Circle Acquires a Crowdfunding Company

Circle Internet Ltd. has acquired Seedinvest, an equity crowdfunding company according to the announcement on the Circle blog on October 5, 2018.

Strategic Acquisition

Seedinvest allows investors to own a piece of a variety of startups

(Source: SeedInvest)

Seedinvest allows investors to invest as little as $200 in a startup, which is considerably lower than any equity investments an average investor can do in the market. Over the years, SeedInvest has raised $115 Mn for startups using crowdfunding while offering 17.4 percent unrealized returns for investors.

It’s not easy for startups to get listed on Seedinvest since it has around one percent selection rate. Harvard University has a 5.4 percent selection rate, which implies the chances of getting into Harvard are much higher than getting into SeedInvest. The company was part of INC magazine’s prestigious “INC 500” list. According to INC, SeedInvest reported growth of 3,381 percent.

The acquisition is strategic as Circle intends to introduce products which will allow institutions and individual investors to invest in startups using crypto-based infrastructure. The acquisition and planned products will materialize only after FINRA approval.

This is Circle’s second major acquisition after acquiring Poloniex, a digital assets exchange in February 2018 for $400 million.

Crowdfunding for Future

Seedinvest will be adding around 30 employees to Circle’s NY office along with the expertise of dealing with private and government regulators with regards to crowdfunding. Seedinvest will also bring in a service offering for raising capital.

The acquisition seems to be inline with Circle’s vision of a more inclusive global economy. A farmer in Africa will be able to invest in a hot silicon valley startup with transparency and security offered by blockchain infrastructure.

“This was a company who had been at the forefront of collaborating with government to figure out how to make it possible to innovate in the way people raise capital,” Circle Chief Executive Officer said in an interview.

SeedInvest in a blog post announcing their acquisition by Circle mentioned that both the companies have similar values and aligned long-term vision. Both of the companies plan to change the way businesses and people raise capital and democratize investing.

SeedInvest – Safe ICOs?

Various checks and the system followed at SeedInvest could help make investments in ICOs safer for investors. The minimum requirement for a startup to raise funds on SeedInvest is to have an MVP ( Minimum Viable Product) which is in contrast different to ICOs which have been able to raise millions just by a whitepaper. Many such ICOs later abandoned the project after raising funds.

Seedinvest also is unlikely to approve anonymous ICO founders while creating an aura of trust amongst ICO investors.

 

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