Crowdfunding Success Stories, Crypto Wallet Tips

In our weekly 'mailbox' we answer readers' questions:

Q: Have there been any success stories in private equity crowdfunding? It would be nice to know there’s a pot of gold at the end of this rainbow.

A: There are plenty of success stories to be found in equity crowdfunding.

The most well-known case is Zenefits, a human resources software company. It listed on crowdfunding platform Wefunder in early 2013 and raised $372,000. In July 2013, it had a valuation of $9 million. According to The Wall Street Journal, it’s now worth $2 billion. Crowdfunders are on track to make 222X their stake in the company.

Wefunder has other big winners, including Checkr, an automated background screening and driving records company. Wefunder’s records state that Checkr has made more than a 34X return for its crowdfunders.

In fact, Wefunder says that 11 out of the 119 companies that have raised on its site are now worth more than $100 million. If you want to call them “pot of gold” companies, I won’t argue.

Wefunder’s companies also show an internal rate of return (IRR) of 41% from 2013 to 2016. (IRR is an annualized return rate that includes investments that haven’t been cashed out yet.)

That not only is much better than what the Nasdaq and Dow did during the same period but also is nearly three times better than the record of the top 25% of venture capital firms. And 81% of these crowdfunding companies are still active.

I’m citing Wefunder because it does a great job of tracking the progress of companies that have raised on its site and then making those numbers available to the public. Just this year alone, we’ve recommended two startups from Wefunder to the members of our First Stage Investor research service. But Wefunder is just one of a half-dozen portals (including MicroVentures, SeedInvest, Republic, StartEngine and Netcapital) that find high-caliber startups that want to raise money through crowdfunding. These other portals also have plenty of success stories to share.

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