fostering local economic resilience and fueling entrepreneurship.
Management consulting firms play a crucial role in driving transformative strategies that enable startups to thrive, foster innovation, and create new jobs. While traditional funding avenues remain vital, investment crowdfunding offers an alternative pathway for entrepreneurs, connecting them directly with investors who believe in their vision. This channel empowers companies, particularly those in underserved markets, to gain visibility and access to capital on a scale previously out of reach.
The Strategic Role of Regulation Crowdfunding
The Jumpstart Our Business Startups (JOBS) Act and the subsequent Regulation Crowdfunding (Reg CF) rules have opened doors for smaller investors to support early-stage companies in exchange for equity. Crowdfund Capital Advisors’ research shows substantial growth in crowdfunding-backed companies across regions and industries. Consulting firms like Bain & Company, IBM (IBM Garage), Deloitte (Deloitte Catalyst), Accenture (Accenture Ventures), and EY-Parthenon can align their services with this trend, advising clients on leveraging crowdfunding as an innovative source of capital to build stronger, more resilient businesses.
Investment Crowdfunding: Empowering Economies at the Local Level
Investment crowdfunding levels the playing field for businesses in smaller cities and diverse communities by facilitating capital inflows that would otherwise be inaccessible. For consulting firms, guiding clients through crowdfunding helps achieve broader economic resilience goals. For instance, Bain & Company’s Bain Innovation Exchange (BIE) provides startups with the tools and networks to scale effectively. Through initiatives like the “Innovation Kickstarter,” Bain supports business model development tailored specifically to startup needs.
Similarly, IBM Garage collaborates with businesses to identify operational pain points and rapidly develop and launch solutions, making it an ideal partner for tech-oriented startups needing streamlined digital infrastructure and robust security measures. These services empower startups to transform their business models using IBM’s deep technology expertise in AI, automation, and supply chain management.
Why Consulting Firms Should Embrace Crowdfunding for Clients
As a tool for economic revitalization, investment crowdfunding offers firms like Deloitte Catalyst and Accenture Ventures unique opportunities to support small businesses and drive sustainable growth. Deloitte Catalyst provides startups with end-to-end services across the entrepreneurial lifecycle, connecting them to a vast network and expediting market entry. Accenture Ventures, with its Project Spotlight, helps startups accelerate their growth by integrating them into larger enterprise ecosystems, providing tools and resources essential for navigating complex market landscapes.
Additionally, EY-Parthenon is renowned for its strategic consulting expertise, assisting startups in technology, healthcare, and financial services with tailored growth plans and scaling strategies. EY-Parthenon’s global network and vast resources make it an attractive option for fast-growing companies aiming to expand quickly and efficiently.
A Future-Focused Approach to Investment
Investment crowdfunding is a valuable tool that complements consulting firms’ broader goals of economic empowerment and job creation. By supporting startups in navigating crowdfunding campaigns, consulting firms can help these businesses thrive in today’s competitive landscape. Firms like Bain & Company, IBM, Deloitte, Accenture, and EY are well-positioned to adopt crowdfunding as a strategic growth lever, driving long-term economic resilience and innovation.
We invite consulting leaders to explore the opportunities investment crowdfunding provides, especially for startups and small businesses that prioritize community-centered growth. Crowdfund Capital Advisors remains dedicated to providing the insights and data needed to make crowdfunding a powerful resource for clients nationwide. For more information on how investment crowdfunding can enhance client growth strategies, visit us at www.CrowdfundCapitalAdvisors.com.
In a rapidly shifting economic landscape, the time has never been better for businesses to leverage Regulation Crowdfunding (Reg CF) to secure funding and build loyal investor communities. Several recent developments underscore this unique opportunity for potential Reg CF issuers to stand out in the market and raise capital effectively.
1. Private Markets Have Bottomed Out
With the private markets hitting recent lows, investors are eager to seize opportunities to support resilient and high-potential businesses. As many in the private market look to rebuild their portfolios with promising assets, Reg CF issuers stand to benefit from this increased interest. In these conditions, Reg CF becomes an attractive entry point for investors looking for value and growth in the recovery cycle.
2. Favorable Monetary Policy: Fed Reduces Interest Rates
A lower interest rate environment, fostered by recent Federal Reserve cuts, translates to more accessible capital and reduced borrowing costs for businesses. This also means investors have fewer options for strong returns in traditional investments like bonds, which could encourage them to diversify into alternative assets like equity crowdfunding. With reduced returns elsewhere, community-backed ventures via Reg CF can appear especially attractive.
3. Soft Economic Landing Encourages Investor Confidence
According to insights from leading financial institutions like Goldman Sachs, the economy’s soft landing has mitigated fears of a severe recession. This stability brings more confidence to investors, who may now be more willing to participate in new ventures without as much risk aversion. The renewed investor confidence presents a favorable environment for businesses seeking to raise capital through Reg CF.
4. VC Trends Create a Unique Opportunity for Reg CF Issuers
The recent trend of venture capital (VC) firms shifting upstream toward later-stage investments has left a noticeable void in the early-stage investment landscape. This gap creates a unique opportunity for Reg CF issuers to engage with local communities and raise essential seed capital. For entrepreneurs and small business owners, Reg CF provides a platform to attract investors who believe in their mission and are eager to see them succeed.
Moreover, as the private market cycle progresses, Reg CF issuers have a chance to use this funding period as a bridge to more significant investments down the line. Companies can build their traction now with community investors, positioning themselves strategically for when VC firms return to earlier-stage investments.
5. Reg CF Continues to Thrive Despite Market Volatility
Unlike traditional capital markets, Reg CF has demonstrated remarkable resilience throughout recent market fluctuations. Capital commitments in Reg CF have remained strong, nearly matching the record numbers seen in 2021. The 2023 Year in Review indicates that interest in Reg CF offerings has not waned, and the volume of active deals, despite slight contractions, continues to reflect a robust investment climate.
“For potential Reg CF issuers, this convergence of economic stability, supportive monetary policy, and favorable market dynamics creates a prime moment to launch a crowdfunding campaign,” says Sherwood Neiss, Principal at Crowdfund Capital Advisors. “With a community-driven financing model, issuers can not only raise funds but also foster a loyal base of advocates and potential customers. Now is the time to harness this moment—align with investors eager to participate in your growth journey and take advantage of Reg CF’s community-powered potential.”
For continued insights on market trends and investment crowdfunding strategies, subscribe to the CCA newsletter for direct updates.
As the latest PitchBook-NVCA Venture Monitor highlights, the venture market may have bottomed out, but it hasn’t yet shown signs of a strong recovery. Venture capital (VC) firms are proceeding with caution, many leaving the market altogether or tightening the terms of investment to reduce risk. In this environment, startups backed by VCs should consider investment crowdfunding as a viable bridge financing option, providing the capital they need to sustain and grow while sidestepping the slower, more restrictive VC process.
Let’s dive into why investment crowdfunding is particularly well-suited to meet this need and why it’s worth considering in today’s venture landscape.
What is Investment Crowdfunding?
Investment crowdfunding, enabled by the JOBS Act of 2012, allows companies to raise capital from a large number of investors via online platforms. Unlike traditional VC, which often limits investment to accredited investors (those meeting specific income or net worth criteria), Regulation Crowdfunding (Reg CF) opens the door for anyone to invest, empowering communities, customers, and other non-traditional investors to support companies they believe in.
Through SEC-regulated portals like Wefunder, StartEngine, and Republic, companies can launch campaigns to attract investors by offering equity or other forms of securities. Investment crowdfunding campaigns run under clear regulations to protect both issuers and investors and have proven successful in helping early-stage companies meet funding goals quickly and effectively.
Why Consider Investment Crowdfunding as a Bridge Financing Tool?
In today’s capital market, Reg CF offers distinct advantages, especially for companies that already have some VC backing but need capital quickly. Here’s why it’s particularly effective now:
1. Contextualizing the Venture Capital Slowdown
The venture market remains in a cautious state. While on pace to exceed $175 billion in investments this year, liquidity challenges have limited a more substantial recovery, causing many VC firms to reevaluate their strategies. This slowdown has driven some VCs to enforce more stringent protections in term sheets, while others have left the market altogether. For VC-backed startups, this climate presents challenges in securing follow-on funding, meaning additional financing alternatives are essential for continued growth.
2. Investment Crowdfunding as an Efficient Bridge
Crowdfunding offers a quicker alternative to traditional VC rounds, which can often take upwards of nine months to finalize. With Reg CF, the average campaign length is around 195 days—significantly shorter and more manageable for companies needing bridge financing without lengthy delays. This timeline efficiency makes crowdfunding particularly attractive, allowing companies to secure capital on a shorter schedule and remain agile in their growth trajectory.
3. Data on Series A Companies Using Crowdfunding
Series A-backed companies have shown that they can successfully raise additional capital through investment crowdfunding, with average raises hovering around $1 million. This trend underscores that crowdfunding can be a powerful tool for companies that have already attracted VC support, providing a reliable supplement to previous funding rounds without extensive terms renegotiation or delays.
4. Flexibility and Broad Investor Access
Unlike VC rounds, which often limit participation to accredited investors, Reg CF campaigns can draw from a much wider base, including non-accredited investors. This inclusivity allows companies to engage directly with their customer base and communities, generating not only financial support but also fostering loyalty and advocacy. The broader investor pool means companies can raise funds from individuals who are also potential customers, providing a dual benefit of financial capital and brand visibility.
5. Building a Community of Advocates
Crowdfunding campaigns offer more than just financing—they build a community. Investors in a Reg CF campaign tend to feel a sense of ownership and are more likely to promote the business, refer others, and support product launches. This level of customer engagement is invaluable, as it creates a loyal network that may provide continued support and advocacy well beyond the initial funding campaign.
6. Reduced Pressure on Terms and Investor Control
In contrast to the tightened control and rigorous due diligence that VCs are implementing in today’s market, crowdfunding offers a more flexible path with typically less restrictive terms. This provides startups with a greater degree of control over the funding process and the freedom to focus on their business rather than intensive renegotiations or compliance with stringent conditions.
How Investment Crowdfunding Works: A Step-by-Step Guide
For companies new to investment crowdfunding, here’s how a typical campaign works:
- Campaign Setup: Start by selecting a platform (like Republic, StartEngine, or Wefunder) and creating a campaign page. This will include business details, the funding goal, financials, and the offering type (equity, convertible notes, etc.).
- Compliance and Disclosures: Reg CF requires that companies meet certain SEC disclosure standards. This ensures transparency for investors and helps foster trust. Common disclosures include financial statements, business risks, and goals for the capital raised.
- Promotion and Community Engagement: Successful campaigns leverage social media, customer networks, and email marketing to attract interest and build a community of supporters. Engaging directly with customers and potential investors throughout the campaign is key to success.
- Funding Goal and Timeline: Crowdfunding campaigns typically have set minimum and maximum funding goals and operate on an “all-or-nothing” model. This means the company only receives the funds if it meets the minimum target by the campaign’s end.
- Capital Disbursement and Post-Campaign Engagement: Once the goal is met, funds are disbursed to the company (minus platform fees), and the startup can begin deploying the capital as outlined in the campaign. Keeping investors informed and engaged post-campaign strengthens relationships and promotes long-term support.
Ready to Consider Investment Crowdfunding? Let’s Talk!
For venture-backed companies navigating today’s venture landscape, investment crowdfunding offers an accessible, flexible, and community-driven financing alternative. Whether you’re seeking bridge financing to extend your runway or aiming to expand customer engagement, Reg CF can help you meet those goals.
Contact us (sales@theccagroup.com) today to discuss how investment crowdfunding could be the right fit for your company. Our team has the expertise to guide you through every step of the process, from campaign setup to post-campaign engagement, ensuring you leverage crowdfunding to its fullest potential. Let’s explore how you can use the power of the crowd to sustain and grow your business!
As the 2024 presidential election comes to a head, both major parties are focusing on economic policies—but neither has fully embraced the potential of investment crowdfunding to fuel local growth. Republicans continue to push for tax cuts aimed at stimulating corporate investment, while Democrats advocate for tax hikes on wealthy individuals and corporations to fund social programs. Yet both approaches miss a crucial point: the true engine of the U.S. economy is small business, and fostering local investment in these businesses could transform our economy from the ground up.
Sherwood Neiss, Principal at Crowdfund Capital Advisors, offers an insightful perspective: “On one end, we have one party using tax cuts to stimulate business growth, while the other uses tax hikes to create more opportunity. In reality, both should focus their attention on the segment of our population that represents the majority of businesses and creates nearly half of the U.S. economy—small businesses. Attention here would be a first in decades, refreshing in its approach and appealing to Main Street Americans. It would build a much stronger America than either party’s current plans.”
Why Investment Crowdfunding Matters: The Data
Our data analysis shows that Democratic districts are particularly benefiting from investment crowdfunding, outperforming Republican districts in significant ways:
- 2.67x more deals are launched in Democratic districts compared to Republican districts.
- Why it matters: This shows that more entrepreneurs are turning to crowdfunding in Democratic districts to access capital, resulting in more business creation and innovation in these areas.
- For every $1 invested in a Republican district, $3.36 is invested in a Democratic district.
- Why it matters: Greater investment volume means stronger local economic growth, with more capital being funneled into communities for hiring, expansion, and local spending.
- Nearly 3x more investors are found in Democratic districts.
- Why it matters: This indicates broader community engagement, where individuals are financially supporting local businesses, leading to a more dynamic and resilient economy.
- 4.2x more jobs are created in Democratic districts.
- Why it matters: Jobs are a direct indicator of economic health. These figures demonstrate how crowdfunding directly impacts employment growth, a vital component of local economic stability.
- Democratic districts experience 4.86x more economic stimulus.
- Why it matters: This shows that investment crowdfunding creates a ripple effect, stimulating local spending and reinvesting in communities at a significantly higher rate than in Republican districts.
What Current Policies Miss
Republicans’ emphasis on tax cuts primarily benefits large corporations, especially those in manufacturing, but leaves small businesses without direct support. Democrats’ push to raise corporate taxes is intended to increase federal revenue for social programs but may reduce corporate investment, impacting job creation and wages. Neither approach focuses on supporting small businesses, which according to the Small Business Administration make up 99.9% of all U.S. businesses and contribute 43.5% of the nation’s GDP.
Investment Crowdfunding: A Policy Solution
Investment crowdfunding offers a unique solution that bypasses the need for broad tax cuts or hikes by directly empowering local investors to support their communities. To maximize its potential, policymakers should promote tax incentives that encourage more people to invest in crowdfunded businesses. Possible incentives include:
- Capital gains exemptions for investments in crowdfunded small businesses.
- Tax credits for reinvesting profits locally.
- Co-investment funds, where the government matches private investment to further boost local businesses. We discussed this in a policy paper recently.
The 2024 election provides an opportunity for both parties to rethink their economic strategies. Rather than relying solely on corporate tax cuts or hikes, lawmakers should focus on investment crowdfunding as a direct means to stimulate local economies. As Neiss says, “Crowdfunding is not just a financial tool; it’s a pathway to economic resilience, diversity in entrepreneurship, and stronger communities,” says Neiss. “It’s time for the political conversation to catch up.”
Crowdfunding offers more than just capital—it creates a long-term relationship between entrepreneurs and their investors. When you run a successful campaign, your supporters become more than financial backers; they can turn into advisors, customers, and brand advocates. Managing this dynamic, however, requires careful attention to communication. Entrepreneurs must engage their crowd beyond the initial fundraising phase by providing regular updates, addressing concerns, and maintaining transparency.
Boxabl, a well-known startup in the tiny-home industry, serves as a cautionary tale. The company raised millions from thousands of investors through crowdfunding to manufacture its innovative foldable homes, generating significant buzz. However, the excitement began to wear off as Boxabl experienced production delays and mounting losses. Investors became increasingly concerned when reports emerged about high executive spending, casting doubt on the company’s management practices. The lack of transparent communication from the leadership team left many backers frustrated and uncertain about their investments.
This growing unease ultimately led to an investigation by the SEC. Although the SEC concluded its investigation without recommending enforcement action, the episode highlighted a key lesson for all crowdfunded businesses: transparent, consistent communication is crucial to maintaining investor trust and avoiding reputational damage.
Crowdfunded ventures must not only meet their funding goals but also manage the expectations of their investors. Clear communication about setbacks, realistic timelines, and financial transparency can prevent misunderstandings and keep backers engaged and supportive. Entrepreneurs who treat their crowd as key stakeholders, rather than just financial contributors, are more likely to sustain long-term success.
Boxabl’s experience serves as a powerful reminder that crowdfunding is as much about managing relationships as it is about raising capital. Success hinges on the ability to communicate effectively with your crowd, turning them into long-term allies of your business.
(References: Boxabl’s story on Business Insider and Boxabl’s SEC Investigation)
October 17, 2024 – Denver, CO – Crowdfund Capital Advisors (CCA), a global leader in crowdfunding data and advisory services, has announced a strategic partnership with InvestmentX, a premier investment analysis platform. Through this collaboration, InvestmentX will leverage CCLEAR, the comprehensive data arm of CCA, to bring unparalleled insights into the investment crowdfunding market directly to its subscribers. This partnership highlights the growing demand for data-driven decision-making tools within investment crowdfunding and aims to equip retail and professional investors alike with the resources needed to make well-informed choices.
Launched in 2016, CCLEAR has established itself as a trusted source of investment data within the crowdfunding space. The platform currently tracks over 1.4 million data points, encompassing critical financial metrics such as company sales, cash positions, receivables, and investor sentiment. By incorporating CCLEAR’s proprietary data methodologies, InvestmentX subscribers will have access to a range of predictive analytics, including “velocity of money,” to gauge real-time traction in live crowdfunding campaigns.
“This partnership is about empowering investors with the real-time data they need to make smarter, more confident investments,” said Sherwood Neiss, Principal at Crowdfund Capital Advisors. “Investment crowdfunding is not only about compelling stories but also hard numbers. CCLEAR brings the level of transparency and detailed analytics to early-stage investing that historically has been reserved for the public markets. We are thrilled to work with InvestmentX to support their audience in navigating this dynamic sector.”
InvestmentX’s platform will now include real-time updates on top-performing crowdfunding campaigns, enhanced by CCLEAR’s cutting-edge data capabilities. CCLEAR’s unique analytical approach combines raw financial data with investor sentiment and market trends, offering predictive insights that are crucial for identifying promising investment opportunities at an early stage.
Through this collaboration, Crowdfund Capital Advisors and InvestmentX are united in their mission to broaden access to investment insights, reinforcing the impact of Regulation Crowdfunding in democratizing access to capital for startups and emerging businesses. Both firms look forward to further developing tools that support informed investing while fostering a sustainable investment crowdfunding ecosystem.
For further information, please contact:
About Crowdfund Capital Advisors
Crowdfund Capital Advisors (CCA) is a global advisory and consulting firm specializing in crowdfunding and early-stage finance. CCA provides data-driven insights, regulatory guidance, and ecosystem development for governments, organizations, and investors. CCLEAR, the data division of CCA, is the industry-leading source of investment crowdfunding data.
About InvestmentX
InvestmentX is an investment analysis and financial media company, offering insights and tools for retail and professional investors seeking to navigate emerging investment opportunities. The platform is dedicated to promoting informed, data-backed investment strategies in both traditional and alternative asset classes.
As we approach the final stages of the 2024 election, both political campaigns are focused on the economy. Yet, a key piece of the puzzle is often missing in these discussions: small businesses and startups, the true drivers of job creation and innovation in America. Whether you’re a business owner, an entrepreneur, or just someone passionate about the future of the U.S. economy, this is the moment to highlight the role of investment crowdfunding.
Investment Crowdfunding: A Game-Changer for Startups
Investment crowdfunding democratizes access to capital, allowing everyday Americans to invest in startups and small businesses through online platforms. This approach, first introduced under the JOBS Act of 2012, opens doors that were traditionally reserved for the wealthy or institutional investors. Over $2.5 billion has already been raised through investment crowdfunding, helping small businesses thrive and create jobs in a range of industries.
This method benefits both campaigns’ objectives. On one hand, it supports Vice President Harris’ focus on fostering innovation and offering greater opportunities for women and minority entrepreneurs. On the other hand, it aligns perfectly with President Trump’s goals of boosting U.S. manufacturing, reducing taxes, and spurring domestic job creation. By strategically co-investing alongside the public, the government amplifies the success of these small businesses without taking unnecessary financial risks.
Key Benefits of Investment Crowdfunding:
- Immediate Access to Capital: Startups can raise funds when they need it most, without waiting for years to become profitable. This addresses the cash flow crisis that many new businesses face.
- Supporting Underserved Entrepreneurs: Women and minority entrepreneurs, who have traditionally struggled to access venture capital, have been significant beneficiaries of investment crowdfunding.
- Strategic Government Co-Investment: The proposed $1B equity and $1B debt funds ensure that the government is not giving away money but is strategically co-investing alongside everyday Americans, targeting businesses with real growth potential.
Why Both Campaigns Should Embrace This Proposal
Investment crowdfunding offers a bipartisan solution to some of the nation’s biggest economic challenges. It encourages job creation, supports diverse entrepreneurs, and strengthens the backbone of the American economy—our small businesses. By integrating targeted tax incentives and leveraging AI-powered partnerships with venture funds, this approach amplifies economic growth while minimizing risk.
Ready to Learn More?
Download the full Investment Crowdfunding Proposal and discover how this initiative can drive innovation and job creation nationwide. Download the Proposal
For more insights on investment crowdfunding and its impact, visit Crowdfund Capital Advisors.
As venture capital (VC) firms face declining investor interest, leading to concerns over inactive “zombie funds,” investment crowdfunding tells a different story. While both sectors have experienced reductions in investor numbers, Reg CF continues to show resilience, maintaining broader participation compared to venture capital, despite a sharp drop in investors between 2023 and 2024.
Investor Participation: A 30.4% Drop from 2023 to 2024, but Still Dominating VC
In recent years, investment crowdfunding has seen a significant decline in the number of active investors. From 2023 to 2024, Reg CF is expected to experience a 30.4% drop in investors, falling from 316,608 to an estimated 220,404. This sharp decline mirrors the 25% decrease reported in VC participation in recent years, but there’s an important nuance: even with this steep drop, investment crowdfunding remains far more accessible and attracts significantly more investors than venture capital.
In fact, throughout the observed period, Reg CF investor numbers have consistently outpaced VC investors. For instance, in 2021, the number of Reg CF investors was 2,137% higher than VC investors on Pitchbook, and even in 2024, Reg CF still boasts a 1,929% higher investor base than VC. It’s worth noting that Reg CF only launched in May 2016, so its percentage increase would have been even more substantial had it been a full year. This difference highlights a key advantage of Reg CF: its accessibility. Reg CF investors are often friends, family, and customers of the businesses, making it easier to connect with them and engage their support. In contrast, VC investors are notoriously difficult to find, and securing their commitment requires navigating rigorous screening processes and multiple rounds of engagement.
Capital Inflows: Investment Crowdfunding Remains Resilient
Despite the 30.4% decline in investor numbers between 2023 and 2024, the amount of capital raised through Reg CF platforms has remained robust. From just $19.71M in 2016, investment crowdfunding surged to $556.90M in 2021. Although there was a dip in 2022, with $498.24M raised, the market bounced back in 2023 to $526.52M. Looking forward to 2024, projections show capital inflows remaining strong at $540.06M.
This trend is striking when compared to VC, where investor numbers have also fallen significantly, and capital raised has seen greater volatility. Investment crowdfunding, on the other hand, has proven to be more resilient and inclusive, offering an avenue for startups to continue raising funds despite broader market challenges. Moreover, the current lack of VC investors is creating an opportunity for Reg CF investors to get in on deals where valuations have been reset and traditional capital sources are pulling back. This opens the door for retail investors to access promising companies at more attractive valuations, which could prove to be highly beneficial in the long run.
Conclusion: Investment Crowdfunding Still a Vital Option with Long-Term Potential
While the number of Reg CF investors is expected to drop by 30.4% from 2023 to 2024, investment crowdfunding continues to be a critical funding tool for startups and small businesses. The capital raised through these platforms remains strong, showing that while fewer investors may be participating, those that do are contributing meaningfully. With its democratized approach, Reg CF offers a compelling alternative to venture capital, which remains heavily reliant on fewer, larger investors.
Furthermore, the ongoing valuation resets and absence of traditional VC capital provide a unique window of opportunity for Reg CF investors. Though it’s a game of risk, the potential upside for those who take part in these investment rounds could be substantial when these companies reach an exit.
* The data in this report comes from CCLEAR, the industry’s only 100% complete dataset of all investment crowdfunding transactions that began when the industry launched on May 16, 2016. For more information, see cclear.ai or contact data@theccagroup.com
At Crowdfund Capital Advisors, we are committed to ensuring that small businesses and startups across the United States have the capital they need to grow and thrive. Today, we’re proud to support the Empowering Main Street in America Act of 2024, a critical piece of legislation that will help expand access to capital for underserved entrepreneurs, especially women and minority founders who continue to face barriers in the financial system.
This new bill builds on the bipartisan success of the JOBS Act of 2012, which transformed the way small businesses raise funds through mechanisms like Regulation Crowdfunding (Reg CF). As a tool that democratizes capital formation, Reg CF has been a game-changer for many entrepreneurs who have been historically excluded from traditional funding networks, such as venture capital (VC) and banks.
Who We Are: The Data Behind Our Insights
At CCA, we conduct extensive research, analysis, and reporting on the crowdfunding industry through our proprietary data platform, CCLEAR. CCLEAR allows us to gather comprehensive data on crowdfunding campaigns, track success rates, and monitor the performance of businesses using Reg CF. This data is crucial to understanding how Reg CF is affecting the landscape of entrepreneurship in the U.S., especially for those who have historically struggled to access capital.
Our research shows that women and minority entrepreneurs, in particular, have thrived under Reg CF. In the past year alone, 40.7% of all Reg CF campaigns involved at least one woman or minority founder. Not only are these entrepreneurs participating at higher rates, but they are also seeing strong success. Women-led campaigns, for example, boast a 66.6% success rate, higher than white male and minority male founders. This success translates into real economic impact, with these businesses driving job creation and revenue growth in communities across the country.
Why the Empowering Main Street Act is Important
The Empowering Main Street Act of 2024 addresses one of the biggest challenges facing small businesses today: access to capital. While venture capital is often concentrated in specific regions and networks, Reg CF has made it possible for entrepreneurs from all backgrounds and regions to connect with investors and raise the funds they need to grow. This bill strengthens that ecosystem by reducing regulatory barriers, increasing transparency, and ensuring that investors are protected.
The bill is particularly important for women and minority entrepreneurs, who are some of the most underserved groups in the financial system. Venture capital, for example, allocates only 2% of its funds to women and minority founders, compared to the 23.5% of Reg CF funds directed toward these groups over the past year. This stark disparity highlights why Reg CF—and by extension, the Empowering Main Street Act—is so vital.
In addition to expanding access to capital, this bill promotes community-driven investment. Research shows that 80% of investors in Reg CF campaigns come from an issuer’s first-degree network—meaning that many of the people investing in these businesses are customers, community members, and supporters who are directly connected to the company’s mission. This approach fosters strong ties between businesses and their communities, giving entrepreneurs not only financial backing but also a dedicated base of support. This is particularly impactful for women and minority founders, who often face systemic barriers to accessing traditional investor networks.
Real Economic Impact
The data is clear: businesses funded through Reg CF are not only raising capital—they are creating jobs and contributing to local economies. Over the past year, 31.2% of all jobs created by Reg CF-funded companies came from businesses led by women and minority founders. These businesses also saw average revenue growth of 19%, showing that when given the opportunity, underrepresented founders have the ability to grow and sustain thriving businesses.
Even more impressive is the long-term success of Reg CF-funded businesses. Only 6.5% of women- and minority-led companies funded through Reg CF have closed within their first five years, compared to 17.8% of all Reg CF companies and 50% of U.S. companies overall, according to the Bureau of Labor Statistics. Furthermore, 24.4% of women- and minority-led companies have gone on to raise follow-on financing, proving that these businesses are not just surviving—they’re excelling.
Moving Forward: A Call to Action
The Empowering Main Street in America Act of 2024 is a vital piece of legislation that will further strengthen the ability of all entrepreneurs—especially women and minority founders—to access the capital they need to succeed. By supporting this bill, Congress will ensure that more Americans have the opportunity to grow their businesses, create jobs, and contribute to the overall health of the U.S. economy.
At CCA, we will continue to advocate for policies that promote inclusive capital formation and work to close the funding gap for underserved entrepreneurs. Through CCLEAR, we will keep gathering the data needed to provide insights and highlight the impact of crowdfunding on the broader economy.
We urge Congress to pass the Empowering Main Street in America Act, a bill that will have a lasting impact on the future of American entrepreneurship.
For over 15 years, Shark Tank has captured the imagination of millions worldwide, featuring entrepreneurs pitching their innovative ideas to a panel of seasoned investors—also known as the “Sharks.” Since its debut in 2009, the show has become a global phenomenon, sparking versions in countries like Canada, Australia, and beyond. More than just a TV show, Shark Tank has built a reputation as a launchpad for aspiring businesses to gain national exposure, strategic partnerships, and often the necessary capital to scale their operations.
But what happens after these businesses secure a deal—or don’t? Increasingly, we are seeing Shark Tank companies turn to Regulation Crowdfunding (Reg CF) as a follow-up financing option. Reg CF allows these businesses to raise capital from a broad base of investors, including everyday people who want to be part of the companies they believe in.
Download the full report AND the list of all Shark Tank Issuers/Offerings:
The Appeal of Regulation Crowdfunding
What makes Reg CF so attractive to Shark Tank businesses? For many, it’s not just about capital. While shows like Shark Tank provide an excellent opportunity to secure large investments from well-known entrepreneurs, Regulation Crowdfunding offers something equally powerful—crowd advocacy.
With crowdfunding, these businesses don’t just gain funds; they gain a community of investors who are also customers, brand advocates, and ambassadors. These are people who believe in the mission of the business and are more likely to promote the product or service, providing a lasting, loyal customer base. This added layer of advocacy can help drive long-term success.
Kevin O’Leary’s Role in Crowdfunding
Interestingly, one of the Sharks—Kevin O’Leary—has become a leading voice in the crowdfunding space. As a strategic advisor and spokesperson for StartEngine, one of the top platforms for Reg CF, O’Leary has leveraged his Shark Tank influence to promote the benefits of equity crowdfunding. StartEngine has hosted many high-profile campaigns, though it faces competition from platforms like Wefunder, which has raised more capital for Shark Tank issuers to date.
The Shark Tank Effect on Reg CF
There’s no doubt that Shark Tank fame can provide a significant boost to a company’s crowdfunding efforts. Many businesses that appear on the show, regardless of whether they secure a deal, experience a massive surge in public interest—a phenomenon known as the “Shark Tank effect.” This heightened visibility positions them well for Reg CF, allowing them to capitalize on public excitement while engaging a broader network of potential investors.
Over time, we’ve seen numerous Shark Tank companies continue their fundraising journeys via crowdfunding platforms, achieving considerable success. Not only do they raise millions in follow-up funding, but they also increase their valuation and expand their market reach. By inviting regular investors into their companies, they foster stronger ties with their customer base, ensuring that these backers are deeply invested in their success, both financially and emotionally.
What Does This Mean for Entrepreneurs?
For entrepreneurs who have appeared on Shark Tank, Regulation Crowdfunding offers a powerful tool to maintain momentum post-show. Whether they close a deal with a Shark or not, crowdfunding gives them the opportunity to continue building capital while turning fans into investors. As more Shark Tank alumni turn to Reg CF, it’s clear that crowdfunding is becoming a critical part of the growth strategy for these businesses.
If you’re a business owner considering crowdfunding or an investor interested in the companies behind Shark Tank, keep an eye on this evolving trend. The future of fundraising is changing, and Shark Tank companies are leading the charge in merging traditional capital raising with the power of the crowd.
September 2024 marked an intriguing month for the crowdfunding sector, as markets adapted to shifting macroeconomic conditions while continuing to show signs of resilience. The Federal Reserve’s decision to implement a 50 basis point rate cut—its first in over four years—helped ease financial conditions, and this move was well-received by both traditional markets and the crowdfunding space. Despite geopolitical tensions and slowing growth signals, there are key takeaways you won’t want to miss from September’s crowdfunding landscape.
Deal Flow and Commitments
Crowdfunding deal flow continued to rise, with 126 new deals launched in September across 102 cities. The industry secured $38.2 million in commitments, though this was a step down from August’s higher totals. Automotive and gaming companies stood out, with deals like Olympian Motors and Orange Comet raising significant capital.
Debt vs. Equity Trends
While debt offerings made up 35.7% of all deals, equity remained dominant in terms of capital raised. Debt deals are raising larger sums than before, despite representing a smaller portion of overall capital commitments.
Platform Leaders
Platforms like Honeycomb and StartEngine saw notable growth, with Honeycomb leading the market in new deals. Established platforms such as Wefunder retained their market share, though their commitments have begun to show signs of pressure.
For a deeper dive into September’s market trends—including detailed analysis of valuations, platform performance, and key investor trends—subscribe to our full report and stay ahead in the evolving crowdfunding landscape!
We’re excited to announce the release of our August 2024 report, providing deep insights into the state of Investment Crowdfunding, with a special focus on the coffee and tea industry!
Since its inception in 2016, coffee and tea issuers have emerged as one of the most compelling segments within crowdfunding. With 211 deals completed and nearly $55 million invested, this sector is rapidly evolving. Our August report uncovers key trends, including the rise in median valuations, the role of top platforms like Honeycomb, Wefunder, and StartEngine, and how investor interest has shifted in 2024.
But the numbers only tell part of the story. Our report dives deeper into the economic impact, revealing how coffee and tea companies have contributed $1.7 billion to the U.S. economy and created over 13,200 jobs in 116 cities nationwide. This growing market isn’t just about coffee and tea—it’s about community, innovation, and investment opportunities.
Ready to explore the full report? Whether you’re interested in the broader crowdfunding landscape or specifically focused on coffee and tea issuers, we’ve got you covered with several options:
- Subscribe to our Monthly Reports: Get all industry insights delivered straight to your inbox for just $34 per month.
- One-Time Report Purchase: Buy the August 2024 Industry/Coffee & Tea report for $49.95.
- Exclusive Coffee & Tea Analysis: For $99.95, gain access to a detailed analysis of coffee/tea companies that have successfully raised capital, complete with offering links, amounts raised, # of checks written, financials, valuations, and more.
Don’t miss out on this opportunity to stay ahead of the curve in the fast-growing world of investment crowdfunding!
In fact, throughout the observed period, Reg CF investor numbers have consistently outpaced VC investors. For instance, in 2021, the number of Reg CF investors was 2,137% higher than VC investors on Pitchbook, and even in 2024, Reg CF still boasts a 1,929% higher investor base than VC. It’s worth noting that Reg CF only launched in May 2016, so its percentage increase would have been even more substantial had it been a full year. This difference highlights a key advantage of Reg CF: its accessibility. Reg CF investors are often friends, family, and customers of the businesses, making it easier to connect with them and engage their support. In contrast, VC investors are notoriously difficult to find, and securing their commitment requires navigating rigorous screening processes and multiple rounds of engagement.
