CROWDSCALE 🤝 KingsCrowd

Peanut Butter + Jelly….

LeBron + Dwayne Wade….

Chads + Trust funds….

These are the legendary duos we know of. And now one more is added to the history books: CROWDSCALE + KingsCrowd

I’ve partnered with KingsCrowd to power that nifty little dashboard you see at the top. KingsCrowd is the premier data provider in equity crowdfunding, and I’ll be tapping into their data to help research my future content

Speaking of, here are three emerging data trends I see taking shape in the equity crowdfunding space.

1. Equity Crowdfunding in a Slump?

It took me all of 3 seconds with KingsCrowd data to realize that the startup investing landscape is gloomy

• During Oct-Dec of 2021, an average of $102M was flowing into equity crowdfunding investments every month

• In the same 3 months of 2022, that figure dropped to $41M per month (-60% YoY)

Digging into the data, we start to get an understanding of the breakdown.

• Number of active raises during that time frame decreased only minimally, from 632 → 611, a 3% decrease

• In that case, the drop comes from investor demand, which seems to have fell off a cliff

This makes sense when taking a macro view of the economic situation:

• 2021: Stimmy checks, 0% interest rates, stocks + crypto only going up

• 2022: Rate increases, layoffs, plummeting asset classes, war in Ukraine

I believe that investor demand could remain cool for some time - a lot of investors used up their dry powder during 2021 and I think it could take some time for the macro picture of the economy to improve

2. SAFEs are Picking up Steam

In last week’s article, I explained what a SAFE investment is. Within Reg CF, this investment structure has been growing substantially.

• In the final 3 months of 2021, 27% of all active Reg CF raises were SAFE investments

• Fast-forward to 2022, and that share has increased to 39% of all raises

SAFE’s are an appealing alternative to Convertible Notes, as they don’t carry interest or have a ‘due date’ (more flexibility for founders)

3. StartEngine Makes Push for Reg A Dominance

There are two main types of crowdfunding investments for non-accredited investors, Regulation Crowdfunding (Reg CF) and Regulation A (Reg A).

There’s a few nuances between the two, but Reg A is typically for larger startups as there is a higher maximum for the amount they can raise

• Within Reg A, the Dalmore Group is the clear market leader (although some of their tally is partly driven by Issuance/Dealmaker)

• StartEngine’s acquisition of SeedInvest will materialize in 2022. The pairing up of the #2 and #3 platform would put StartEngine on par with Dalmore

• I would put StartEngine as the platform with the most momentum heading into 2023 - I’ll be following the data closely to see how that changes throughout the year!