EquityNet intends to be the Kickstarter of crowdfund investing.
Like Kickstarter, EquityNet has a fairly broad reach: Since its 2005 debut, EquityNet has signed up more than 20,000 investors, who have collectively invested over $230 million in entrepreneurial ventures through the platform.
Despite those impressive numbers, EquityNet doesn’t see itself as a traditional crowdfunding company.
EquityNet isn’t a licensed broker-dealer, so it can’t take commission on deals conducted through its platform. Instead, it charges entrepreneurs a $99 monthly subscription fee for access to its community of investors and an additional one-time fee if entrepreneurs want help from one of its analysts. (The prices get cheaper if folks agree to a multi-month or annual subscription.)
The model will change dramatically when the Securities and Exchange Commission implements crowdfunding for unaccredited investors, which the JOBS Act legalized back in 2012. Hollas wants as many investors on the platform as possible, so he’s keen to see the SEC open up equity crowdfunding to the average Joe. Plus, EquityNet will be able to take commission on deals involving unaccredited investors.
“What you typically see is that the platforms that succeed are those with the largest populations,” Hollas told VentureBeat. “Typically, it’s a winner take all result.”
EquityNet gathers a massive amount of data on its entrepreneurs and their projects, EquityNet CEO Judd Hollas told us, which enables the startup to employ Morningstar-style screening to private investment opportunities. The U.S. Army and Department of Defense have used EquityNet data to analyze private companies for commercial viability.
Thousands of companies raising funds through the platform have entered hundreds of different parameters, including current financials, projected financials, profit margins, R&D expenses, and so on. In aggregate, that’s some very valuable data — one that provides an alternate revenue stream for the company.
“Pretty much anything you want to know in the private sector, we can tell you,” said Hollas. “That data has just not been collected before.”
EquityNet’s data-centric approach is a part of what made it attractive to Proton Enterprises, which just led a $2.1 million funding round in the startup, EquityNet announced today. Hollas declined to disclose the company’s total financing, but said it had raised “well over a few million” prior to this $2.1 million round.