EarlyShares, a Miami-based equity investment platform for accredited investors, launched its first equity investment campaign to the public last week.
The crowdfunding campaign, for a South Florida startup in the recreational boating industry, is also the first of many equity investment projects that will be launching on the EarlyShares platform in coming months, said Heather Schwarz-Lopes, co-founder and chief strategy officer for EarlyShares. "We’ve received about 1,500 applications from entrepreneurs seeking capital so the need is large," she said Tuesday.
The equity investment offering for BoatSetter, a peer-to-peer boat rental venture, has already reeled in more than $600,000 from eight investors so far. BoatSetter is seeking $2.25 million, but must raise at least $1 million to close.
Andrew Sturner, chairman and CEO of BoatSetter, said the company had already raised $700,000 in seed capital and was considering an angel round. But Sturner, and also an angel investor with Accelerated Growth Partners, said the crowdfunding platform offers an efficient process, where all the deals are fully vetted and the site is well organized and complete. Because BoatSetter is a consumer company, it’s also a great way to draw in brand ambassadors. "The main reason I did it is it gave us the ability to expand our network and find more real advocates for our process," said Sturner, who liked that the company could also offer rewards to investors for various levels of investment.
BoatSetter, led by a team with extensive marine industry and technology experience, connects boat owners to prospective boat renters through a secure online platform, creating a source of income for boat owners and an affordable, convenient option for potential boat renters. The business model “will not only subsidize the cost of boat ownership and give renters access to new boating experiences, but will help bring additional business to our wide network of marine industry affiliates," Sturner said.
Under current SEC regulations, only accredited investors who are registered users of EarlyShares.com are able to view the BoatSetter offering and other upcoming equity investment opportunities on EarlyShares. Information that investors can view includes details on traction of the company, investment documents, the business plan and a Q&A; everyone can view a general description of the company, details on the team and a company video. The EarlyShares equity offering from BoatSetter will give accredited investors the opportunity to invest in an EarlyFund – an LLC managed by EarlyShares – which holds a convertible note investment in Collaborative Boating, the owner of BoatSetter.
EarlyShares, founded in 2011 but launched publicly earlier this year, hosts both equity- and rewards-based campaigns on EarlyShares.com. BoatSetter’s offering is a hybrid model that includes rewards. Upcoming EarlyShares campaigns will feature equity investment offerings related to web entrepreneurship, real estate and music industry projects. Lopes said EarlyShares has a user base of 50,000 and about 1,000 accredited investors.
The provisions of Title II of the Jumpstart Our Business Startups (JOBS) Act, which took effect on Sept. 24, 2013, lifted a longstanding ban on general solicitation. Small businesses and startups, like BoatSetter, are now legally allowed to publicly advertise their capital raising initiatives to accredited investors on crowdfunding platforms.
"As angel investors, we are always looking for deals. The hope for all of us, startups and angel investors alike, is that crowdfunding will bring more angels into the fold," said Sturner.
Title III of the Act, still undergoing regulatory approval and not expected until later next year, is expected to allow EarlyShares and other platforms to open up equity crowd-funding beyond accredited investors, Lopes said.