How has Investment Crowdfunding Growth Compared to Venture Capital?

CHART OF THE WEEK 📈

By Brian Belley | Read

Both online startup investors and founders have likely noticed that investment volume and deal activity have been sluggish compared to the peaks of 2021. This trend isn’t unique to the online investment crowdfunding market — Venture Capital (VC) has also experienced a pullback in both deal count and investment volume since 2021. This week’s chart of the week examines how VC and Reg CF (Regulation Crowdfunding) trends compare and provides 2024 year-end projections for regulated investment crowdfunding.

• Although investment crowdfunding has slowed since its 2021 peak, Reg CF has proven more resilient than VC in terms of both investment dollars and deal count when normalized to 2018 values.

• From 2018 to 2021, normalized capital raised for Reg CF grew by 5.6x, while Venture Capital increased by 1.4x.

• Looking ahead to year-end 2024 estimates, Reg CF is expected to finish at 4.4x its 2018 investment dollar volume, while VC is projected to reach only 1.3x its 2018 value.

• Part of the reason for Reg CF's larger relative growth is that U.S. VC investment is still approximately 571 times larger than Reg CF: $187 billion vs. $327 million (estimated 2024 values), respectively.

• Venture Capital fundraising in 2024 may be skewed by massive AI rounds, like CoreWeave’s $8.6 billion and xAI’s $6.0 billion raise, potentially obscuring the overall state of the broader VC market.

To read the complete deep-dive analysis, including more charts for the regulated investment crowdfunding markets since 2018 and projections for 2024, read more here.

INVESTMENT ROUNDTABLE

By Sam Fiske / Watch

In this week’s Investment Roundtable, we break down the fastest-growing startups in crowdfunding from 2022 to 2023. Plus, we dive deep into Lexi—a company pivoting from IoT solutions to smart building management. Can Lexi overcome its revenue challenges and capitalize on the push for building decarbonization?

EXCLUSIVE WEBINAR

PITCH REVIEW 💸

By Léa Bouhelier-Gautreau \ Deal Report

Brief: Rally has developed a rideshare platform designed to create demand-based trips with dynamic routes. The company operates the OurBus platform, which does not own buses directly but partners with a network of bus companies to provide bus pool rideshare services for events and regular scheduled services for highly traveled corridors between cities. Since its inception, Rally has completed 3 million trips and generated $120 million in total revenue, demonstrating a significant footprint in the U.S. public transportation market.

Key People: Rally's key leadership includes CEO Narinder Singh, with over 25 years of experience in transportation and technology, providing strategic vision and market insight; CTO Numaan Akram, whose technical expertise ensures the optimization and scalability of Rally's platform; CXO Lav Kush, who focuses on customer experience and operational efficiency; SVP of Events Siheun Song, managing transportation logistics for large-scale events; and SVP of Lines Axel Hellman, responsible for expanding intercity bus services.

Summary

Here's what we like: Rally presents a compelling investment opportunity driven by key growth factors: the company's demand-based rideshare platform capitalizes on increasing government initiatives aimed at reducing traffic congestion and promoting public transport. This favorable regulatory environment, combined with Rally's innovative approach, positions the company for strong market penetration and sustained revenue growth.

Rally’s competitive advantage lies in its dynamic routing and on-demand bus services, setting it apart from traditional fixed-route systems. Its ability to optimize routes based on real-time demand enhances operational efficiency and user satisfaction, especially for event-goers and commuters. Led by CEO Narinder Singh and CTO Numaan Akram, Rally’s leadership brings a wealth of transportation and tech experience, vital for driving innovation and executing strategic decisions.

Moreover, Rally's established partnerships with major organizations and universities, alongside its impressive track record of 3 million trips and $120 million in revenue, including $34 million in 2023, underscore its market traction. Favorable investment terms, including preferred equity with liquidation preferences, further bolster the investment's appeal.

Here's what we don't: The U.S. public transportation market, while growing, is highly competitive, with established players like Megabus and Greyhound having broader route networks and stronger brand recognition. Rally’s reliance on government initiatives and funding for public transport infrastructure also presents risks, as changes in policies or budgets could limit growth potential.

Rally's competitors benefit from larger fleets, economies of scale, and greater resources to invest in marketing and customer acquisition. In contrast, Rally’s reliance on a network of bus operators limits its control over service quality, which could undermine customer satisfaction. Additionally, the company's smaller operational footprint makes it vulnerable to being outpaced by better-funded competitors in terms of market penetration.

Concerns around Rally's leadership team also highlight potential weaknesses. While experienced, the team may lack the expertise to scale large operations and navigate complex regulatory environments. Rally's reliance on partnerships with bus operators poses further risks, as disruptions or quality issues in these partnerships could harm service reliability and customer trust, stunting future growth.

LAST WEEK’S POLL RESULTS

Would you invest in StartGlobal?

🟩🟩🟩🟩🟩🟩 👍 (14)

🟨🟨🟨🟨⬜️⬜️ 👎 (11)

25 Votes

🎙️ INSIDE STARTUP INVESTING

By Sam Fiske \ Listen

In this episode of Inside Startup Investing, host Chris Lustrino interviews Jeff Annison, co-founder and CEO of Legion M, a pioneering fan-owned media company. Legion M leverages equity crowdfunding to unite a million fans in revolutionizing the media landscape. Annison discusses the company's journey, its significant milestones, and the future trajectory in democratizing media production.

STAFF PICKS 🌶️

Assured Med Supply

Assured Med Supply is developing a dynamic marketplace, AI conversational chat interface, enterprise integration, and AI-driven visualization dashboards to streamline the medical supply process. With key distribution partnerships, including Siemens, Assured Med Supply has seen over 100% year-over-year growth in its medical supply segment.

• Pre-Money Valuation: $9 million

• Minimum Investment: $100

Holofit By Holodia

HOLOFIT by Holodia offers patented XR fitness technology that gamifies workouts, making fitness fun and engaging. The platform provides an immersive experience that distracts users from the discomfort of exercise, encouraging long-term commitment. HOLOFIT has over $1 million in annual recurring revenues and a 35% average year-over-year growth for the past three years.

• Valuation Cap: $25 million

• Minimum Investment: $100

World Tree

World Tree is the largest grower of Empress trees in North and Latin America. The company has already planted 6,000 acres of trees. World Tree offers sustainable timber investment opportunities, targeting high-end markets such as furniture, veneers, musical instruments, and surfboards. The company aims to expand its tree farms, farmer marketing, training, and audits through its current fundraising campaign on Dealmaker Securities.

• Valuation Cap: $1.5 million

• Minimum Investment: $499

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