Seedinvest

SeedInvest is an equity crowdfunding platform offering non-accredited investors the opportunity to invest in high-caliber startups across a number of emerging sectors, examples listed by the site including: Artificial Intelligence, Cannabis, Drones, Finance, Gaming, Hardware, Healthcare, Manufacturing, Mobile, Retail, Robotics, Transportation, and VR. The site has raised over $100M for over 150 startups to date and is led by Ryan Feit, who was instrumental in the passage of the 2012 JOBS Act and is a thought leader in the crowdfunding space.

The site’s pitch to both investors and founders is two-pronged: it excels at leveraging its experience and connections within the startup ecosystem while also providing several different methods for raising funds. The platform’s management team, which is made up of ex-Wall Street professionals, is able to facilitate both institutional and individual investor connections, connecting founders with sources of capital that can tolerate larger check sizes and can execute quickly. This experience and network can also positively impact investors, who benefit from a robust diligence model employed by the site for selecting potential investment opportunities. SeedInvest’s stringent vetting process results in the selection of approximately 1% of applicants, allowing investors to spend their time deciding between a collection of highly curated, pre-diligenced deals. It must be noted, however, that this selectivity leads to a prioritization of quality over quantity, with sites such as Republic and StartEngine listing new investment opportunities more frequently.

With funding offerings including Reg D (506 (b) and (c)), Reg CF, and Reg A+, Seedinvest also provides useful flexibility for companies in choosing how they raise capital. The chart below outlines each of these options. For further details, please visit our Education page, which provides comprehensive explanations for each of these legislatively-defined funding paths.

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Given the various funding avenues and their respective stipulations, SeedInvest’s investment minimums depend on individual offerings. The platform’s advertised minimum amount across all offerings is $200, however, listings through Reg D are limited to accredited investors. SeedInvest also offers an “auto-invest” option, helping investors to easily build out a portfolio of 10-25 companies (note that this does not change the $200 minimum investment per company). Investors select a set of characteristics they need to see in a company in order to invest, then all new listings meeting these preconditions automatically receive a predetermined amount of capital. As for fees, SeedInvest charges a 2% fee per investment that can be up, but not exceed, $300 – a fee that is reimbursed in the case of an investment failing to reach its fundraising goal. This fee is automatically applied for those using the auto-invest feature.

For investors, SeedInvest offers an easy-to-use platform that provides substantial information including financials, a pitch deck, quarterly updates, and extensive information about each company. As such, investors can perform much of their due diligence without having to leave the SeedInvest site. This sets the site apart from other such Republic, which – despite emphasizing its accessibility and simplicity for ordinary investors – has little more than a pitch deck, forcing investors to do most of their diligence outside of the site.

While SeedInvest provides well-vetted opportunities and a number of appealing features – namely auto-invest and extensive diligence – to ordinary investors, its offering appears to be tailored to the companies it lists. Founders are given a bevy of options, be it bypassing ordinary investors by raising institutional capital or using Reg D raised to limit investors to those who are accredited, that are to the detriment of the non-accredited investors on the site. This differs from other equity crowdfunding sites, which have instead looked to empower individual investors. Perhaps the starkest comparison is Republic, which bought Fig and Compound to expand low-cost offerings in supplementary asset classes while also tailoring new listings on the site to fit investors’ need for socially-oriented and diverse businesses. SeedInvest is a competitive option for those looking for ease-of-use but may fall short for investors seeking genuine engagement with a community and the startups they invest in.

Pros

• Companies on the platform are highly vetted, as there is approximately a 1% acceptance rate for companies that apply to be listed on the site.
• The site is largely accessible to both accredited and unaccredited investors, though a small number of investments are only available to accredited investors. It has an affordable minimum investment of $200.
• SeedInvest’s auto-invest feature makes it simple to invest in preferred categories, diversifying one’s portfolio with very little effort.
• Both founders have experience working on Wall Street and have forged close relationships with family offices, high-net-worth individuals, and other institutional investors. Additionally, Ryan’s intimate familiarity with the JOBS Act is a compelling value-add for a site focusing on the offerings this legislation enabled.

Cons

• The 2% processing fee per investment (up to $300) is higher than competitor platforms (no fee on Republic or the majority of investments on StartEngine)
• SeedInvest’s core clientele may differ from other equity crowdfunding sites, as it appears to put helping companies, as opposed to investors, first. The site often connects companies with institutional investors, whose large checks may limit the amount of capital raised from others, and also allows Reg D offerings, which exclude non-accredited investors.
• In terms of both returns and liquidity, investments in this in the equity crowdfunding space involve an inherent amount of uncertainty. Furthermore, any changes in the regulatory environment may affect these platforms’ business model.

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