Executives behind US-based equity crowdfunding platform, Seed Equity, have announced the creation of a new fund to invest in startups raising money on the platform. Called Seed Equity Capital Partners, the fund is targeting to raise $10 million. Funds will be put to action in investing in early growth stage technology companies that fit three criteria; have a potentially disruptive business model, early traction with either a growing user base or revenues, and experienced management teams with prior success.
Founding Seed Equity Capital Partners is Todd Crosland, who also leads and founded the similar named crowdfunding platform. Originally, founding and managing IBFX, an online foreign exchange broker, Seed Equity marked an opportunity for Crosland to apply aspects of social investing that were used at IBFX to create a trading community and apply them to equity crowdfunding.
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Commenting about the current fund, Crosland stated, “The fund will target companies that are at the forefront of disruptive changes in the technology industry. We will be selective about which entrepreneurs and businesses we choose to invest in, and once we’ve made an investment we will work with the company’s management to help make the company a success.”
Overall, the creation of the fund provides an opportunity for investors to gain access to equity crowdfunding through a managed program that will diversify its investments across multiple technology startups. While diversification is a known aspect of stock trading, it is often overlooked among beginner angel investors. As such, high net worth individuals who are allocating funds to angel investing are advised to create portfolios of investments as the majority of startups don’t return positive gains. Therefore, the advantage of investing in a managed crowdfunding fund is that it provides its investors a diversified approach while providing exposure to startups.
The launch of the fund also provides a boost of available equity to startups raising money on the platform. Upon launching, the firm announced that it has already provided funding to several companies with campaigns on the crowdfunding platform including Spatch.