Crowdfunding, or Peer to Peer investing, has finally taken a major leap forward with the passage of legislation that allows non-accredited investors to buy into these types of private investment equity deals. This is major news that will shake up the investing world for good and free up all sorts of capital for businesses, real estate, and personal loans across the U.S. One of the companies that stood at the forefront of this more than three year long fight is CrowdFunder. The company participated in the struggle to get the JOBS Act legislation Title IV Passed so that every man and woman can participate in investments that pay so much better than standard returns that have been traditionally available to most average individuals and investors. Welcome to the brave new world of private investing.
Crowdfunder Intro & Background
Established back in 2011, in the early days of the Peer to Peer lending universe, Crowdfunder has served as both advocate for the cause and as one of the original platforms for bringing deals to the investing public via its original crowdfunding platform in the U.S. They have helped to see through the changing of laws that allowed American-based small businesses and startups to raise their own funds via revenue-based or equity-based financing deals. All the while, they labored tirelessly to put investors and entrepreneurs together to make deals, disseminated peer to peer lending education to the investing public and instructions on how to go about conducting such campaigns to businesses, and offered professional marketing assistance for startup companies. You would be correct in referring to Crowdfunder as the proverbial “Good Samaritan” of the crowdfunding and peer to peer lending world.
The platform began not just as a deal-making investment opportunity, but a fundraising site and platform to help both people and organizations to raise funds for noble world causes, organizations, and even personal motives. The site is easy to use and secure and has helped bring groups together to assist them in reaching financial goals in common. They have never put a minimum size on the goal for fundraising. All of this history makes them well-suited to benefit from the imminent explosion in crowdfunded investing and peer to peer lending that the passage of Title IV of the new JOBS law will finally allow. This has been too long in the making.
Crowdfunder Founder and Management Team
CEO & Founder Chance Barnett has raised venture capital funding for several different firms from their humble beginnings during the past 15 plus years. Before he started Crowdfunder back in 2011, he worked as an advisor and investor in start up companies, a contributor to Forbes Magazine on crowdfunding and startups, and a best selling author in personal Development and Entrepreneurship. Chance was a leading advocate in the JOBS Act legislation crafting and passage, and a big proponent of getting the Congress and SEC to agreeing to its recently passed at the end of October legislation that is imminent to allow all investors to invest in P2P lending and crowdfunding deals. Chance consults on venture capitalism formation for private leaders and foreign government across the globe.
Co-Founder and Chief Investor Officer Rafe Furst acts as an advisor, investor, and entrepreneur who puts together resources, individuals, and ideas to get things moving. Rafe participated in more than 30 startups' funding starting back in mid-1990's Silicon Valley that have since produced in excess of $1 billion in revenues. He has been featured as a columnist writer in the New York Times, Shake the World, and WIRED.com.
Lead Developer Justin Harkey brings around a decade of valuable professional experience to his front end development role at CrowdFunder. He has developed and improved websites of countless organizations, from major corporations and their e-commerce efforts to single page sole proprietor websites.
Chief Operating Officer Douglas Strasnick contributes over 9 years of experience in directing teams to achieve success in generating revenues in multiple channels. He brings an invaluable contribution of and experience with strategy and executive leadership to CrowdFunder.
Crowdfunder boasts an incredible over 121,500 crowdfunders that have helped more than 31,700 companies to obtain over $318 million in funding deals since its inception five years ago. The only types of loans that they are engaged in facilitating are personal and business funding in exchange for payments from or equity ownership stakes in the companies and entities.
How Crowdfunder Works
Thanks to the passage of the long-awaited Title IV legislation of the JOBS Act, by the end of January, investors of all kinds will be able to invest in peer to peer lending and crowdfunding without having to be accredited investors at long last. Until then, only accredited investors are able to participate in deals' fundings.
Crowdfunder actually works in several easy steps. Businesses interested in raising funds set up their free profile so that they can meet the investors who are interested (and for now who are qualified). They then use the Crowdfunder tools and platform to build up their fundraising campaigns. Finally they receive their funding, close on the funds, then grow their companies to the next level.
Investors also must sign up for a free profile and answer the self-survey on accreditation. Then you are able to start browsing through companies and their deals they are offering in exchange for private funding. Ownership stakes are given in the companies in exchange for these funds with different terms and stakes being hammered out by each individual company that is raising funds. Crowdfunder does not electronically transfer any money from you the investor to the company in which you are investing. The transfers of funds are handled off site after the funding objective has been reached and the deal is closed.
- Self Servicing Platform -Crowdfunder's platform is seamless and self-serving so that you are able to consider a Deal's terms, download any and all relevant documents, and even connect and talk with the deal founders online.
- Lower Minimum Investments – Many of the deals on the platform provide lower than typical minimum investment amounts to encourage additional investors to participate in their offering with a smaller quantity of capital. This allows you to spread around your investment dollars to create a larger, better-diversified portfolio.
- Self-Verification Process – We love that the platform artfully sidesteps the accredited investor conundrum by allowing you to fill in a self-verification questionnaire that no one investigates to become accredited on Crowdfunder. Sadly, this does not completely satisfy the requirement as the individual companies soliciting deal investments are also held liable for correctly documenting their reasonable measures taken to make sure their investors are actually accredited. Fortunately this will no longer be an issue from end of January 2016 thanks to the final implementation of the passed Title IV legislation of the JOBS act.
- Connect with the Founder of a Specific Deal – By either leaving comments on your deal founder's page or leaving a comment on your contact form with the deal reservation you are able to get together with the founder directly to pose any questions that you may have surrounding their company and deal offering.
- Company Following – You may join a company's following, and then you will receive appropriate notifications as to their status and progress going forward.
- Matching – Matches up a specific pool of accredited and interested investors in a company’s deal.
- Legal Guidance – Ensures that the crowdfunding deal remains legally within the complicated and evolving financial regulations.
- Measuring Success – Analytics provide the information on who is interested in the deal and the types of investors who are showing interest.
- Evangelization Services – Makes it simple for companies to build up a group of followers for the company.
Crowdfunder maintains a single office. Their company headquarters is found in Playa Del Ray, greater Los Angeles, California at 12540 Beatrice St, Ste 200, Los Angeles, CA 90066, where so many of the crowdfunding operations are based in the Golden State (though more of them are located in the San Francisco Bay area than in L.A.).
Crowdfunder Interface Screenshots
Crowdfunder is quick to point out that only investment money that you can afford to lose entirely or tie up for many years should be invested into company deals via Crowdfunder's platform. Regarding the safety of the site, they do not gather your sensitive financial information such as bank names and account numbers, as all actual funding of the deals is done offsite and offline at another point and time.
Crowdfunder Complaints and Ratings
Strangely enough, Crowdfunder does not have a file with the Better Business Bureau, which simply put means that there are no BBB ratings available for them. The flip side is that we also could not find any complaints that appeared to be legitimate when we searched online regarding Crowdfunder.
Crowdfunder Customer Support
Crowdfunder admits to its inherent weakness with their lack of sufficient customer service by declaring at the top of their help and contact page, “Welcome to Crowdfunder Helpdesk Customer Service!” It may be a friendly greeting, but it is telling you that this is more or less it here, what you see on this page. There are no customer support phone numbers available. They provide announcements, a community with answers, and the ability to provide feedback and suggestions from the page. They also give you a single email address where you can request information or help or provide comments. Nowhere is the weakness of this platform more clearly seen than in the apparent lack of interest in or resources for effective and responsive customer service and support.
Crowdfunder Costs & Fees
One thing we really admire about Crowdfunder is that they are not apparently in this business for the money they might hope to make by showing a little greedy initiative. Instead, they are in this to advance the common cause and standard of crowdfunding that their founder Chance so sincerely espouses. They do not seize any percentage of funds that companies raise, while other such rival platforms get as much as 10% of any and all monies raised.
Instead, Crowdfunder charges a monthly flat fee of $299 (and higher plans are also available) as a subscription of sorts from the entrepreneurs who wish to raise funds on the platform. This is a ridiculously inexpensive way for companies to raise funds, since founders are raising even millions of dollars on this platform. Investors do not pay anything for the services that Crowdfunder provides of presenting deals and all relevant documentation that accompanies them. At the same time, they do not provide financial transaction services, so you would not expect them to charge much, if anything, since they are not maintaining or monitoring any investments on your behalf, nor managing any distributions to you.
Final Words on Crowdfunder
What can we say about Crowdfunder when there is much that is good, and also some that is less good, about the company and platform services? They do provide a forum for you to find and research crowdfunding company investment deals, and allow you to “connect” with the founders themselves. They do not transfer any money on your behalf, nor manage your investments or distributions in any way at all.
Yet how can you raise a complaint against the company that nearly single-handedly championed the rights of rival companies to offer non-accredited investors the chance to pursue crowdfunding and peer to peer lending on competing more sophisticated and all-inclusive platforms? We all owe Crowdfunder an enormous debt of gratitude for their tireless efforts on our behalf in the struggle to make investments fair and open to all people, everywhere.
Pros of Crowdfunder Review
- At no charge to you the investor, Crowdfunder provides a marketplace for deals investing and peer to peer lending.
- Companies interested in raising even million of dollars pay a very reasonable flat fee of only $299 per month.
- You are able to connect with the actual deal founders using the platform.
- Using the follow feature, you can obtain updates and ongoing information on the company and its deal as progress is made.
- While it is only an issue until the end of January, accrediting as an investor on this platform is done via a self-survey questionnaire.
Cons of Crowdfunder Review
- At this time, the actual transaction of wiring money does not happen on Crowdfunder. The closing of dollars will happen offline with the company in which you are investing directly.
- Your investments are not managed and you can not monitor them from the platform.
- The platform does not handle receipt or payment of any distributions or interest due to you, as all transfers take place entirely offsite.
Crowdfunder Review Summary
The Godfather of American-based Crowdfunding, this company pioneered the investment method and successfully championed the rights of average investors on Capital Hill and with the SEC until they finally triumphed and did away with the accredited investor restrictions. While we all owe them a debt of gratitude for practically inventing crowdfunding and making it accessible to all investors everywhere, it does not change the fact that their platform is actually quite simple and even barebones when compared to most any of their rivals. Still, there are deals to be found and funded here, and a huge number of investors are members, so they are doing something right.