|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.|
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.
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.
So does CircleUp. CircleUp is partnering with big name consumer corporations like General Mills ( GIS) and Procter & Gamble ( PG). Through the partnerships, General Mills and P&G will offer mentoring to the companies on things like growing brands, licensing deals, etc. The partnerships then give the corporations a view of the early-stage consumer products market and the ability to screen potential investments or eventual acquisitions. One criticism against CircleUp is the amount of data and financials a company has to provide in order to be listed on the site. Startups worry that it will lessen their competitive advantage if they essentially give away all their secrets, but others say it's the price you pay if you want funding. "It's one way that were trying to add value not only to the companies, but the ecosystem overall," Eakin says. The company also dismisses criticism of whether it should be called a crowdfunding or private placement site, with Eakin saying: "we are a crowdfunding site that provides investment opportunities for accredited investors. We enable individual investors to come together to invest in a private business. Current regulations limit this model to accredited investors only, and we follow those regulations." The main challenge for the company right now is keeping up with demand both from companies seeking funding as well as investors hungry for investment opportunities, he says. "We believe the models like CircleUp -- and there are others -- have demonstrated the Internet can be an efficient tool to start
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