The Bright Future of Investment Crowdfunding

This is what we’ve been waiting for.

We’re starting to see incredibly high-quality crowdfunding deals. Rounds that premier venture capital firms fight to get into.

People are beginning to realize the power of this form of investment.

U.K.-based Revolut is a perfect example.

Revolut is like Paypal, but it’s designed for international use. Using its app, you can send or spend cash in 23 different currencies. And Revolut’s MasterCard can be used in more than 100 countries.

Its exchange rates are excellent and there are no fees. If you’ve ever used a traditional credit or debit card overseas, you know how bad the experience can be.

The startup makes money by splitting the credit card transaction fee with MasterCard.

Revolut launched only last year and has already gained more than 200,000 users… and is adding 1,500 a day. In 10 months, it’s processed more than $500 million. It is in acceleration mode.

Revolut is raising an $8.6 million series-A round of financing. Most of the cash is coming from traditional VC firms.

Balderton Capital (one of Europe’s top-tier firms) is leading the funding. Balderton is the European division of Silicon Valley’s legendary Benchmark Capital, regarded as one of the top five VCs in the world. It’s joined by global powerhouse Index Ventures and other prominent firms.

When you have a strong lead investor (like Balderton), raising the rest of the money in a round is easy. It’s about simply figuring out who will bring the most value.

Revolut smartly chose to set aside $1 million of the round for “the crowd.” Specifically, it wants to raise money from potential customers.

Blurring the Line Between Investor and Customer

To invest in Revolut, you have to be a user of its service.

And when the round went live this week, investment reservations flooded in. More than $14 million was pledged in the first 12 hours.

However, there’s only $1 million available for equity crowdfunders. Revolut knew this was likely to happen. (Like I said, it’s a very hot deal.)

So the company is holding a kind of contest. Revolut users who are most active (add the most contacts) get first crack at the deal.

Not only does Revolut get $1 million from the crowd, but it’ll also likely get tens of thousands of new users for free. The press coverage alone more than makes up for any inconvenience the crowdfunding round caused.

This is the future of equity crowdfunding. Startup founders who want their customers to be investors and vice versa.

As Revolut and others have shown, startups can raise money from both VCs and small individual investors.

Unfortunately, U.S. investors are excluded from the Revolut deal. (That’s our government’s fault, not theirs.)

I’m using Revolut as an example because this is the type of deal you want to watch for in the future. One where the startup realizes the benefit in bringing its best customers along for the equity ride.

We are just beginning to see the power that having thousands of investor- champions can have for a startup business.

The Future Will Be Full of These Types of Deals

Only non-U.S. residents are able to invest in Revolut. If that’s you, July 18 is the deadline to register and start using the service.

It stinks for those of us in the States. But… this is just one great deal. There will be many others. Catching them simply requires patience and willingness to act when the time comes.

In fact, one of the first picks from our new service, First Stage Investor, is just as promising. And it’s in an even more exciting sector. And there are no hoops to jump through to get into the deal, either.

To get the details, you’ll need to sign up when we launch (ETA: July 21).

I apologize for the secrecy, but we can’t give away all the good stuff. I hope you understand. Watch your inbox next week for an invitation to join our service. FYI, we’re pricing First Stage Investor so it’ll be affordable for everyone.

Invest early and well,

Adam Sharp
Founder, Early Investing

P.S. Have any questions you want us to answer about equity crowdfunding? Email us at mailbag@earlyinvesting.com and we’ll do our best to give you an answer. Other feedback is also welcome.