CircleUp has raised some capital to invest in the brands raising capital on its equity-based crowdfunding platform. Earlier this month the company announced the formation of The Consumer Growth Fund, a $22 million fund that will match investments made by other investors in select companies raising funds on the site.
Managed by CircleUp managing director Jason Yuan, the fund has invested in Canadian nutritional “Supershake” brand Rumble and Northern California-based hard cider producers Sonoma Cider. Both companies have closed rounds for over $1 million and $4 million respectively using the site.
The CGF’s announcement arrives as CircleUp recently passed the 100 transactions mark, with companies raising over $100 million to date on the platform. According to CircleUp COO Rory Eakin, beverage brand startups make up around 20 percent of the companies utilizing the site. Along with Rumble and Sonoma Cider, other beverage brands that have closed fundraising rounds on CircleUp include Bhakti Chai, Joia Soda, Kombucha Brooklyn and Rooibee Red Tea, who used CircleUp to secure the final $500,000 of a $2 million capital raise back in March. Currently, beverage brands including high pressure processed ready-to-drink gazpacho Tio Gazpacho, Güdpod, and sleep shot aid Food For Sleep are in the midst of CircleUp fundraising rounds.
According to Eakin, companies that have raised money on the site have on average gone on to grow revenues by 90 percent per year post-funding. These success stories have led to an increased interest in the platform from institutional investors like family funds and smaller private equity groups where previously the majority of funding came by way of entrepreneurs’ angel investors.
“For us it’s a real validation and it’s great for the companies raising capital,” said Eakin. “Fewer investors, larger check sizes and a lot of strategic support as these companies continue to grow.”
As for the types of beverage companies the CGF will look to invest in moving forward, CircleUp’s business development associate Zach Grannis pointed to companies that resonate with millennials by way of innovation while also hitting the organic, non-GMO and socially conscious checkpoints currently in vogue across the food and beverage industries. Grannis cited artisanal cocktails, probiotics, third-wave coffee and premium tea as examples of other categories attracting such interest.