NEW YORK (TheStreet) -- Somewhere in the middle of a crowdfunding portal and a private placement Web site lies CircleUp, a site that could be the framework for a new breed of investing in high-potential industry-specific companies.
CircleUp aims to get young, but already revenue-generating ventures in the consumer goods sector connected with investors to provide the financing to expand their business. For young companies, particularly those not in the tech sector, the process for finding capital could take months or years in some cases, exceedingly long for a business trying to get off its feet and expand. Investors are usually isolated either by their geographic boundaries or from beyond personal networks.
"It's increasingly difficult for investors to find high-growth private companies to invest in. Similarly, the process of businesses finding investable companies, particularly in specific verticals is equally difficult," says COO and co-founder Rory Eakin.
|Erik Vandekieft, CircleUp's director of engineering (left), Rory Eakin, CircleUp's co-founder and COO (middle) and engineer Bryce Drennan, sit amongst brands that have successfully raised money through the crowdfunding site.|
So why is CircleUp focusing on promising consumer-goods businesses?Simply because consumers goods -- products like baby food, skin care and kale chips -- are tangible and have business models that are easy for investors to understand as opposed to tech companies, for instance. "Not everyone can properly [use due diligence on] a software startup. But everyone buys consumer products," Eakin says. "They have straightforward economics, the balance sheet is understandable and people can go and try the product." Tech companies will generally be funded by venture capital or angel investors, meaning if you've got a really good tech concept, "chances are you are going to be discovered," Eakin says, noting that those tech ventures that do put up campaigns on crowdfunding platforms are essentially companies that have been "passed over" by other investors. However, "there's no Silicon Valley" for consumer goods, Eakin says. "There's no central clearing place for the market to operate."
The area is also a natural focus for CEO and co-founder Ryan Caldbeck. Before CircleUp, Caldbeck worked in consumer product and retail-focused private equity at TSG Consumer Partners and Encore Consumer Capital. It was through his experience, working with many consumer and retail-oriented companies too small to obtain funding through traditional private equity channels that he got the idea for CircleUp.
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