Founders Now Have $5 Million Reasons to Crowdfund
Plus, Lisa Wang on how retail investors should respond!
Today is about as money of a day as it gets for me… March Madness officially kicks off, the news rules for Equity Crowdfunding have officially taken effect — raising the funding limit to $5 MILLION (up from $1,070,000), and to no surprise, our partners at Republic also just announced a $36m cap raise 🤯
“Should we really take crowdfunding seriously?” barked an angry-old-man VC to me in 2016… I replied. “Ummm. Fuck yes you should.” Fast-forward 5 years and not only have founders featured on my pod and newsletter raised more than $200m via equity crowdfunding, but many of them actually got “real” VCs to put in that way too… so much so that funds like Tribe Capital (and many others) have worked crowdfunding into their value prop!
I love when I’m right.
So, why does $5m matter so much? Because it allows startups to essentially crowdfund their way to a Series A, if they so choose. And, if you’re thinking, how long will it take for a startup to raise $5m via Reg CF?? Already happened. Gumroad went live on Republic earlier this week and within a single DAY the campaign was sold out. BOOM!
I cannot overstate how big of a deal this. First, awesome for founders — I’m for anything that allows founders to keep early control. This just takes that two steps further. Need a bridge? 30-90 days and you’re funded. No decks. No pointless pitch meetings talking about projections we both know are horse shit.
The real impact though is for you and I!
More money means more sharks, which means more competition, which in-turn means better deals. The move to $5 mil will bring in hundreds of startups that previously felt the bite wasn’t worth the chew… or whatever the hell the saying is. Now, at $5m, it very clearly is. I expect to see Gumroad be the first of many highly publicized startups opting for Reg CF, Reg A and Reg D offerings… which will obviously put more pressure on regulatory groups to allow liquidity or share-trading platforms enough latitude to follow the money (you listening Republic???).
Obviously, I had planned to do a Pitch Review on Gumroad… but cough* what’s the point now? So, we all get a little time back.
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For my newbs; every week (except this one) I breakdown a startup pitch with the added hook that you don’t have to be a rich guy to invest (if you don't know what that means, click here).
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On the pod: Now that we all just leveled up, I think it’s important to reiterate the value of education around startup investing — I do the best I can to bring VC talk to the street level, but I am not a great educator. I mostly just share my experiences post-defacto. So, I had my friend Lisa Carmen Wang join me on the pod (her company SheWorx was acquired by Republic last year) to talk about the impact of retail investing in startups and how she helps educate founders and investors before the exchange dollars.
She was also kind enough to offer up her e-book (which is great btw…) FREE of charge!
Download it HERE. Did I mention Lisa is a HOF Gymnast and Olympian???
Here's my podcast w/ Lisa Carmen Wang 👉 https://spoti.fi/3vE4AIc
Follow me on Twitter @kitun.