Equity Crowdfunding by the Numbers: Q3 ’22
The final numbers for Q3 are in, and per KingsCrowd*, equity crowdfunding platforms rounded out the quarter in September with an additional $30.7M in Reg. CF and $17.1M in Reg. A+ commitments. All told, that brings the industry to a grand total of $154M raised in Q3.
Big number, we know. Even more exciting (at least for us) – per the report, StartEngine ranked among the front of the pack. In Q3, we posted a total of $41.8M raised between Reg. CF and Reg. A+ offerings combined. That puts us ahead of Wefunder’s raise total by a whopping 28% and ahead of Republic’s numbers by an astonishing 139%.
*Source = https://kingscrowd.com/markets/. Please note a KingsCrowd Edge Subscription is required to access this report. The report only includes platforms selected by KingsCrowd and excludes real estate- and collectibles-only platforms, as well as Reg. D offerings and all raises limited to accredited investors.
Q3 Raise Totals via Reg. CF & Reg. A+ Combined*:
StartEngine Q3 Milestones:
Industries climbing the funding ladder in Q3:
Though Real Estate & Construction businesses saw the most funding growth (to the tune of nearly $10M more dollars raised YoY), the Food & Beverage industry closed Q3 at the top of the leaderboard. At just over $24.3M in Reg. CF and Reg. A+ commitments, Food & Beverage companies accounted for more than 15% of all funds raised in the quarter. SaaS businesses also saw significant funding growth, with raise totals up $4.5M YoY.
Q3 Winners by combined funding total of Reg. CF & Reg. A+*:
Food & Beverage
Real Est. & Constr.
The Rise of Investor Perks
Clocking in at 569*, September saw a near record number of regulation crowdfunding offerings. The number of investors in the space has reached new heights too, with StartEngine’s investor community alone on the cusp of 1 million users. And as equity crowdfunding becomes ever more mainstream, a growing number of companies have turned to investor perks to entice a larger field of would-be backers.
Per a recent report, the number of businesses offering early-bird discounts to investors grew nearly 10X from just 20 to 198 from 2020-2021. Meanwhile, StartEngine’s Owner’s Bonus subscription – which offers members 10% bonus shares of participating raises – now comprises over 95% of the companies fundraising on our platform. YoY, membership has also grown 178%.
That’s good news for investors, of course, but there’s a lot of upside for founders too. For starters, perks can be a great way to build early momentum, which can have compounding effects later in the raise. As an example, on StartEngine, companies who attract 100 new investors to the platform in the first 30 days of their offer can qualify for additional email marketing. And that can mean a lot of extra oomph behind a raise.
Though some founders may feel concerned about dilution from perks, in practice it’s often minimal. Take StartEngine Owner’s Bonus for instance: Say a company raises $1M with a $10M pre-money valuation (i.e. not including the amount of the raise). On its own, that constitutes $1M / $11M = 9.1% dilution. Now, assume 100% of investors also participate in the Owner’s Bonus program (hey, we can dream) – that works out to $1.1M / $11M = 10% dilution. That’s a difference of less than 1%.
As we see it, widespread adoption of investor perks helps drive a virtuous cycle for equity crowdfunding. Pushed by volatility in public markets and receding VC funding levels, investors and entrepreneurs alike are entering the space in ever-growing numbers. At the same time, innovative tools, like investor perks, can boost equity for backers while leading to stronger outcomes for founders. And that is good news for all involved.