⚡ Get All Content for 20% Off ⚡

Crowdfunding Platform Raises $4 Million to Fund Its Own Growth By -- You Guessed It! -- Crowdfunding. Equity crowdfunding platform SeedInvest just completed its Series A round of funding by reaching out to investors through its own platform.

By Catherine Clifford

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

To build a startup, you've got to believe in your mission. Big time. That's why the co-founder of apartment-rental site Airbnb never stays in hotels. And that's why the SeedInvest team raised its first round of funding through equity crowdfunding.

Proving it can "walk the walk," the equity crowdfunding startup announced today that it raised $4.2 million from investors through its own platform.

"We decided there was no better way to illustrate our conviction in our platform than by utilizing it ourselves," Ryan Feit, co-founder of SeedInvest, said in a statement. "This was the perfect occasion to tap our rapidly growing investor base and provide them with the opportunity to join our journey."

Related: Why Fraudsters Won't Sink Equity Crowdfunding

Of the total sum raised, $2 million came from venture capital firms including Scout Ventures, Great Oaks Venture Capital, Avenue A Ventures, Archer Gray and Krillion Ventures. The remaining $2.15 million came from 42 angel investors who were able to be approached thanks to new changes in the rules for reaching out to investors. The company's initial goal of $3 million was met in one week.

The JOBS Act (or Jumpstart Our Business Startups Act) removed an 80-year ban on what's called "general solicitation" -- the act of publicly advertising that you are seeking funding. Now that the ban has been lifted, it is legal for entrepreneurs to advertise their funding efforts.

Related: Steve Case: JOBS Act Is Working, But D.C. Still Needs to Do More for Entrepreneurs

In the time that SeedInvest advertised its fundraise, more than 3,000 investors checked out the investment opportunity. And that kind of exposure is exactly one of the selling points SeedInvest uses to explain to entrepreneurs why they would be benefited of raising money on their platform: access to investors. And so while SeedInvest raised money for its own growth, it also bolstered the authenticity of its marketing strategy.

Equity crowdfunding is a method of fundraising that involves trading many small pieces of your company for cash. Currently, the rules in the U.S. only allow entrepreneurs to raise money from accredited investors via equity crowdfunding. Accredited investors have to meet certain levels of wealth, established by the Securities and Exchange Commission. However, the SEC is in the process of creating rules that would make it legal for entrepreneurs to raise money from nonprofessional investors, too.

Related: Crowdfunding's Next Hot Frontier: Real Estate

Catherine Clifford

Senior Entrepreneurship Writer at CNBC

Catherine Clifford is senior entrepreneurship writer at CNBC. She was formerly a senior writer at Entrepreneur.com, the small business reporter at CNNMoney and an assistant in the New York bureau for CNN. Clifford attended Columbia University where she earned a bachelor's degree. She lives in Brooklyn, N.Y. You can follow her on Twitter at @CatClifford.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

The Remote Side Hustle a 43-Year-Old Musician Works on for 1 Hour a Day Earns Nearly $3,000 a Month: 'All From the Comfort of Home'

Sam Ziegler wanted to supplement his income as a professional drummer — then his tech skills and desire to help people came together.

Business News

Costco CFO Reveals Uncertain Fate of $1.50 Hot Dog and Soda Combo

CFO Richard Galanti reveals that the price will stay the same — but only "for a while."

Business News

The Most Unexpectedly Popular Side Hustle of the Decade Has Low Startup Costs and High Markups

A new report shows that vending machines are a popular investment — and the industry is set to grow up to $3 billion by 2031.

Marketing

Ever Wonder Why Certain Websites Rank Higher Than Yours? This SEO Expert Reveals The Secret to Dominating Search Results

It's often the smart use of SEO, now supercharged with AI, particularly in keyword optimization.

Business News

AI Is Impacting Jobs. Here Are the Gigs Affected the Most, According to an Analysis of 5 Million Upwork Postings

The researcher said in the report that freelance jobs were analyzed first because that market will likely see AI's immediate impact.

Leadership

Former Interrogator Shares 5 Behaviors Liars Exhibit and How to Handle Them

Five deceptive behaviors to look for and how to respond to those behaviors when you encounter them.