Regulation Crowdfunding (Reg CF) money raised during the month of July increased from $28 million in July 2022 to $33.7 million this July. But when comparing consecutive months, June 2023 faired better as the month prior generated $43.7 million in money raised.
Crowdfund Capital Advisors (CCA) has distributed monthly numbers for the securities exemption, which enables issuers to raise up to $5 million online. Sherwood Neiss, Principal at CCA, stated:
“The exuberance in the public markets, higher interest rate savings options, and summer holidays may have led to issuers postponing offers and investors diverting their funds. Despite this, the overall health of the investment crowdfunding industry remains strong, with year-to-date capital commitments surpassing those of the previous year.”
Year to date, things look a bit better. CCA states that the total invested in 2023 as of July is up from $291.6 million in 22022 to $298.1 million.
At the same time, July generated fewer deals, with just 76 offerings, the lowest monthly amount since April 2020. Regarding closed deals, July saw 88 funding rounds close with a success rate of 78.4%.
There were 472 active offerings at the end of July, a decline from the previous month of 560 deals.
The median valuation of firms raising money experienced a nice increase to $17.5 million in July from $10 million in June. The average funding round increased to $562,000 from last year’s $271,000.
Neiss added that they “look forward to August, which has historically been one of the stronger months for the industry as people return from vacation and investors are back in front of their computers.”
In spite of the “mixed bag,” CCA believes the overall health of Reg CF offerings is robust.
Some industry insiders would like to see the funding cap increased to $10 million or even $20 million. A higher funding cap could attract more mature firms and, correspondingly, less risky offerings.
Meanwhile, venture markets remain slow, at best. A cocktail of a challenging economy, global strife, and high-interest rates have caused many to hit the pause of private offerings.
