Who's it for?
In the not-so-distant past, crowdfunding companies required you to be an accredited investor in order to invest with them. This meant you needed to have a net worth of $1 million (excluding the value of your primary residence) or have earned $200,000 or more per year over the last two years.
SeedInvest rallied behind the JOBS Act, signed into law by Barack Obama, which allowed new investors to invest in private companies on the internet for the first time. In 2015, Title IV (Regulation A+) of the JOBS Act prevented the need for a huge net worth to define which Americans could become angel investors. Regulation A+ allowed private companies to raise up to $50 million from regular investors.
Therefore, SeedInvest is for anyone who has some risk tolerance, extra cash and has a hankering to invest in startups.
What SeedInvest offers
SeedInvest offers a wide variety of opportunities, including Reg D, Reg A+ and Reg CF investments, and according to SeedInvest’s website, over the last 30 years, early-stage venture capital returned 22.65% compared to 9.93% for the S&P 500.
Only 1% of SeedInvest startups are approved out of 25,000 applications over the past five years, so it offers thoroughly vetted startups. Through the end of last year, SeedInvest arranged 72 funding rounds for entrepreneurs.
Commissions and fees
SeedInvest charges a 2% non-refundable processing fee (up to $300) per investment, but the fee is refunded if a company doesn’t reach its fundraising goal.
If you’re a trying to raise money on SeedInvest, however, here are the fees and reimbursable expenses, according to SeedInvest’s website:
- 7.5% placement fee, which is charged on the total amount raised, which is also paid only upon the successful completion of your offering.
- 5% warrant coverage, all based on the total amount raised on SeedInvest in the round.
- Anywhere from $0-$10,000 in due diligence, escrow, marketing and legal expense reimbursement.
Platforms and tools
The website is laid out simply, and separately offers sections that are clearly separated out for entrepreneurs and investors.
According SeedInvest’s website, its Auto Invest section helps you opt in to deals in which you can legally invest. Auto Invest invites you to explain more about yourself, and based on that information, will encourage you to set up your account online and then, finally, recommend 10-25 startups.
You can build a portfolio with a minimum as low as $200 per startup. If you’re not positively overwhelmed by certain offerings, you can opt out of them.
To invest, you’ll need to:
- Create your account.
- Review the terms of the offering on an investment opportunity that catches your eye.
- Click on the “invest” button and complete your investment, including linking your account.
You can easily browse a multitude of startups on SeedInvest’s website, and it includes information such as detailed information about each company, information on which funding round type and amount the company is raising, as well as minimum investment requirements.
Start your raise
SeedInvest goes into brief detail about how, as an entrepreneur, you can begin to fundraise for your company on its website, including funding amounts. As it explains on the website, in the Pre-Seed rounds, there are amounts as small as $500,000 through later stage growth rounds as large as $30 million. Also according to the website, for companies raising under $5 million (Regulation D and Regulation CF), pay no up-front costs to raise capital on SeedInvest. You only pay if your raise on SeedInvest is successful.
A lengthy FAQ page gives you a lot of answers to your questions, but there is no published email address or phone number on SeedInvest’s website. There is a chat box available on the website if you’re interested in asking questions as you’re browsing the site. You can supply your email address on the chat box and SeedInvest will contact you via email.
If you dig deep on the FAQ page, you’ll find an email buried: firstname.lastname@example.org. It’s not the most forthcoming customer service page.
Ease of use
It literally takes two minutes to invest on SeedInvest. Log your name and Social Security number, answer a few questions, and you can browse the offerings on SeedInvest’s website to determine which investments you’d like to choose.
On the entrepreneurial side of the house, you’ll need to meet a few more qualifications.
SeedInvest’s website recommend that companies meet the following minimum requirements:
- At least a minimum viable product or prototype
- Proof of concept (includes customer traction or partnerships)
- At least two full-time team members
- A business which has been incorporated in the United States
If you’ve always wanted to invest in a cutting-edge startup but need a way “in,” take time to check out SeedInvest. Through SeedInvest, anyone can be an angel investor or venture capitalist, no matter your income level.
Depending on the offering type, both non-accredited and accredited investors can make investments on SeedInvest, which is, undoubtedly, its universal appeal.