Thoughts on startups by investors that
fund them & entrepreneurs that run them

Which equity based crowdfunding startups hold the most promise / have the highest growth potential at this point?

Since no equity crowdfunding platforms under the JOBS Act will be able to even begin operations for another six to nine months, it is impossible for any of them to be “the market leader” at this point…even though every single one of them—as in a drawing room farce—is claiming the title.

And since the three logical big players (KickStarter, Gust and AngelList) have all indicated that they are unlikely to enter the fray, we need to exclude them as well.

That leaves us with five equity ‘crowdfunding’ companies that are actually up and operating: one playing close to the line, one using debt, one limited to Accredited investors, and two using the SPV strategy. They are:

The fast-follower to KickStarter, they have taken the “populist” route rather than the “curation” one. They’ve also somewhat blatantly been claiming to offer crowd equity for some time, despite the SEC regs in the US.  But their aggressive market entry scored them $15m in venture financing last month, so you underestimate them at your peril.

This UK-based company, founded by an American securities attorney, has been operating for almost a year, pioneering the SPV approach, which is legal in the UK. They’re very smart, and have been involved with the JOBS Act legislation.

They have been operating their platform for a few months under the exemption for  Accredited investors, and have done a nice job in positioning themselves to enable Accredited investors to invest in revenue-generating, consumer brand companies.

A relatively recent entrant, the company is based in New York with its initial operations in Florida. They are following the earlier ProFounder playbook, using existing state-by-state regulations for revenue-backed notes. Smart guys.

In the currently Combinator class, this startup is combining curation, SPVs and [at least for now] Accredited Investor status to allow crowds to invest in ‘micro-funds’ bundling several promising startups (such as yC graduates). In addition to the yC/DST investment, they’ve scored some additional smart money as well.

Finally, among the 200-300 other eager startups on their way to jumping into the arena, there are three or four still in stealth mode that are being run by experienced people I respect, so I’ll be looking out for them as well.

If all this sounds like something between Sons of Anarchy and a three ring circus, you’re right :-). Later this year, but before the floodgates open in January, Gust is planning to introduce a program in conjunction with the ‘official’ angel/venture industry associations, to establish some guidelines which will be useful in determining which platforms will play best with later stage funding options. Stay tuned!

*original post can be found on Quora @ *

Written by David S. Rose

user David S. Rose Founder and CEO,

David has been described as "the Father of Angel Investing in New York" by Crain's New York Business, & a "world conquering entrepreneur" by BusinessWeek. He is a serial entrepreneur & Inc 500 CEO who chairs New York Angels, one of the most active angel investment groups. David is also CEO of Gust.

prev next

You might also be interested in

The UrbanTech Movement is Transforming Cities

Urbanization is a defining process of modern life.

More than half of the world’s population now lives in cities, and the number of urban citizens around the world is projected to rise to 66% by 2050.

In the US, over 80% of the population lives in urban areas with 1 in 7 Americans living in New York, Los Angeles and

Read more >

Angel Investors Spotlight: An Inside Look at Hudson Valley Startup Fund’s Investment Process & Advice for Founders

Hudson Valley Startup Fund brings together a network of the region’s successful business and community leaders to give back, supporting the launch of the next Hudson Valley visionaries. We sat down with fund managers Chad Gomes, Johnny LeHane and Paul Hakim as they shared insights into their investment process, what they look for in both group members and startups, and

Read more >

The Right Startup Advisors Are As Valuable As Money

If you are a new entrepreneur, or entering a new business area, it’s always worth your time to assemble an Advisory Board of two or three executives who have travelled that road before. You need them before you need funding, and if you select the wrong people, or use them incorrectly, no amount of money will likely save your startup.

Read more >

How do I get in touch with investors/funds with just an idea and no product?

There are many wonderful ideas, and they are not necessarily easy to come up with. So congratulations on having thought of one!


“Having value” and “Being fundable” are two completely different things. What the more experienced responders here are saying is completely accurate: while a good idea is usually a necessary ingredient for the formation of a good company, it is

Read more >

Is there an incubator for aspiring Angel Investors or VCs?

No, but there are several sets of courses on angel investing that can provide a good base from which to start. The most comprehensive and best known is the Power of Angel Investing seminar series developed by the Angel Resource Institute (formerly known as the Angel Capital Education Foundation, and prior to that part of the Angel Capital Association). It

Read more >