Fashion-related firms seeking angel and seed investors have a new ally: FlashFunders.
This story first appeared in the October 16, 2014 issue of WWD. Subscribe Today.
FlashFunders is a new no-fee, online equity funding platform. The company was cofounded by Europlay Capital Advisers, law firm Stubbs Alderton & Markiles, Vincent Bradley and Brian Park.
FlashFunders is the latest entrant to the angel world in a crowdfunding format. It joins CircleUp, which launched in 2012, in the space that provides investors equity in return for their investment. The respective platforms vet the firms and the angel and seed investors to ensure they meet accreditation requirements. The two are also different from Kickstarter, which relies on pledges, or donations, from individuals.
The FlashFunders platform is a member of FINRA-SIPC, which allows it to operate as a broker-dealer in a regulated environment. The platform, which goes live today, helps entrepreneurs navigate the SEC’s complex rules, ensuring the offerings are SEC-compliant and executed using FDIC-insured escrows.
Mark Dyne, a former Skype seed investor and chairman and founder of Europlay, is the chairman of FlashFunders. He noted, “Ninety-seven percent of the 8.5 million accredited investors in the U.S.” don’t take part in start-up investing because of a lack of access to the early-stage firms.
According to Bradley, the minimum investment through the FlashFunders platform is $2,500, and, once on the platform, the entrepreneurs have 90 days to meet their funding goal. As part of its business model, FlashFunders has the option to invest in the companies that secure funding on the platform, but it has a three-year time frame to make that decision and can wait to see how the firm progresses before electing to do so.
Swggr is one of the fashion-related firms seeking funding on the platform. The mobile app will be in beta testing next month, with a launch date later this fall. A cross between Instagram and Pinterest, Swggr users host virtual online “closets” from which their followers can style mood boards. According to Yuri Moreira, Swggr’s founder, “Users who like or comment on a look rack up points that can be used for discounts for products available from our [affiliated] partner, who focuses on fashion offerings.”
Swggr’s business model counts two forms of revenue streaming. One is a boutique that hosts items from other brands and retailers that are sold on Swgger, giving Swggr 75 percent of the affiliate fee and the affiliate the balance. The other form is the points reward system, in which redemptions generate a 50-50 revenue sharing when users redeem their discounts.
According to the FlashFunders platform, Swggr is seeking to raise $500,000 and, so far, has raised $49,000.
Moreira said his team is working out of the Stubbs office, the securities law firm that has a venture-capital arm that is a FlashFunders cofounder and investor.