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- Austin, TX and San Francisco, CA
- Equity crowdfunding for non-accredited investors
- Broker-dealer registered by the FINRA
- Secured funding for big-name companies
- Opaque about costs
MicroVentures is an equity crowdfunding platform that offers accredited investors and non-accredited investors alike the chance to invest in early-stage companies.
Founded in 2009 by Bill Clark and based in Austin, Texas, MicroVentures specializes in Regulation Crowdfunding, which is a term that refers to a form of equity crowdfunding that allows everyone to invest, not just accredited investors. Companies on MicroVentures can also launch Regulation D Rule 506 raises, though these are limited to accredited investors. Furthermore, MicroVentures is one of the few equity crowdfunding sites to be a broker-dealer registered by the Financial Industry Regulatory Authority (FINRA).
According to MicroVentures, “The sweet spot for our platform is companies or startups that need $150,000 to $1,000,000 in capital.” They go on to describe what their investors typically look for when seeking investment opportunities: not just entrepreneurs/companies with good ideas, but ideas with demonstrated market traction and a team with experience in the industry in question. Clearly, this isn’t crowdfunding for the little guy. Home-based creators of digital content and mom-and-pop shops will find rewards crowdfunding platforms better suited to their needs.
Read on to see if MicroVentures’s brand of Regulation Crowdfunding matches the needs of your business.
Table of Contents
MicroVentures describes its services thusly:
MicroVentures is an investment platform that helps startups and small businesses raise capital online. We currently raise capital through Regulation D Rule 506 and Regulation Crowdfunding.
MicroVentures names the following industries as its main areas of investment:
- Internet technology
- Media and entertainment
- Green technology
MicroVentures offers anybody the chance to become an investor — you can invest as little as $100 in a startup.
According to MicroVentures:
MicroVentures looks for businesses that have a unique idea or a new spin on an old technology. We review the team, traction, market size and other factors to determine if the company will be a good fit for our platform. Additionally, we believe in accountability to the business (or concept), which is one reason we seek to identify firms whose founders already have invested their own capital in their business.
The typical amount of time MicroVentures will spend assessing your application before giving it the go-ahead (or not) is six weeks.
Be warned, however: MicroVentures is a selective platform. When you start the application process, MicroVentures informs you that “We review every company that is submitted, but we are only able to respond to the ones we think will be successful on our platform. This is less than 5% of the companies that submit. . .”
Additionally, MicroVentures states on its Investors page: “We started raising capital for startups in 2011. Since then we have made over 160 investments and raised over $100M.”
In comparison to the big players in rewards crowdfunding, that’s not terribly impressive! Compare that to the 441,785 projects (and the 161,536 successfully funded projects) that have been launched on Kickstarter — a company that also closely vets its campaigns — as of April 2019, and you see just how exclusive MicroVentures’s platform is relative to the “typical” crowdfunding site.
Terms & Fees
These are the terms and fees for MicroVentures’s equity crowdfunding campaigns:
|Funding Duration Limit:||one year|
|Platform Fee:||$99 application fee, $250 due diligence fee, 10% of what you raise (5% from the issuer and 5% from investors)|
|Payment Processing Fee:||None|
Note that in addition to the fees listed above, there may be additional costs involved in preparing and presenting your campaign (involving the filing of legal forms and the like). I know this from reviewing other equity crowdfunding platforms and studying their terms and fees. However, MicroVentures has next to no information on its website about the costs of running an equity campaign. In this sense, it’s one of the least transparent crowdfunding firms I’ve come across.
And now, a warning: Equity crowdfunding is a much more legally fraught field than rewards crowdfunding, as investing is heavily regulated. Consult an attorney if any legal questions arise in the course of preparing your campaign.
MicroVentures’s application page for startups contains quite a lot of fields for the prospective campaigner to fill out. You’ll be asked to name a notable investor, describe your revenue and partnerships, discuss the terms of your financing round, and more. Remember, MicroVentures estimates that less than 5% of applying startups will ultimately be allowed to fundraise on the platform.
If your campaign meets its funding goal, you should get your funds within two weeks.
Sales & Advertising Transparency
As I said, MicroVentures is strangely opaque when it comes to detailing the costs of launching an equity crowdfunding campaign on its platform. One of the few sources of information MicroVentures provides to startups is the brief FAQ towards the bottom of its “Startups” page. The company seems to expect startups to contact them to get these details. Not a terribly open approach, but then again, MicroVentures is an exclusive platform and it doesn’t try to mitigate this impression.
Customer Service & Technical Support
MicroVentures provides a phone number and a contact form on its webpage. Of course, if your campaign is accepted by the company, representatives will be in contact with you.
Most of the existing reviews of MicroVentures evaluate the company from the perspective of the investor, not the startup. As such, they are of limited value to the businesses actually interested in what MicroVentures has to offer. One thing the reviews seem to agree on, however, is the fact that MicroVentures’s heavy curation of the companies on its platform makes it a solid means of finding investment opportunities.
As one of the industry’s pioneers, MicroVentures has a reputation as a powerhouse in the equity crowdfunding field. It offered investments in Facebook and Twitter before they went public. It is a trusted entity and it has seen over $100 million in investment sent to a very select group of companies. Clearly, for the right kind of startup, MicroVentures offers an attractive package of services.
It’s open to debate, however, to what degree this conception of equity crowdfunding truly fulfills the original promise of crowdfunding, which was to open up funding to a broader cross-section of startups and businesses than had been adequately served by financial markets in the past.
An outfit truly at the beginning of its creation story would be better served by rewards crowdfunders such as Kickstarter (see our review) and Indiegogo (see our review) when initially raising capital. A track record of successful rewards crowdfunding will prove helpful if your enterprise should eventually seek to use MicroVentures’s equity crowdfunding platform.