StartEngine Index: Slow January follows Robust December as Reg CF Tops $90 Million

StartEngine, one of the largest investment crowdfunding platforms in the US, produces a monthly index focusing on Reg CF – the smallest of the three crowdfunding exemptions. The snapshot is an interesting perspective on sector progress.

The most recent Index, published last week, indicates $90.7 million has been raised to date for all issuers using Reg CF. This is different from the CCA report as these include investors who get pushed into a Reg D exemption thus pushing the CCA number higher. Necessity is the mother of invention and this just highlights the fact that the Reg CF cap, now at $1.07 million, is far too low and a painful shortcoming of the exemption. When demand is higher than the $1.07 million cap, it has become standard operating procedure to reach out to investors and ask accredited investors to invest under Reg D 506c (accredited crowdfunding).

So what do we learn from the Index for January?

Reg CF investments grew 5%, a decline from the 12% growth seen in December. In aggregate, January saw a net increase of $5.3 million. The largest raise during January was on NextSeed. BuffBrew Taproom hit its max of $1 million.

Of the ten largest campaigns, 5 were hosted on StartEngine’s platform, 3 on NextSeed, and 1 on each SeedInvest and Wefunder.

Tech is consistently a favorite of both investors and platforms with this sector garnering 21.3% market share. Of note, Medtech showed up on SeedInvest with $794,000 raised by the end of January.

As for securities offered, the breakdown is as follows:

  • Common Stock 36.2%
  • SAFEs – 25.9%
  • Debt – 20%

StartEngine is quick to note that Wefunder has dominated Reg CF volume through 2017 but as of 2018 they became the forerunning in volume. Since Reg CF became actionable in 2016, Wefunder has listed 165 campaigns, StartEngine has listed 168 campaigns and SeedInvest 79.

California and Texas are the two most active states when it comes to Reg CF crowdfunding. California is pretty obvious as it is the largest center of entrepreneurship and innovation in the country. Texas is home to NextSeed – which probably helps a bit.

 

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