CircleUp, the crowdfunding startup, is straying a bit off the beaten path in its latest fundraising round.
As reported by TechCrunch Monday (July 13), the startup, which sits alongside peers such as GoFundMe in using the Web to marshal investments from outside sources — but is geared toward consumer brands — is raising $22 million to start its Consumer Growth Fund.
The Consumer Growth Fund will match funds that are raised by others on its platform but will not take the lead in raising money itself. As TechCrunch noted Monday, the new vehicle will let the company avoid conflict with other investors.
The $22 million raised for the Consumer Growth Fund will roughly match the $23 million the company has raised to power its own business. The investor roster that has backed the company in the past includes Google Ventures, Canaan Partners and others.
The company’s COO and cofounder claims that the business model is unique in creating the Consumer Growth Fund. The executive, Rory Eakin, says the $22 million fund “is a first” and that no other crowdfunding peers have started platforms to invest in deals tied to their own businesses.
TechCrunch said that until the newest fund, the company has marshaled individual investors backing certain businesses. Those investments can come individually or through the platform known as “Circles,” which encompasses separate investment funds which can in turn be clustered around certain themes.
The company has already laid claim to 100 businesses raising funds, with $100 million raised in the past three years. Thus far, said TechCrunch, the average company funded through CircleUp’s platform has grown by as much as 90 percent post-fundraising, but there have been no exits from investors.
In reference to the newly established growth fund, TechCrunch maintained that thus far it has 50 limited partners, among them consumer product executives from companies such as Annie’s, Walmart and family offices.
“These investors can now access an asset class they’ve never reached, without needing to pick and choose the companies themselves,” Eakin told TechCrunch, adding that the fund was projected to be $20 million but wound up being oversubscribed.
CircleUp's traditional business model charges 5 percent commission tied to funds raised. The new fund, however, will charge investors and also take both performance and management fees, which Eakin said would be between 2 and 20 percent.