Does Public Market Performance Influence Private Market Retail Investor Behavior?
Comparing annual Reg CF investment volume vs. the public markets
CHART OF THE WEEK 📈
Exploring investment trends in Regulation Crowdfunding (Reg CF) reveals interesting insights into two markets: the volatile public market and the dynamic behavior of private market retail investors. The following points outline the trends in online startup investing and how they relate to the performance of public markets, including the shifts, influences, and underlying implications.
Debt/Rev-share deals have not significantly contributed to Reg CF investment volume since 2018. Although debt and revenue-share deals started strong, constituting 24% of Reg CF investments in 2018, these small-business offerings have since only made up 6-10% of the total Reg CF annual investment volume.
Reg CF saw massive year-over-year growth from 2019-2021 (110% and 137% YoY growth, respectively). Reg CF also experienced less of a pullback in 2022 (18% pullback in SPY vs. 15% decrease in Reg CF investments), but is lagging behind the public markets in 2023.
The data suggest that retail investors in private markets may indeed be influenced by the performance of their public market portfolios.
You can read the full-length breakdown of the public vs. private markets here.
FUND OPPORTUNITY 💰
OPEN is an indexing and fund management company backed by the New York Stock Exchange. They are creating best-in-class private market indices and associated fund products to replicate them.
OPEN’s first fund, the OPEN Unicorn Index Fund (UIF), LP, looks to capture the current price dislocation opportunity in the space. The UIF is a secondaries fund that tracks OPEN’s overlying index of the 50 largest venture capital-backed US private companies, including names like SpaceX, Stripe, Fanatics, etc., in a single, diversified basket.
Recent price dislocation in the secondaries market for these unicorns (48.5% on average across the Index) has presented a timely investment opportunity.
More recently, IPOs of previous OPEN Unicorn Index constituents, Instacart and Klaviyo, show early signs of IPO market recovery heading into 2024.
Invest in the future of innovation with the Unicorn Index Fund.
PITCH REVIEW 💸
Brief: Votem is at the forefront of revolutionizing the democratic process, addressing the prevalent inconvenience in voting with its innovative FastPass Voting technology. This technology enables voters to pre-mark ballots on mobile devices, allowing for rapid, simplified, and more inclusive voting experiences, ultimately encouraging broader voter participation. It’s currently raising $1,234,998 at a valuation of $25M with a minimum investment of $496.
Key People: CEO Pete Martin. Martin has a background in the technology industry and brings relevant experience to the company. He has successfully led a previous company to an exit, demonstrating his ability to navigate the business landscape. Martin is dedicated to the success of Votem and has assembled a team of experts to support the company's growth.
Not an Edge Member yet? Unlock the Ratings 🔓📈
Here's what we like: Votem has developed an innovative election system that can potentially transform the voting experience. With its FastPass Voting technology, Votem aims to eliminate long queues at polling stations, making voting faster, easier, and more accessible. The company's technology has already been successfully implemented on over 30,000 ballot marking devices in Los Angeles County, showcasing its effectiveness and scalability.
The timing of Votem's expansion into the larger elections market is particularly advantageous, with the upcoming 2024 general election presenting a significant opportunity for growth and adoption.
Votem has already established partnerships and has a track record of successfully implementing its technology. With the proper funding and resources, the company can further enhance its product, expand its engineering and development capabilities, and invest in sales and marketing efforts to drive greater adoption.
Here's what we don't: Votem operates in a highly competitive industry, facing competition from well-established players such as ES&S, Dominion, and Hart Intercivic. These competitors have established their presence in the voting software market and built strong relationships with government entities and election officials. It will be challenging for Votem to gain significant market share and compete effectively against these established competitors.
While Votem has developed innovative technology for in-person voting with little to no waiting time, the adoption of such solutions by government entities may face barriers. The voting industry is highly regulated, and implementing new technologies often requires extensive testing, approval, and adoption processes. Votem may encounter challenges in convincing government entities to adopt its technology on a large scale.
Would you invest in Votem?
ON THE POD 🎙️
In this episode of the Inside Startup Investing podcast, Chris Lustrino is joined by Andrei Klochko, CEO of Airthium. They dive deep into clean heat pump technology, discussing Airthium's groundbreaking contributions to the clean tech sector. With a strong emphasis on climate technology, Andrei, a trained physicist, provides insights into the complex yet fascinating world of Airthium's tech innovations and their vast market opportunities.
Listen to the full episode here
TOP-RATED DEALS 🌶️
Joyhound Beer Company (Rev Share)
Joyhound Beer Co., lauded by Huckberry Magazine as 2022's best brewery in Maryland, is poised to establish a new taproom, which will house an exclusive brewing facility. This move is part of a broader vision to expand their brewing system and consolidate all production processes in-house.
Revenue Share Percentage: 6.4%
Minimum Investment: $100
Sunny is innovating in the menstrual care sector, offering a menstrual cup designed to alleviate the common apprehension surrounding insertion. It employs a user-friendly approach, inserting like a tampon with a reusable applicator. The Sunny Cup can be worn up to 12 hours, providing superior capacity compared to tampons and contributing significantly to waste reduction and financial savings—up to $6,000 in a lifetime and preventing 14,000 tampons/pads from landfill contribution.
Valuation: $7 million
Minimum Investment: $100
Noad is an innovative home exchange membership platform for digital nomads and remote workers. The company allows members to avoid double rent while traveling by offering their homes to other members and earning credits to use within the network.
Valuation: $3 million
Minimum Investment: $100