While most of the
equity crowdfunding headlines have gone to discussions of startup fundraising,
it’s a platform that is backing growth-stage consumer product companies that
today announced the largest Series A raised of any company in the category. CircleUp has
raised $7.5 million in a round led by Union Square Ventures, with participation
from Google Ventures, Maveron Ventures, and Clayton Christensen’s Rose Park
Advisors – adding to its $1.5 million Seed round raised in April 2012.
CircleUp
is unique in its category in that rather than raising early-stage capital for
nascent businesses, the platform focuses on providing otherwise difficult to
come by growth financing to established mid-size consumer and retail brands. The
issue for these companies is that they are often too small for private equity,
too large for commercial banks, and too moderate in growth for venture capital.
But for sophisticated individual investors with industry experience looking for
an alternative to the stock market and real estate, they often represent a less
risky and more easily quantifiable option than technology startups. And the
highly active M&A market in the CPG sector creates a natural path toward
liquidity. View Full Story
Union Square Ventures On CircleUp:
As
venture capitalists, we understand how valuable an injection of capital into an
early-stage, fast-growing business can be. But our industry has a particular
set of economics, one that has skewed the availability of equity investment
towards startups in the technology sector. Yet, despite a lack of access to
upfront capital, entrepreneurs are constantly innovating in all areas of our
economy. One of the most vibrant verticals is consumer products, with over
50,000 new consumer and retail companies started every year. These businesses
are drivers of economic growth.
 |
| Andy Weissman, Partner at Union Square |
CircleUp has created an equity
crowdfunding marketplace, enabling investors to own pieces of small but
fast-growing consumer and retail businesses. Since last April, entrepreneurs
have used CircleUp to raise over $10 million in equity, each in an average of
only 61 days. The list of successful companies include Episencial, a producer of skin care
products developed by its CEO, Kim Walls, a skin-care expert; Peeled Snacks, natural snack foods,
founded by Noha Waibsnaider after working at a larger consumer products
company; and Raen Optics, a maker of
awesome eyewear started by two friends out of their boutique creative agency. These
companies average over $1 million in yearly sales and more than 70% in annual
growth.
This
technology-enabled marketplace has created an entirely new system of allocation
of capital and expertise. CircleUp has standardized the investment process (no
paper is used), provided transparency and the ability to easily share data, and
lowered the cost of investing for both investors and companies. Plus, these are
products that investors can use themselves (making due diligence fun). For
investors, the platform is designed to create trust and provide information in
an open manner. For companies, the marketplace gives them efficient access to
interested investors to help them grow, saving them months of manual
fundraising time.
This kind of peer-funding
network has the potential to expand the types of investors and entrepreneurs
that can participate in private investing. We are excited to announce that we
have become investors in Ryan, Rory and the team at CircleUp.
maveron features:
CircleUp, Disrupting
The Financial Services Industry
Congratulations to Ryan Caldbeck and Rory Eakin, the co-founders of CircleUp, for closing new funding of $7.5 million led by Union Square Ventures and Google Ventures, with participation from Maveron. Rather than shying away from what some consider to be competition, we were the first institutional investors to invest in CircleUp and embrace the value that crowdfunding can bring to early-stage startups. The new financing marks the next step for Caldbeck and Eakin in making CircleUp the investment platform for the next generation of consumer brands and early evidence shows that there is a good chance the next Chobani, Vitamin Water, or Under Armor will start by raising capital on CircleUp.
In his Forbes article on the one-year old “Jumpstart
Our Business Startups” (JOBS) Act, Caldeck says “Equity crowd funding is the
most disruptive thing to happen to the financial services industry in a very
long time.”
We couldn’t agree more! Congratulations to the team.
 |
| Ryan Caldbeck, Founder and CEO |
Before he founded CircleUp, Ryan Caldbeck worked in
consumer product and retail-focused private equity at TSG Consumer Partners and
Encore Consumer Capital. His experience in private equity exposed him to many
great consumer and retail businesses that were too small to obtain funding
through the customary private equity channels. As a result, he decided to make
funding available to these small and promising companies through CircleUp.
Ryan
received his MBA from Stanford and BA from Duke. He holds Series 24, 63, and 82
licenses with WRH+Co. If you have a 15 minute conversation with him, you will
learn that he grew up in Vermont, which explains his love of cheddar cheese and
maple syrup.
 |
| Rory Eakin, Founder and COO |
Rory has supported
entrepreneurs nearly all his career, most recently as Director of Investments
at Humanity United, part of the Omidyar family enterprises. At Humanity United,
he invested in small businesses and social enterprises to stimulate job creation
and promote stability in fragile economies. He began his career at a startup
providing financial training to small businesses in Cape Town, South Africa. Rory
is a former consultant with The Boston Consulting Group.
Rory received his MBA from Stanford as well as a
public policy degree from Princeton. He holds Series 24, 63, and 82 licenses
with WRH+Co., and enjoys listening to weekend NPR quiz shows a little too much.
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