When it comes to online private equity investments, a lot of attention is paid to the platforms that host the deals, the startup founders, and what kinds of companies are raising capital. But what about the investors? One of the strengths of Regulation Crowdfunding is that it opened up startup investing to people who could not access this asset class before. Everyday investors are integral to the explosive success that crowdfunding has seen thus far. We wanted to acknowledge and examine the role of investors in this Chart of the Week. We took a look at the average investment amount across 10 different platforms in 2020. Our data set includes all Regulation Crowdfunding raises from 2020, both equity and non-equity deals. Additionally, raises where no investors committed capital were removed from the dataset. SeedInvest does not provide investor data and was therefore excluded.
Localstake had the highest average check size committed at $2,639.18 — though this figure comes from a total of three raises. After this, the average amount drops by nearly half, possibly indicating that Localstake is an outlier in this data. Wefunder’s 160 raises averaged out to a check size of $732.75 per investor. On the lower end, StartEngine checks averaged $523.88 across 92 raises in 2020 and 93,226 individual investors.
Altogether, the average check size had a range of $2,115.30 for the 10 platforms represented. Interestingly, platforms that host primarily non-equity deals (Localstake, MainVest, and Honeycomb) all made it into the top 10 platforms for average check size for 2020 investments at $2,639.18, $773.04, and $875.06, respectively.
Understanding the typical check size committed by the Regulation Crowdfunding investor was illuminating, particularly since the online private markets allow investors to commit capital to startups for as little as $50 in some cases. We will keep close tabs on whether or not these numbers increase in 2021, especially now that companies can raise up to $5 million under Regulation Crowdfunding.
Note: all data used for the Chart of the Week comes from the KingsCrowd database and represents a snapshot of the crowdfunding market.
Wall Street has Morningstar, S&P, and Bloomberg
The equity crowdfunding market has KingsCrowd.
About: Olivia Strobl
Olivia comes to KingsCrowd with a background in venture capital and technology. She spent time at Glasswing Ventures, an AI-focused venture fund in Boston, before joining the KingsCrowd team. There she helped develop machine learning algorithms for the opportunity qualification of preseed and seed-stage startup companies. Prior to her time at Glasswing, Olivia worked in a lab studying the neural correlates of attention. She holds a degree in Neuroscience from Wellesley College.