An exit is a chance for a startup company to raise capital and provides its investors with an opportunity to see immediate profits or reap bigger potential rewards in the future.
The growth of equity crowdfunding platforms provides more avenues for startup exits. For example, in late 2022, crowdfunding investment platform StartEngine acquired competitor SeedInvest. StartEngine continues to leverage SeedInvest’s expertise and resources to further expand its capabilities to reach more startups across multiple verticals.
The companies give startups a way to raise capital from personal investors, who can put as little as $100 into a given startup. The startup uses the funds to innovate, grow and attract additional investment to help it reach the next level. This capital infusion from crowdfunding platforms puts many startups on a possible exit path.
Combined, StartEngine and SeedInvest created more exits for startup firms on their platforms than any other competitive startup investing site.
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Different Type Of Exits
Startup exits take several forms that might mark a new beginning for a company or an agreeable end:
- An initial public offering (IPO) where a company sells stock to the public, giving investors an opportunity to sell their shares
- A merger between the startup and another firm that enables the companies to expand or capture additional market share
- An acquisition where a company buys another firm to gain intellectual property assets, customer bases, innovative technology and brand cachet
- An employee or management-based buyout where either or both of these groups takes ownership of the company and pushes it forward
Standout Exit Stories from StartEngine and SeedInvest
- Knightscope Inc., a provider of advanced physical security tools, launched a $22 million IPO in January 2022. Founded in 2013 in startup-rich Mountain View, California, the company raised more than $77 million through equity funding, including $20 million with SeedInvest and additional funding through StartEngine.
- IfOnly, a provider of a proprietary software platform for experience sales, raised more than $14 million on SeedInvest. Mastercard Inc. bought the company in 2020.
- Software provider Partpic Inc. raised more than $1 million on SeedInvest. The company created a machine learning program to identify industrial parts through a picture taken by a user. Amazon.com Inc. acquired the company in 2016 and shortly after launched its own service called Part Finder.
- Luxury brand curator Digital Brands Group Inc. raised more than $6.3 million through crowdfunding on SeedInvest and launched a successful IPO on the Nasdaq Stock Exchange in mid-2021. The company gained attention for its innovative approach to offering denim and luxury clothing at attractive prices.
Visit the full list of the 40 startups that reached an exit following funding rounds on StartEngine or SeedInvest.
There are some on the list that aren’t entirely success stories. For example, NowRX held a firesale earlier in the year. And due to the market pullback, several IPOs have since declined considerably since their IPO highs. Nonetheless, there are several winners on the list, and many millions were made in the process.
StartEngine’s acquisition of SeedInvest and both companies’ recent successes come during a period of growth for the crowdfunding investment platform space. In mid-February, Wefunder received regulatory approval to operate in the European Union in a bid to expand its popular platform and gain a foothold in the European startup ecosystem. In late 2020, the biggest U.K. platforms and rivals Crowdcube and Seedrs agreed to merge, which bolstered Crowdcube’s entry into the European market.
Consolidating and expanding crowdfunded investment platforms gives startup founders more avenues to grow their businesses. The availability of crowdfunded capital comes during a downturn in traditional venture capital funding and a broader economic downturn. There’s considerable opportunity for StartEngine and other firms to fill this gap and give more startups a lucrative exit.
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