We’ve heard many times that it’s easier and cheaper to launch a company than ever before.
Much of the time, this observation is made with regards to its effects on founders. Lower barriers to entry mean more people flocking to startups, more startups being created, and more solutions being offered than problems we knew we had. But this influx of new companies also affects investors.
Faced with an increasingly diverse set of companies that are technology-enabled rather than technology-centric - think Lyfts, not Oracles - and revenue-focused from the start, investors must design solutions to address a new kind of supply.
A lower barrier to entry and exploding number of startups means a growth in opportunities for angel investors and crowdfunding platforms to fund companies at lower price points.
CircleUp, a crowdfunding platform that connects accredited investors with consumer retail brands, is quickly becoming a stronghold for conversation around these trends. In the past two years, CircleUp has raised $40M for 40 companies and reduced the average time to raise capital from 12 months to 60 days. In a world where technology is making it easier to source, screen, and invest in deals across the board, CircleUp’s platform makes it more efficient for consumer retail companies to find funding.
And, with any paradigm shift comes an opportunity to set the tone for the future.
Among venture capital firms, Collaborative Fund has been at the forefront of investing in seed-stage companies with positive corporate values that we expect will be commonplace in coming years, with investments in companies such as Gumroad, Earnest, and Hampton Creek Foods. That’s why we’ve decided to partner with CircleUp to invest in consumer brands that align with these values.
Together, we’re committing $4M to fund consumer brands certified as B Corporations, in the form of a $3M fund managed by CircleUp, where Collaborative Fund is an anchor investor, as well as a $1M co-investment vehicle managed by Collaborative Fund. B Corporations are for-profit entities that have publicly committed to factoring public benefit, in addition to profit, into their corporate decisionmaking.
We’ve only seen the tip of the iceberg in a new era of companies. Collaborative and CircleUp are proud to be leading investor efforts to give entrepreneurs more options to get their companies off the ground, while incentivizing them to build positive values into their brands from the start.