Already the model is working. CircleUp was launched in 2011, but has only been operational for one year. In that time frame, the Web portal has already helped 12 companies raise $10 million in growth capital.
While the average food company on Kickstarter raises less than $10,000, the average company on CircleUp raises close to $1 million, according to the company.
The companies, on average, have had more than $1 million in annual revenue, are growing at more than 70% per year and raised money in just over two months, the company says.
"We think there is a huge opportunity in consumer. [It's] very underserved by financial markets," Eakin says."Most have done a friends and family [investing] round, but this will be their first round of expansion capital beyond that," he says. Friday marks the first anniversary of The Jumpstart Our Business Startups Act (JOBS Act), which, in its most basic sense, relaxed the stringent rules attached to small private companies from raising capital. One specific in the law opens up the gates for investment-based or equity crowdfunding allowing accredited as well as unaccredited investors to make investments in promising entrepreneurial ventures or small companies looking for expansion funding. However, the Securities and Exchange Commission has dragged its feet on finalizing rules for investment-based crowdfunding, putting implementation likely in 2014 at this point.
Once the rules are settled, speculation regarding the potential for investment-based crowdfunding is astonishing. Some experts believe that equity crowdfunding could grow to be a $300-billion industry, but there are high hurdles to jump to get to that level, such as legal and cultural barriers to get past. "I think it's realistic, but you really have to look out not months, but years -- many, many years," angel investor Chris Camillo said at the inaugural Crowdfund Texas Conference in Austin. That said, Camillo, in an interview with TheStreet on Wednesday, said CircleUp's sector-specific focus is a good bet on the future of crowdfunding portals. "Specialization is at the core of crowdfunding portals," Camillo says.
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