Equity-based crowdfunding platform CircleUp has closed a $14 million Series B round of funding.
This story first appeared in the March 27, 2014 issue of WWD. Subscribe Today.
The latest round was led by Canaan Partners. The last round of funding, $7.5 million in Series A led by Union Square Ventures, was in April 2013. Existing investors in Series A, including Google Ventures, Rose Park Advisors and Maveron — which was also an early investor in the $1.5 million seed round — were also investors in Series B. With the latest round, CircleUp has raised an aggregate of $23 million in less than three years.
CircleUp is different from other crowdfunding platforms. Under its model, investors get equity in the investment, so the firms seeking equity stakeholders get vetted and angel and seed investors must get accredited before either one can access the consumer-focused crowdfunding platform. In comparison, Kickstarter — where the average raised is $10,000 — relies on pledges, or donations, from individuals who in turn receive a product or other token, but no equity in the business they invest in.
Ryan Caldbeck, CircleUp’s chief executive officer and cofounder, said, “The raise will be used to invest in new product features and build out our other services and partnerships. We are looking to form partnerships with third parties that our entrepreneurs would benefit from.”
Caldbeck said his firm has already held several incubator days in which executives from General Mills and Procter & Gamble have conducted educational seminars and advisory sessions on topics involving branding, marketing, sourcing and packaging.
Caldbeck previously was at private equity firm TSG Consumer Partners before founding CircleUp.
The premise behind CircleUp is to streamline the process between investors with consumer backgrounds who have money to put to work, but not necessarily access to firms that fit their investment profile. The process enables completion of due diligence and investment decisions within three months, rather than the typical year when pitching to Silicon Valley tech firm investors.
The average raise for entrepreneurs working through CircleUp is $1 million across its consumer products categories. So far CircleUp has helped more than 30 firms raise more than $30 million total. Most of these firms are early-stage consumer companies with annual revenues of $1 million to $15 million seeking seed investors.
Among the recent raises this year were two in January: outdoor socks firm Point6, $876,832, and skin-care firm Seaweed Bath Co., $345,000. Last year two firms in apparel and accessories successfully raised capital through CircleUp: sunglass and accessories firm Raen Optics, $825,000 in February, and outdoor apparel firm Klymit, $300,000 in September. Two skin-care firms in 2012 were able to get funding through the crowdfunding site: Willa, $1 million in November, and Pangea Organics, $555,000 in December.