In our previous article on investing in and exiting equity crowdfunded startups, we touched upon the relative newness of this asset class. But a few breakout success stories have heralded the massive potential of this investment avenue. If you’re musing on the merits of CSF investing, here are a few case studies to whet your appetite.
Partners: General Motors
Return for investors: 1011%
Cruise Automation, founded in 2013, funded the development of their driverless car technology through several rounds of funding, including series A and B via AngelList Syndicates, and a later round of invite-only crowdfunding that achieved $200,000. This figure ended up paling in comparison to the deal that netted investors 1011% returns - the $1 billion acquisition by automotive giant General Motors, which was secured in 2016 just 3 years after Cruise Automation was founded. This marked the very first billion dollar exit in crowdfunding history.
Partners: DST Global
Return for investors: 1900%
British money management platform Revolut secured their initial £1.01 million investment via CrowdCube in 2016, where investors could pledge anywhere between £10 and £5,000. In another funding round in 2018, Revolut received a $250,000 investment from DST Global, bringing the company’s value to £1.2 billion. The founders Nikolay Storonsky and Vlad Yatsenko retained their executive positions, but gave investors the choice to keep their shares or sell them back to Revolut. An investor who contributed the maximum of £5k in 2016 would have exited with a whopping £95,000. Revolut is now worth $5.5 billion.
Partners: TSG Consumer Partners
Return for investors: 2800%
BrewDog has always had crowdfunding at the centre of its fundraising strategy, and based its brand around alternative approaches and inclusivity. The Equity for Punks scheme, in which investors and customers can invest as little as £47.50 for two shares, has attracted 56,000 investors since the company was founded in 2007. Had you invested in BrewDog’s 2010 crowdfunding round, you would have seen a very nice return of 2,800% when TSG became minority stakeholders in 2017. The founders continue to hold a controlling stake, aligning with the off-beat, innovative style of their business practices, and their hugely customer-focused approach.
Partners: Insight Venture Partners
Return for investors: 3000%
In what's said to be the biggest legal tech Series B fundraising effort in Europe, record-breaking returns were made by investors when ContractPod Technologies secured $55 million from Insight Venture Partners in 2019. Although what this crowdfunded startup does isn't quite as sexy as craft beer or electric cars, the numbers on the case study make it an exciting one. ContractPod (previously known as Galexy Services) has made huge waves in legal technology, using AI to streamline contract management processes, and radically improve the day-to-day efficiency of legal teams. ContractPod got their start on Crowdcube, where they raised £212,000 in 2013. When Insight became majority stakeholders in 2019, investors had the opportunity to exit with a very pleasing 3000% return.