Success Rates for Wefunder, StartEngine, Republic

NEW STARTUPS

Startups that you can invest in with as little as $100 right now:

🧱 Printera - 3D printing the world’s heaviest building material (StartEngine)

☀️ Powur - Solar power operator with $239M in revenue in the past 12 months (Wefunder)

🔫 AccuShoot - Propelling customers to marksman mastery through software (NetCapital)

POLL RESULTS

Last week I asked readers what company StartEngine was most likely to acquire next, and the results indicate MicroVentures is the fan favorite.

I think a direct competitor with more exposure to accredited investors makes the most sense so I tend to agree with this selection!

FAILURE RATES BY CROWDFUNDING PLATFORM

Kingscrowd dropped some data on the failure rate of startups by platform, and there are some interesting nuggets to glean from it.

They have a whole article on it that goes deeper here, but I’m going to share my top 4 takeaways from this data.

1. MAN AM I GLAD WE’VE EVOLVED

There’s a few platforms on this list that have failure rates spiking into the twenties. 

Some of these I’ve never heard of - and some of these were bad actors trying to muddy the space that a bold few were trying diligently to build.

One of the most egregious on the list is Fundanna, which has also done business as truCrowd.

These funding portals don’t exist anymore, because the SEC stepped in to shut them down.

The SEC claim alleged that truCrowd allowed a prior criminal still on probation to raise funds on their platform - which is prohibited by law.

This individual was able to raise funds for two campaigns, then used the money for personal purchases according to the SEC.

The utter lack of due diligence makes it unsurprising to see truCrowd’s failure rate at 23.5%. 

Scams still happen in the space (I’ve been sued for exposing them) - but we are in a much better spot than just a few years ago.

2. DEALMAKER IS ON ONE HELL OF A HEATER

Dealmaker, I must apologize. I was unfamiliar with your game. 

The funding platform took the number one spot, and only 0.8% of the companies hosted on their platform have failed.

The only caveat I’ll throw into this is that DealMaker specializes in the Reg A space for more mature companies.

Mature companies tend to be more stable - the upside might not be as high, but the risk is certainly lessened.

Still, this is an impressive feat and I’ll give credit where credit’s due.

3. FUNDING ABILITY MATTERS

StartEngine (5.3%), Wefunder (6.4%), and Republic (7.3%) are three of the largest platforms in the crowdfunding space.

Ultimately - success is up to the startups and not the platforms they raise on.

But if the platform you raise on isn’t effective at raising money, your chances of success diminish significantly.

It’s pretty simple - if you aren’t successful at raising money, you won’t have any cash. Tough to stay in business if this is the case.

Republic has the highest failure rate of the 3 main crowdfunding platforms, and lower $$$ raised could be a contributing factor.

In the above graphic, Republic far lags its competitors in the number of $1M+ raises. There are less deals on Republic, but not 6-7x times less.

Still, the difference in failure rate isn’t massive. Just 2 percentage points separates Republic from Wefunder, and the gap is less with Wefunder.

In a year where 100 startups raise on Republic, that’s just an extra 2 company failures.

I wouldn’t shy away from deals on Republic or Wefunder just because they’re a couple percentage points higher in failure rate - but this is a good reminder to make sure a startup has enough money (either raised, or in the bank) before investing.

4. CROWDFUNDING IS LEGIT

Crowdfunding has its slew of haters, people that believe the industry is devoid of quality. Their perception is that the whole space if full of Fundannas/truCrowds.

I think we can dispel that notion pretty easily with this data.

Of the top 5 crowdfunding platforms by volume, 92%+ of their startups are still in operation today.

There will be duds. There will be 100% losses booked on some of these high-risk startups. That is the nature of the business.

But the notion that this isn’t a long-term, sustainable industry doesn’t hold much weight in my opinion.

The quality of companies has only improved, and the funding numbers have remained consistent & show signs of climbing higher.