Equity crowdfunding is becoming more and more popular around the world as an alternative form of investment, and naturally there are also a host of companies that are reaping the rewards of seeking funding. Despite being a considered high-risk investment, many investors are happy to take a punt in the hopes of hitting it big in the event of an initial public offering (IPO) or buyout. Here’s a few success stories that have emerged from the fledgling world of ECFs.
This ride-hailing giant certainly needs little introduction, but the circumstances in which investors in ECF platform OurCrowd managing to secure shares is certainly a unique one. As early investors in JUMP, an electric bike-sharing firm, they acquired shares in Uber when the ride-hailing giant bought the fledging service to compliment their own offerings in April 2018. Further down the line, OurCrowd tripled their position in Uber, setting them up for a very healthy return for the eventual IPO in May 2019.
Although OurCrowd CEO, Jon Medved, didn’t divulge any details about the returns to investors, he claimed they were “very happy”. The lack of controversy surrounding this statement is probably enough proof that its platform’s users are very much on his side!
For OurCrowd, one IPO clearly isn’t enough! The ECF company was also an early investor in meat substitute firm Beyond Meat, participating in a later stage round one year prior to its IPO. Amazingly, their IPO took place in the same week as the Uber IPO, making for a very profitable seven-day window for its investors!
Its share price opened at US$25 on launch day, hitting a high of US$234 in July 2019. At the time of writing, Beyond Meat is holding steady at US$96 which indicates that investors in the business have gotten their money back and then some! Even if there’s a lock-in period, which is a pre-determined length of time in which they cannot sell their shares, the price trend to date bodes well for the future!
The trend of equity crowdfunding is also spreading down under! Australian transfer comparison website Jayride secured around A$665,000 in funding across three raises on equity crowdfunding website VentureCrowd. In 2018, the company was listed on the Australian Securities Exchange (ASX) following a A$1.5 million IPO, which gave investors their first chance to secure a successful exit.
With shares priced at A$0.24 during the ECF round, the listing share price of A$0.50 meant those who chose to cash out after the ASX listing would’ve seen a whopping 108% in returns! According to Jayride CEO Sunny Yu, around half of the 19 investors in the company sold their holdings at the time, making them the first Australian investors to secure a successful ECF exit. Although its share price today is hovering around A$0.34, those that exit now would still make a profit on their money, which marks a successful investment.
One of Malaysia’s homegrown success stories in the industry, MyCash Online is the among the first few businesses in Malaysia to have a verified ECF exit. A group of early investors in the fintech startup accepted a buyout offer by 500 Startups, giving them a 44.2% return on their initial investment.
However, the majority of initial investors chose not to exit, demonstrating faith in the project under the stewardship of CEO Mehedi Hassan to date. Should the company continue its meteoric rise, the decision could pay off very handsomely in the future.
Though there is a sizeable risk to consider when deciding whether to participate in ECF rounds, global success stories offer not just inspiration, but also credibility to the model. The next unicorn could easily be lying in wait for their next round of funding which you can get involved with. Who’s to say it won’t come from Malaysia?
Disclaimer: Our articles are not and should not be taken as financial advice. You should conduct your own research carefully and be fully aware of all implications prior to making any investments.