Crowdfunder Review

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Date Established
2012
Location
Los Angeles, CA

Pros

  • Good for seed-stage companies
  • Keep-whatever-you-raise funding
  • Crowdfunder doesn’t take a % of what you raise

Cons

  • High monthly cost
  • Most firms aren’t right for Crowdfunder
  • Limited customer support

Overview

Compared to such rewards-based crowdfunding platforms as Kickstarter, Crowdfunder is a different sort of beast. Launched in Los Angeles in 2012, Crowdfunder offers itself as an equity crowdfunding solution for “high-impact ventures.” In fact, Crowdfunder co-founder and CEO Chance Barnett was one of those who helped craft the JOBS Act — legislation passed in 2012 that opened up equity crowdfunding laws in the U.S., thus permitting companies like Crowdfunder to exist (prior to this, equity crowdfunding was not legal). In a recent Forbes article, Barnett discusses the JOBS Act and the amount of money raised under the three main portions of the law. He explains why equity crowdfunding with accredited investors has taken off in a way that equity crowdfunding with non-accredited investors has not. Accordingly, Crowdfunder’s investment platform allows for accredited investors only.

Crowdfunder is not a fundraising platform for personal causes, charities or nonprofits. It is explicitly targeted at entrepreneurs and startups with high growth potential. The cream of the crop, you could say. In their About page, Crowdfunder lists a number of figures relating to the company:

  • $160,000,000 investment commitments on the platform
  • 12,000 individual & institutional investors
  • 36,000 companies
  • Funded 100+ deals at an average deal size of $1.8M

Crowdfunder’s platform, however, comes at a price. While the company doesn’t charge a percentage fee off the amount you raise like most crowdfunding sites, you will have to pay at least $449/month to use Crowdfunder’s platform. It’s a barrier to entry that will likely scare off the less self-assured and the under-resourced. But in exchange for high monthly fees, Crowdfunder promises access to its network of elite accredited investors.

Let’s explore how Crowdfunder works.

Services Offered

Crowdfunder’s equity crowdfunding platform is aimed at a very specific portion of the market. As Crowdfunder explains on its website:

Crowdfunder is designed for early-stage startups and more mature businesses raising seed stage, Series-A & Series-B funding. Our offering does not cater to inception stage companies at this time.

Crowdfunder’s primary categories of business include tech startups, social enterprises, small businesses, and film & entertainment.

Crowdfunder refers to equity crowdfunding campaigns as Deals. Once you’ve gone through the process of creating your Deal (more on that later), you’ll have to choose a monthly subscription package, of which three are available:

Basic

  • $449/month
  • Basic Listing — “A Deal room incorporating key deal highlights along with investor CRM capability”
  • Best for experienced founders with their own network of external investors
  • Deal Discovery — Make your Deal viewable and searchable by investors
  • Deal Alerts — Automatically notify investors that your Deal has launched

Self-Start

  • $499/month OR one month free + $999 for three months
  • Investor Tools — “A Deal room with access to 13,000+ accredited investors for proactive outreach and enhanced CRM capability including deal analytics for investor tracking”
  • Best for prepared founders and fund raisers who have their Deal defined
  • Deal Discovery
  • Deal Alerts
  • Deal Analytics — Visualize metrics, trends & traffic sources for your Deal’s data
  • Deal Views — View the investors that visit your Deal and the actions they take
  • Investor Browsing — Search for and connect with strategic investors

Accelerator

  • Starting at $749/month
  • Learn To Fundraise — “Gear up for fundraising with pitch deck coaching, campaign strategy workshops, and document templates to execute a successful campaign”
  • Best for founders who need assistance in launching their crowdfunding campaign
  • Personal pre-fundraising advisor
  • Step-by-step coaching
  • Introductions to the Crowdfunder network of marketers, designers, videographers, incubators, and VCs
  • Invitation to Private Founders Events and training

All payments must be made through Visa, MasterCard, Discover or American Express. You can get a refund on your purchase up to 24 hours after you’ve made it.

Crowdfunder isn’t shy about charging a high monthly price for their services. Their target demographic is the subset of entrepreneurs confident enough in their eventual success that the notion that they might lose money to Crowdfunder while their Deal fails isn’t a deterrent. After all, if you raise hundreds of thousands of dollars, the money you’ll save by not paying 7.9% of what you’ve raised to Crowdfunder (roughly the industry-standard rate) will more than make up for the monthly costs.

As you can see by the terms used to describe Crowdfunder’s subscription packages, they aren’t trying to appeal to doe-eyed innocents here. Crowdfunder’s platform is for those conversant in the specifics of business and startup culture. Normies might be better-served by another platform.

Business Qualifications

To use Crowdfunder’s platform, you must be at least 18 years of age and your business must not be involved in the following:

  • Guns/Firearms
  • Tobacco/Cigarettes/Cannabis
  • Pyramid Marketing
  • Adult Products & Entertainment
  • Gambling
  • Contests and Raffles
  • Illegal Substances/Drugs

Here are Crowdfunder’s complete terms of use.

Terms and Fees

Here are the terms and fees for Crowdfunder’s crowdfunding campaigns:

Funding duration:No set limit (60-90 day campaigns are typical)
Crowdfunder fee:$449 per month and up
Funding terms:Keep-what-you-raise
Payment processing fee:None (Funds are collected offline)

Crowdfunder operates under the keep-what-you-raise model of crowdfunding — you keep what you raise, regardless of whether or not you meet your funding goal. Crowdfunder explains it like this: “This is because investors invest with the contingency of your business being a success and not if you reach your fundraising goal.”

In addition to the monthly fees charged for use of their platform, Crowdfunder states “We charge a one-time fee to make your Deal discoverable to our network of accredited investors.” This is a condition that Crowdfunder ought to disclose a little more prominently on their site.

One curious thing about Crowdfunder is that they don’t handle the funds themselves. You have to actually collect your funds offline from the investors themselves. It’s an odd setup — particularly for a platform that charges as much as Crowdfunder!

Bear in mind that equity crowdfunding is a still-evolving field, with the full impact of the JOBS Act still being assessed. Equity crowdfunding is a more complex proposition than, say, rewards-based crowdfunding, as investing is much more substantially regulated. Consult an attorney if you have any legal questions regarding the process, SEC regulations, etc.

Application Process

Crowdfunder’s application process is a bit more substantial than that of other crowdfunding sites. You can get started for free while you set up your Personal and Deal profiles, but in order to actually launch your Deal on Crowdfunder, you need to complete three documents: the Term Sheet, the Executive Summary, and the Investor Pitch Deck. These documents, particularly the Term Sheet, are complex. In particular, Crowdfunder recommends that when putting together your Term Sheet, you “consult and work with an experienced attorney to create the right financial offering that makes sense both for your company, and for investors.”

Sales and Advertising Transparency

Crowdfunder has a great deal of information about their services on their site, though they don’t do the best job of making sure all the charges are clear up front. You have to take a pretty deep dive into their literature to discover all the terms, conditions, and fees associated with running an equity fundraising campaign.

Customer Service and Technical Support

Crowdfunder has an extensive FAQ and numerous support articles covering every aspect of the equity crowdfunding process, but one thing I noticed when going through these articles is that some of them are out of date. Some articles reflect the fact that all provisions of the JOBS Act have now been implemented, while other, older articles still refer to certain portions of the Act not having taken effect yet. As there are thorny legal issues involved here, it’s important that this information be current!

In terms of direct support, Crowdfunder offers an email address, but no phone support or live chat.

Negative Reviews and Complaints

Reviewers have critiqued the comparatively high monthly fees charged by Crowdfunder, especially in light of the fact that Crowdfunder doesn’t transmit funds to you online like nearly every other crowdfunding platform. Users have had some critiques to make as well. The priciness of the service is a point of contention. Others have taken issue with how Crowdfunder measures the “funds raised” by businesses on the site.

Positive Reviews and Testimonials

Crowdfunder’s flexible deadlines have been praised in reviews, along with the fact that you can keep whatever you raise on the site regardless of whether or not you’ve met your funding goal. Some users have praised the quality of the customer service and the efforts the company makes to connect you to investors. Overall, feedback on Crowdfunder is limited, so it’s hard to extrapolate trends from the data available.

Final Verdict

Crowdfunder obviously isn’t a crowdfunding platform for the mom-and-pop pizza shop down the street looking to raise funds to buy a new oven. Crowdfunder’s flavor of equity crowdfunding is best suited to the sort of unique startup that has exponential growth potential. For them, Crowdfunder may be a funding option worth looking into. But for the majority of startups and businesses that might benefit from crowdfunding, there are cheaper, more straightforward platforms available.

Crowdfunder’s CEO has talked of wanting to democratize access to capital, which is indeed a commendable goal. For now, though, Crowdfunder’s appeal is limited by the expense of the platform and the complex nature of equity crowdfunding. Equity crowdfunding is a field that is likely to continue its rapid growth, however, and regulations are likely to be further streamlined in the future. Crowdfunder is well-positioned to take advantage of these trends.

Jason Vissers

Jason Vissers

Jason Vissers is a writer, cereal chef and Netflix aficionado from San Diego. A native Californian who enjoys the beach, Jason nonetheless prefers to do his surfing on the World Wide Web, the raddest wave of them all. Jason can't eat raisins.
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