Scutify Raises $1.5 Million At $25 Million Valuation Without Big VCs

Scutify, a social network for the finance community, announced Tuesday that it has raised $1.5 million from private investors. The company, which is now valued at $25 million, decided to avoid the venture capital market and went straight to members of the existing Scutify community instead.

"A lot of 'em took up the offer to invest in Scutify," Kheang Ly, founder and CEO of Scutify, told Benzinga. "We're talking about 100 investors or so. Some have a few thousand shares. Some have a whole bunch."

This unusual, crowdsourced approach proved to be very lucrative for Scutify.

"When we first started, we didn't seek funding straight away," said Ly. "A lot of the stuff we bootstrapped ourselves. We basically bootstrapped the platform from beta to production mode."

When users came aboard, they started to get a feel for Scutify and saw the potential in the platform.

"They were comfortable with the platform and what we were offering even before we went out for funding," said Ly. "I think an issue a lot of people have with crowdfunding is they're pitching a product that hasn't even been released."

Related Link: This Startup Wants To Help Every Site Launch A Trading Platform

No Funds Necessary - Yet

Ly said that Cody Willard, chairman of Scutify, is a big believer in "raising capital when you can, not while you have to." By raising capital on its own terms, Scutify was able to get a better deal.

"That was part of the equation," said Ly. "We didn't have to raise the funds that we have at the moment."

Scutify's bootstrapping efforts could have gone on for another 12 to 18 months, but the company felt that its growing user base gave it a chance to get other investors on board.

"We spent a lot of 2014 on the product…rolling out all the different types of apps we had," Ly added. "Also, bringing out new features and functionality to the platform. We're at a stage now where we're quite happy with what we have. In 2015, a lot of the focus is on the marketing side of things. We're trying to get more users on board. We want to hit that critical mass stage."

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.