Many startups raise capital through equity crowdfunding platforms, and while most are still in growth stages, several have achieved notable exits. This analysis examines documented cases where equity crowdfunding investments led to liquidity events through IPOs, acquisitions, and other exit strategies.
The following examples demonstrate how equity crowdfunding has created tangible returns for early-stage investors.
What is a Liquidity Event?
First, let’s understand what we mean by “liquidity event.” This is simply when early investors get to cash out some or all of their investment. The most common liquidity events are:
- Initial Public Offerings (IPOs) – when a company lists on a public stock exchange
- Acquisitions – when a larger company buys the startup
- Mergers – when the startup combines with another company
These events transform your previously “locked-up” investment into cash or publicly traded shares that you can sell.
Case Study 1: JUMP Bikes to Uber Acquisition
OurCrowd investors who backed JUMP, an electric bike-sharing startup, experienced a notable exit when Uber acquired the company in 2018. The acquisition provided these early investors with Uber shares in exchange for their investment.
Following Uber’s public offering in May 2019, these investors saw their position value increase substantially, demonstrating how equity crowdfunding can connect retail investors to larger market events.
Case Study 2: Jayride’s Path to Public Markets
Australian transfer comparison platform Jayride raised approximately A$665,000 across three funding rounds on the VentureCrowd platform. Following this equity crowdfunding success, the company completed a A$1.5 million IPO in 2018 and listed on the Australian Securities Exchange (ASX).
Case Study 3: Beta Bionics – Early Regulation CF Success
Beta Bionics, developer of an automated bionic pancreas system, raised $1 million from 718 investors on Wefunder in 2016. This campaign holds historical significance as it launched on May 16, 2016 – the first day Regulation Crowdfunding became available to non-accredited investors in the United States.
Case Study 4: Replit’s Hybrid Funding Approach
Collaborative coding platform Replit raised $5,240,140 from 2,589 investors on Wefunder in May 2022. What distinguishes this case is that Replit had previously secured institutional funding from venture capital firms including Andreessen Horowitz before conducting their equity crowdfunding campaign.
Case Study 5: CNS Pharmaceuticals’ Path to NASDAQ
CNS Pharmaceuticals (NASDAQ: CNSP) raised over $600,000 on Republic in 2018 before completing a successful public offering. This biotech company presents a documented case of the potential pathway from equity crowdfunding to public market listing.
Source: KingsCrowd – From Crowdfunding to IPO
Case Study 6: Atlis Motor Vehicles’ Valuation Progression
Atlis Motor Vehicles illustrates the potential valuation differential between early and later equity crowdfunding rounds. Initial investors in their first Regulation CF offering participated at a $2.9 million valuation with shares priced at $0.29.
By their final Regulation A+ offering prior to going public, the company’s valuation had increased to $1.9 billion with shares priced at $27.50, before ultimately IPOing at $29 per share. This case documents how early-stage equity crowdfunding investors may secure substantially different terms than later investors.
Source: KingsCrowd – From Crowdfunding to IPO
UK Market Cases
The United Kingdom, with its established regulatory framework for equity crowdfunding, has produced several documented exits:
FreeAgent: This cloud accounting software company raised £1.2 million on Seedrs in 2015 at a £16 million valuation. In 2018, banking group RBS acquired the company for £53 million, providing investors with approximately 3x returns over a three-year holding period.
WeSwap: This peer-to-peer currency exchange platform raised £2.4 million on Seedrs in 2016 at a £15 million valuation. Following its IPO on the London Stock Exchange in 2019, the company reached a valuation of approximately £40 million, representing a 2.5x multiple on the crowdfunding valuation.
Source: Crowdsourcing Week – Big Investor Returns from Equity Crowdfunding
Market Observations and Investment Considerations
Based on the above case studies, several patterns emerge that may inform equity crowdfunding investment strategies:
- Entry timing impact: Data suggests that entry valuation significantly affects return multiples, with earlier investors typically securing more favorable terms.
- Extended holding periods: Most documented equity crowdfunding exits require multi-year holding periods (3-5 years minimum) before liquidity events occur.
- Portfolio approach necessity: Given the statistical distribution of startup outcomes, these successful cases represent outliers rather than typical results, suggesting diversification remains essential.
- Secondary market development: The maturation of secondary trading platforms for private securities has introduced interim liquidity options between initial investment and traditional exit events.
- Regulatory framework importance: These cases occurred within specific regulatory environments (Regulation CF, Regulation A+, and equivalent frameworks in other jurisdictions) that define investment parameters.
