On May 16, 2016, equity crowdfunding (ECF) went live. Finally, anyone, not just wealthy accredited investors, could invest in startups.
It took most investors a while to wrap their heads around the idea that anyone can invest in private startups online with as little as $10. And some entrepreneurs who wanted to raise money were undoubtedly skeptical about using this new way to raise capital at first.
But today, almost three years later, the equity crowdfunding world is thriving. Now that hundreds of companies have used ECF successfully, and more than $71 million has been raised, people are beginning to see the massive potential in this young market.
When ECF first launched in 2016, the only portal to have live deals that first week was Wefunder. Today, there are many sites offering high-quality startup deals. The ECF portals we look at most frequently include (in no particular order):
- EnergyFunders. (Note: This is a recent First Stage Investor recommendation. EnergyFunders doesn’t have many ECF deals yet because the portal is currently focused on offering oil and gas drilling deals to accredited investors, but after speaking with the founder recently, I learned the company is making great progress.)
Vin Narayanan (our Senior Managing Editor), Andy Gordon and I look at nearly every startup that launches an ECF round. And I’m happy to report that the quality of deals has never been higher.
High-Quality Deals, Reasonable Valuations
We’re determined to help you find the best startup deals on the market. Over the last six months or so, that part of our job has gotten easier (and harder, in other ways).
Part of it is that the equity crowdfunding market has been operating smoothly for more than two years and people are starting to understand it.
The other part is that the industry is growing. Word is spreading organically from investors and entrepreneurs alike.
The result is that we have a greater number of quality deals to choose from today. In fact, we’re deep into the process of reviewing a few promising deals right now.
One of the current standouts I’m reviewing closely is Petit Vour on Wefunder. This startup sells subscription beauty boxes with a twist: All its products are cruelty-free, meaning it doesn’t use animal products or test products on animals.
Petit Vour has raised only around $350,000 so far, but it’s already sold $8 million worth of product and was on track to do $3 million in 2018 alone. And it’s been profitable for five consecutive years since its inception in 2013.
Every month, Petit Vour puts together a unique gift box filled with natural beauty products and sells it for $15 to $25. You can see the current box here.
The box is filled with travel-size products, and if the customer likes any particular product, they can buy a larger size directly from Petit Vour. The revenue is split almost evenly between the subscription box and the online shop.
Petit Vour is currently raising money at a $6 million valuation cap. That is extremely reasonable given its current revenue and growth. This deal fits right in with my recent update on lean, bootstrapping startups.
I should note here that I haven’t finished researching this opportunity, so I’m not giving a formal recommendation yet. I like the deal, but I’m going to complete my research before recommending it.
Right now, I’m simply using Petit Vour as an example of the high-quality deals that have been coming online lately. It’s a fantastic sign for the ECF industry.
I suspect we’ll have quite a few nice recommendations for you in the coming months, so keep an eye on your inbox. Be sure to check our monthly issues too, as recommendations are often included there.
Co-Founder, First Stage Investor