SeedInvest is one of the pioneers of the equity crowdfunding space. Note that the founders were involved in lobbying for the passage of the 2012 JOBS Act, which legalized the industry. So then, so how does SeedInvest work? What are the main services and offerings? Well, to answer these questions, let’s have a SeedInvest review.
First of all, in terms of the legal structure, the company has a broker-dealer affiliate, which is called SI Securities, LLC. This means that SeedInvest is more than an online marketplace. That is, the company has the ability to provide financial services, advice and due diligence. The broker-dealer structure also helps to bolster confidence, since there are regulatory requirements for handling customer funds and maintaining certain levels of capital.
As for the investments, there are two types.
One group is for anyone to participate in. Then there are larger investments, which require that investors be accredited. This means that he or she earns more than $200,000 for each of the past two years and for the current year (its $300,000 for couples) or has more than $1 million in net worth (this does not include the primary residence).
Regardless of the type, each investment opportunity will have a profile that includes videos, a presentation and legal materials.
Keep in mind that there is also a SeedInvest review for each of the companies. That is, there are minimum requirements like: some level of a proof of concept, which includes customers and partnerships, and at least two full-time employees.
In terms of the kinds of companies on the platform, they are often technology or consumer startups. And they typically raise at least $500,000.
So here are some examples:
- NowRx: This is an on-demand pharmacy that provides free same-day delivery for prescription and over-the-counter medicines. To do this, the company relies on AI, robotics and sophisticated logistics systems.
- ARdVRk: The company is developing a platform to improve the engagement of physicians and patients regarding clinical trials. This cloud application is called Vital Recall and has customers like Becton Dickinson and CSLBehring. In 2019, revenues increased by 65% to $435,000 and the projection for this year is $1 million.
- Contiq: This is an AI-based system that recommends hyper personalized content to help get more B2B deals. Last year, the annual recurring revenues were $250,000 and they are forecast to reach $1 million in 2020. The company has deals with companies like ServiceNow (NYSE:NOW), VMware (NYSE:VMW), and Zendesk (NYSE:ZEN).
- Ferretly: The company’s app uses AI to analyze social media posts and seeks to reduce the risks to the brand. So far, it has signed more than 200 clients.
Since it inception, SeedInvest has facilitated more than $200 million in financing for more than 200 startups. There are also more than 300,000 investors in the network.
Here’s How SeedInvest Makes Money
Then how does SeedInvest make money? The company has different revenue streams.
There is a $10,000 fee for the due diligence, which is payable from the proceeds of the funding on the site, a $3,000 fee for accounting.
Then, SeedInvest receives 7.5% of the gross proceeds of the offering as well as 5% in the form of equity.
Finally, there is a 2% non-refundable processing fee.
SeedInvest Review: Final Takeaways
Consider that – back in October – Circle acquired SeedInvest. The company is a top global fintech company that uses blockchain technology and crypto assets.
Over the years, Circle has raised $246 million from investors like Goldman Sachs (NYSE:GS), Accell, General Catalyst and IDG Capital.
According to a blog post from the co-founders of SeedInvest, Ryan Feit and James Han: “As part of Circle we will chase the remaining pieces of our original vision for SeedInvest. Since the passage of the JOBS Act, we have leveraged the Internet to streamline the startup fundraising and investing processes. We believe that tokenizing startups can take things to another level by providing liquidity, enabling capital to flow across geographic borders, and paving the path for completely new types of capital formation. And startups are just the beginning.”
Tom Taulli (@ttaulli) is an advisor and author of various books and online courses about technology, including Artificial Intelligence Basics, The Robotic Process Automation Handbook and Learn Python Super Fast. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s. As of this writing, he did not hold a position in any of the aforementioned securities.