Why Crowdfund.co Moved Away From Startups

Few days ago, Crowdfund.co, an equity crowdfunding, announced the company will move away from the seed and startup capital world.

According to experts, this is part of a more general market trend in which platforms prefer to work with companies with proven concepts. Why?

As argued by James Codling earlier this month, echoed by Jouko Ahvenainen who pointed out that

the market will go through an increased level of specialization and possibly there will be different marketplaces for different stages of companies

this trend is due to

the increase in sophisticated investors (who are) using online platforms to invest in scale-up businesses,

which in turn it makes essential for platforms to adapt to meet investors’ needs. As a consequence,

platforms are increasingly becoming investor-led, rather than deal-led and have developed tools to aid disclosure on investee performance, so investors can monitor their portfolio. 

This is in line with Carl Christensen, VP of Crowdfund.co’s Corporate Strategy, who said:

If you look at the areas where equity crowdfunding is most succeeding you will notice a couple of key features.  First, most of the deals are either fully-baked with a quality team. Second, many of the best deals either have history, revenues, cashflow or they are collateralized by some asset (e.g. real estate or equipment).

Therefore, Crowdfund.co aims to provide more stable cash flowing businesses to its investor-base.

Furthermore, the firm’s founders recognize that crowdfunding has not fully matured as rapidly as many had anticipated and that this general market malaise has created some hesitancy on the part of both investors and entrepreneurs alike.

And, finally, they are aware of the fact that

growth equity is much more enticing than a hope and a prayer.

Earlier this year, the company had announced the expansion of service offerings that include debt crowdfunding for things like acquisition financing and recapitalization of privately-held businesses.