If Kickstarter taught us anything, it’s that consumers are willing to pay for products that they believe in at an early stage. With those early-stage “donations” comes not only cool T-shirts but a vote of confidence in the entrepreneurs behind the “world’s most revolutionary toaster!” Now, with the rise of equity crowdfunding, those same consumer-believers can exchange their confidence for equity in the startup of their choice, and in turn, startups have a new funding source at their disposal.
In March of 2015, the SEC finally moved on rules under Title IV of the Jumpstart Our Business Startups (JOBS) Act of 2012, paving the way for private companies to raise up to $50 million from accredited and non-accredited investors. This rule is known as Regulation A+ or Reg A+.
Companies can go through a series of stages when conducting a REG A+ investment offering, beginning with a Testing the Waters stage, followed by a formal filing and qualification with the SEC and concluding with the live investment offering. Testing the Waters campaigns allows companies to promote the potential opportunity through an equity crowdfunding campaign and prospective investors the chance to reserve shares before a company qualifies its offering with the SEC.
XY Findables is a unique case - a smart technology product company starting out with tremendous support on Kickstarter and raising over $200,000 from more than 4000 backers, XY is one of the first companies to actively Test the Waters using the REG A+ rules. Creating a family of connected devices that help make everything consumers own findable via their smartphone, XY Findables had already demonstrated an ability to successfully take products to market and infiltrate the competitive consumer tech landscape with retail and online distribution through Amazon.com, Fry’s Electronics, Walmart, Target and Best Buy. So why go back to the crowd?
Launching their equity crowdfunding campaign on the investment platform StartEngine, XY made the informed decision to trust their customers as opposed to traditional VCs for their next round of fundraising. With 100,000 units sold, 50,000 active users, and an expanding 2016 product line, XY Findables knew they already had something people were interested in. Why not share their success with the crowd that helped make them instead of going the traditional route?
XY certainly isn’t the first company to use these rules, with Elio Motors famously raising $17M with their own REG A+ campaign that launched on June 19th, the same day the TITLE IV rules originally went into effect. With the success of XY’s campaign remaining to be seen, one look at XY’s page might convince interested parties that there’s something special behind the company, or at the very least, they’ve made a few right moves since their success on Kickstarter.
As the company’s products continue to help define the growing “findable” industry of similar item-finding devices, betting on the consumer might just end up paying off. To learn more about XY Findables and other startups raising money right now using equity crowdfunding, check out XY Findables’ equity crowdfunding campaign on the StartEngine platform at www.startengine.com/startup/xy-findables
