The Future of Startup Investing After the Silicon Valley Bank Collapse
Last week, SVB Financial — the holding company for Silicon Valley Bank — filed for Chapter 11 bankruptcy.
The bank’s fall is a major blow to startups. Silicon Valley Bank was a significant supporter of startups — providing banking and debt funding to many early-stage tech and life sciences startups.
That could benefit one area of startup investing…
With one of the industry’s biggest backers gone, startups may need to explore other fundraising options.
What is crowdfunding? Raising money from a large number of investors via online platforms — a trend that’s been rapidly growing in popularity for years.
- The concept was popularized by Kickstarter in 2009. Pledge money to help us build our cool product. If we succeed, you’ll be among the first to receive it.
- Equity crowdfunding platforms took that to the next level. Pledge money to our funding round, and we’ll give you ownership in our company.
Backers went from early customers → investors. It was all thanks to a change in the JOBS Act — which took effect in 2016.
For the first time, startups could raise money from non-accredited investors through online platforms.
This popularized platforms like Republic, StartEngine and Wefunder — each filled with hundreds of startups raising money.
There was another factor in play.
Investors looking for the next Facebook or Uber wanted to front-run others by funding startups earlier, before they went public.
- As a result, more money flowed into startups — and companies stayed private even longer.
- By the time they went public, they’d already be massive businesses — with early investors benefiting.
But there was a major problem…
Startups are much riskier, and there’s a lack of public data available.
There are hundreds of platforms to conduct research on public companies, but very few on private ones.
KingsCrowd — the private-investing data platform — has stepped in to fill that void.
- They built a first-of-its-kind data model and algorithm that use 300+ data points to rate startups.
- Startups and data are pulled from various crowdfunding platforms (StartEngine, Wefunder, etc.).
They help investors manage their startup portfolio in one dashboard — automatically pulling and tracking critical data.
Here’s how their rating system performed:
KingsCrowd has rated over 2,550 deals with $38B in value — leading to a 30% outperformance.
And of the companies that received a high score rating:
- They generated an average 3.5x unrealized return.
- 98% raised a subsequent round of funding.
KingsCrowd is currently raising money through a crowdfunding campaign. Invest here.
How much do they trust their data?
Enough to start their own investment fund. In 2022, they launched KingsCrowd Capital I fund — which lets investors own a portfolio of the top 100 startups.
Here are some early results from the fund:
- One company went public.
- Four companies were acquired.
- 2.5x average unrealized returns.
Here’s how they plan on growing:
1/ Asset class — expand their data model into real estate, collectibles and digital assets.
2/ Product — launch indexes and themed funds, add artificial intelligence to help increase returns and reduce risk.
3/ Customers — grow their reach to serve institutional investors and registered investment advisors.
Investing in KingsCrowd
KingsCrowd is on track to double sales in 2023, and they’ve raised over $7M from 4K investors and notable venture capital funds.
- Between 2018-2020, KingsCrowd raised nearly $1.1M at a share price of $0.13.
- Their latest investment round is priced at $1 per share. See here for more info.
Want to become a KingsCrowd shareholder? Invest in their crowdfunding platform.
Interested in startup investing? Explore KingsCrowd’s platform.
Want to diversify across a basket of 100 startups? Invest in the KingsCrowd Capital Fund.