Top Crowdfunding Raises of 2024: DealMaker Successes, Industry Lessons & Winning Strategies

2024 Equity Crowdfunding at a Glance

Over the past year, many trends in capital raising have emerged. Noteably, the popularity of Regulation A+ capital raises, influenced by various regulatory frameworks that shape investor eligibility and funding limits. Financial institutions are crucial in ensuring compliance with these regulations and protecting investors within the crowdfunding framework. 61 offerings closed during 2024, and only 34 new Regulation A+ campaigns were launched. A total of 20 of those raises exceeded $1M in total capital raised. Across the board, companies using Regulation A+ campaigns for their capital raising raised over $244M in 2024.

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Additional notable trends include the rise in popularity of cleantech, AI and robotics, and influencer-led CPG. Through DealMaker, sustainable energy pioneer EnergyX was the first cleantech company to max out their Regulation A+ campaign ($75M) and have raised over $87M to date from their retail investors. EnergyX exemplifies the interest and success in cleantech investments.

Understanding Crowdfunding Regulations

Crowdfunding regulations are essential to protect both issuers and investors. In the United States, the Securities and Exchange Commission (SEC) is responsible for regulating crowdfunding activities. The SEC has established various regulations to govern crowdfunding, including Regulation Crowdfunding (Reg CF), Regulation A (Reg A), and Regulation D (Reg D). These regulations provide a structured framework that enables companies to raise money while ensuring investor protection and market integrity.

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Regulation Crowdfunding (Reg CF) Overview

Regulation Crowdfunding (Reg CF) is a type of exemption from registration under the Securities Act of 1933. It allows eligible companies to offer and sell securities through crowdfunding, enabling them to raise up to $5 million in a 12-month period. To comply with Reg CF, companies must file a Form C with the SEC, which includes detailed information about the company, the offering, and the intended use of proceeds. Additionally, Reg CF offerings are subject to annual and quarterly reporting requirements. Companies must provide investors with financial statements and other pertinent information, ensuring transparency and accountability throughout the fundraising process.

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Comparing Reg CF to Other Regulations

Reg CF differs from other regulations, such as Reg A and Reg D, in several key aspects. Reg A allows companies to raise up to $75 million from accredited and non-accredited investors, offering a broader fundraising scope. In contrast, Reg D comprises various rules, including Rules 506(b) and 506(c), which allow for unlimited fundraising but may restrict offerings to accredited investors. Reg CF enables businesses to raise up to $5 million annually from accredited and non-accredited investors, making it a versatile option for companies seeking to engage a diverse investor base. Understanding these differences is crucial for companies to choose the right regulatory framework that aligns with their fundraising goals and investor profiles.

2024 Notable Raises

EnergyX's $75M Reg A+ Raise

The incredible raise achieved by EnergyX last year could not have been accomplished if it weren't for their multi-faceted approach. Their strategy was to focus on retail investor acquisition and institutional partners to fund their raise. Turning over 7000 members of their dedicated and interested community into their most loyal supporters (and opening up the doors to allow their loyal community to become investors) was one of the most impactful aspects of their strategy. In addition to the supportive retail investors, EnergyX forged partnerships with some major institutional partners, including General Motors, Posco Holdings, and the U.S. Department of Energy. EnergyX's incredible Reg A+ raise proved that a hybrid fundraising model outperforms single-channel approaches to raising capital, enabled by specific rules like Rule 506 that facilitate securities offerings and support enabling issuers in their fundraising efforts.

Miso Robotics' $50M Multi-Year Campaign

In 2021, Miso Robotics began a capital-raising campaign with DealMaker, utilizing equity crowdfunding platforms to facilitate their investments. The campaign leveraged DealMaker's white-label tools for their sequential raises. DealMaker's advanced analytics allowed for expansion into digital marketing efforts, resulting in a 68% increase in their ticket size offerings compared to results from before partnering with DealMaker. After using automated KYC during investor onboarding, Miso Robotics noted a 99% success rate for the new onboarding process. Using tools that DealMaker Engage offers, serial raises go smoothly; successful serial raises need centralized investor relations, and with DealMaker Engage, all of the necessary tools are in one place.

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Factors to Consider When Selecting a Platform

1. Type of Crowdfunding: Determine the type of crowdfunding that best suits your needs, such as equity crowdfunding, debt crowdfunding, or rewards-based crowdfunding. Each type has its own set of benefits and requirements, so it's important to choose one that aligns with your fundraising strategy.
2. Fees: Consider the platform's fees, including listing fees, transaction fees, and payment processing fees. Understanding the fee structure will help you budget effectively and maximize the funds raised.
3. Investor Base: Look for a platform with a large and active investor base, including both accredited and non-accredited investors. A diverse investor base can enhance your campaign's reach and potential for success.
4. Regulatory Compliance: Ensure that the platform is compliant with relevant securities laws and regulations, such as Reg CF, Reg A, and Reg D. Compliance is critical to avoid legal issues and protect both your company and your investors.
5. Reputation: Research the platform's reputation and track record of successful crowdfunding campaigns. A platform with a strong reputation and proven success can provide confidence and credibility to your campaign.
6. Customer Support: Consider the level of customer support provided by the platform, including investor relations and campaign management. Effective support can help you navigate challenges and optimize your campaign's performance.
7. Marketing and Promotion: Look for a platform that offers marketing and promotion services to help promote your campaign. Effective marketing can significantly enhance your campaign's visibility and attract more investors.

By considering these factors, you can choose a crowdfunding platform that meets your needs and helps you achieve your fundraising goals. Selecting the right platform is a critical step in ensuring the success of your crowdfunding campaign and maximizing the potential for raising funds.

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5 Universal Takeaways from 2024

Throughout this past year's capital raise campaigns, several key lessons emerged that proved to be universal in successful capital-raising strategies:

• Hybrid Funding Wins: As demonstrated by EnergyX's campaign, utilizing both retail investors and institutional capital creates a powerful funding synergy that maximizes raise potential.
• Compliance-as-Asset: DealMaker's 99% KYC pass rate via DealMaker Engage confirms that frictionless compliance processes significantly enhance investor conversion.
• Audience ≠ Investors: CPG brands discovered that having a large audience doesn't automatically translate to investors. Separate nurturing channels are essential for effective capital-raising campaigns.
• Liquidity Planning: Forward-thinking companies using DealMaker are achieving NASDAQ uplisting advantages by planning their liquidity strategies from the start.
• Global Potential: European Union expansion strategies are beginning to emerge, opening new avenues for cross-border capital formation.

Future-Proofing for 2025

Looking ahead to 2025, DealMaker is positioned to build on its technological advantages. The company's AI Roadmap implementation in 2024 reduced compliance timelines by an impressive 65%, demonstrating the transformative potential of artificial intelligence in streamlining capital formation. This technology will continue to evolve, further enhancing efficiency and accuracy in the compliance process.

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Market analysis has revealed another critical insight: secondary market dynamics are becoming increasingly important for platform success. Data shows that platforms without liquidity options experienced a concerning 22% decline year over year, highlighting the growing investor expectation for clear exit pathways.

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Overall, 2024 was a highly successful year for SEC-compliant crowdfunding. With a focus on retail investor acquisition strategies and picking the right regulation for your company to use in its capital raise journey, companies can expect more groundbreaking capital raises in the near future.

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