SeedInvest is a startup investing platform seeking to provide members access to investment opportunities without charging investor fees or carried interest. SeedInvest was founded in 2012 by a team of experienced investment professionals who played a part in the 2012 JOBS Act.

 

Rank Chart
Model Type
Fee Range
Our Score
#1
Donation
3-5%
8.8
#2
Donation
2.9%
8.5
#3
Donation
5%
8.1
#19
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Equity
7.5%
5.3

The Good

Model Type

SeedInvest operates primarily as an Equity Model. On their platform, companies have direct access to accredited investors around the world. Due to SeedInvest’s strict vetting process before granting access to their crowdfunding platform, only a slim 1% of companies are approved to crowdfund on their website. Companies need to demonstrate proof of concept, have at least two full-time team members, and are incorporated as a business in the United States.

SeedInvest has fostered a network of investors interested in funding small businesses and companies who have a product that has proven viability in the marketplace. Businesses are able to directly connect to and appeal to investors by offering equity in their company. They are also able to utilize integration of social media as well as advertising tools to promote their company. This allows users to appeal to friends, family, and customers for donations to their business venture.

Fund Type

SeedInvest is an All or Nothing fund type. Unlike ‘Keep What You Raised’ types that other crowdfunding platforms offer where you receive all funds donated whether you reach your goals or not, with All or Nothing, if you don’t reach your total predetermined monetary goal you don’t receive any funds. This can be a struggle for new businesses attempting to raise much-needed funds in an equity crowdfunding model.

Maximum Allowed Raise

With SeedInvest, small businesses and companies can raise between up to a maximum of $5,000,000. This is only if they have been proven viable in the marketplace with the funding they need. The average funding amount reached is approximately $40,000. SeedInvest’s maximum amount is one of the highest out there when compared to other equity crowdfunding sites that typically have a six-figure cap.

Deadlines

With SeedInvest, companies have 60 days to demonstrate they have raised the funds they are asking for. For some, this may be too short—especially for a business trying to get off the ground or who have never raised funds before.

Receiving Funds

SeedInvest requires companies to reach a minimum funding target (determined by each individual business) in order for their campaign to be considered successful. Investments will not be allocated until the minimum funding target has been met. This may disqualify some businesses from achieving any level of funding if they are unable to reach minimum funding targets.

Administrative Work Options

Their crowdfunding platform aids companies in incorporating due diligence, legal documents, and processing of investments in order to make closing investment opportunities quickly. This provides valuable support to businesses when appealing to investors.

The Bad

Fees

The fees required by SeedInvest are expensive when compared to other crowdfunding platforms. They require 7.5% of the funds raised upon completion of a campaign in addition to between $3,000 and $5,000 in escrow, due diligence, marketing and legal reimbursement. This is substantially more expensive than a flat 5% completion fee required by many other crowdfunding platforms.

Unlike some crowdfunding companies who will charge you a fee if you don’t complete your campaign, SeedInvest does not charge a non-completion fee.

The Bottom Line

SeedInvest is a great crowdfunding platform for small businesses that have a viable operation which has already proven itself lucrative in the marketplace. The fees may be high; however, those who qualify to use this funding platform get access to vetted investors along with effective fundraising tools that simplify and streamline the fundraising process.

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  1. User Score

    9

    September 2nd, 2016 Honolulu, HI

    Invest in companies by little investors as myself and have a chance to grow my wealth to fund more companies. Thanks to the opportunity enacted in May 2016 that allows investing alongside Institutional investors.

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