NEW YORK, May 16, 2018 /PRNewswire/ -- SeedInvest, a leading equity crowdfunding platform, today released a report detailing that investors on its platform have generated a 17.4% median net unrealized Internal Rate of Return (IRR) since the inception of the platform in 2013 through the end of calendar year 2017. The report also notes that SeedInvest investors' median net returns are more than five percentage points higher than the 11.7% median IRR calculated by research firm Cambridge Associates for U.S. venture capital funds of the same vintage.
"Ever since equity crowdfunding was legalized in the US, one of the biggest outstanding questions has been 'How are investors actually doing?'" said, Ryan Feit, CEO & Co-Founder of SeedInvest. "So, we are thrilled to release our investor returns data."
Another key finding from SeedInvest's performance data is that top investors have generated fairly significant returns compared to relatively minor losses for the worst performing investors. SeedInvest found that the top 10% of investors have generated a median net unrealized IRR of 77% (compared to -7% for the bottom 10% of investors). In addition, over the past five years only a small percentage of investors who have diversified, by investing in at least three companies have generated negative returns (excluding any applicable transaction fees).
Regarding these findings, Feit commented, "While startup investing is much riskier than investing in stocks and bonds, we believe there are few asset classes that offer the same 'homerun potential' as venture." He added, "Our data illustrates both the upside potential of allocating a portion of your overall portfolio to venture as well as the importance of diversification."
The report closes by noting SeedInvest's rigorous vetting and due diligence processes. Since its founding, the company has had more than 25,000 startups apply to raise capital and has featured just 1% of those companies on the platform. In order to be selected, startups must successfully pass SeedInvest's comprehensive vetting process that includes business, legal and confirmatory due diligence. Feit concluded, "Unlike other startup investment platforms, we have always taken a quality over quantity approach. We are happy to confirm that so far, our approach has paid off for our investors."
If you would like to learn more, the SeedInvest 2017 IRR report with infographics is available for download at https://www.seedinvest.com/returns.
SeedInvest is a leading equity crowdfunding platform that provides individual investors with access to pre-vetted startup investment opportunities. SeedInvest has facilitated the funding of over 150 startups and boasts a rapidly growing network of over 200,000 investors. SeedInvest has had over 25,000 startups apply to raise capital since inception and has only accepted 1% of those companies to feature on the platform. For more information, visit www.seedinvest.com.
This is being provided solely for information purposes and does not constitute an offer or solicitation of an offer, or any advice or recommendation, to purchase securities, and may not be construed as such or serve as the basis of any investment decision. Past performance of an investment, portfolio or asset class does not guarantee any correlation as it relates to future results. The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation, and there is no assurance that such strategy will be successful.
The performance data included herein includes all companies that successfully completed a fundraising round on the SeedInvest platform and raised at least $100,000 (for deals prior to 2016) or $250,000 (for deals in 2016 or later). Performance may have been lower if all companies were included. Returns are unrealized, and actual investor returns may differ materially from those shown.
The risk/return profile of the Cambridge Associates US Venture Capital Index (the "Index") is materially different from that of any one early-stage company and is not necessarily representative of the companies listed on SeedInvest. Investments cannot be made directly in an index.
Investments in private placements, and start-ups in particular, are speculative and involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest in start-ups. In addition, such investments are generally illiquid and those who cannot hold an investment for the long term (at least 5-7 years) should not invest. All securities-related activity is conducted by SI Securities, LLC ("SI Securities"), an affiliate of SeedInvest, and a registered broker-dealer, member FINRA/SIPC.