There is, indeed, an equity crowdfunding tsunami. This idea of creating an online space where entrepreneurs and investors can meet and transact is quite the hot topic, and new platforms — Kickstarters with an equity twist — are popping up like spring flowers.
We often get asked whether Brightspark can be defined as an equity crowdfunding platform, and the answer is a resounding “no”. While both Brightspark and equity crowdfunding platforms seek out individual investors and aim to fund great early stage companies, that is where the similarities end.
At Brightspark, we deploy venture capital discipline refined by decades of experience. Our Managing Partners personally meet hundreds of entrepreneurs every year and select less than 1% of these companies after months of due diligence. Because the Partners are both experienced VCs and business operators, 80% of their work with portfolio companies actually occurs after financing, helping fill skills gaps and providing actionable input that increases the company’s valuation for all.
At any given time, we typically offer a single deal rather than striving for a large portfolio — we are under no pressure to deploy capital, and we value quality over quantity. Brightspark is also focused in the tech space, where the Managing Partners have deep expertise. Not only do they personally invest in each deal but in many cases a financial institution will co-invest as well. Investing in Venture Capital is risky by definition, but we believe that we can manage some of the risk by investing only in validated business models with very strong management teams.
Equity crowdfunding platforms typically operate quite differently. They often have sophisticated websites that match investors to multiple deals at any given time. All industries are covered — from bagel shops to virtual reality developers — usually at startup stage, with the associated high risk of pre-validated businesses.
Both investing vehicles can coexist in a world that is democratizing investing, although both models will typically attract very different investors. The crowdfunding model attracts non-accredited investors with relatively small investable assets, while Brightspark investments require a minimum of $10,000 and most investors invest $25–50k in a deal.
If you’re an individual who is interested in accessing traditional venture capital, sign up now to join our network of investors and access our deal flow.
This blog is a special feature by our VP of Investor Relations, Jonathan Latsky.