The First Crowdfunded Unicorn?

90% of startups fail. 50% of all businesses fail in the first five years. 40% lack the market need for their product. With a seemingly ceaseless flow of statistics out there which could have the potential effect of discouraging entrepreneurs, it’s no wonder more hopeful stories of success catch on.

The notion of the ‘Unicorn’ – the $1 billion startup, is therefore an appealing one to start-up founders, repositioning the idea of billion-dollar idea technology from the realm of fantasy into a realistic prospect. We all know the Unicorn List of billion dollar startups, Uber, Pinterest, Snapchat, etc. and how their fortuitous alignment of timing, concept and demand resulted in unprecedented success.

General Motors' acquisition of Cruise Automation

Joining the ranks of these businesses comes the first Unicorn with a crowdfunding history, providing further proof, if needed, of the new horizons of equity crowdfunding. General Motor’s acquisition last month of self-driving tech startup Cruise Automation, from start-up capital San Francisco, means a crowdfunded company has joined the list of Unicorns.

The deal, valued at north of $1 billion, had VC funding from a variety of firms. However, the developer of autonomous vehicle technology also gained investment from AngelList, a crowdfunding platform. 

GM has already demonstrated its increasingly innovative investment ethos through its $500 million investment in ride-sharing startup Lyft.

With institutional investment, VC funding, and investment from its pair of AngelList syndicates, the deal has garnered much attention and discussion. With the appearance of being the first $1 billion exit for a startup using crowdfunded equity, in the form of two $100k injections from Zach Coelius and Tikhon Bernstam, the capabilities of AngelList investment are highlighted.

Crowdfunding's rise in influence

The ascent of the equity crowdfunding market since its inception has been well-documented, and no statistic better illustrates its success as Massolution’s valuation of the market of $34 billion in 2015. Its disruption of the market is clear. Interestingly, last year saw the Fintech sector experience its own unicorn, with Funding Circle achieving a $1 billion + valuation, with a $150 million funding round.

The ‘crowdfunding effect’, the generalised moniker given to this type of disruption caused by large equity crowdfunding deals, demands a response from VCs and other traditional investments. Entrepreneurs have access to a new breed of deals, channelling their funds through an array of high-growth oriented platforms, as equity crowdfunding disrupts the investment chain.

The final word

With crowdfunded equity bringing ambitious entrepreneurs to the deal table for companies like Cruise, which tap into a distinct technological zeitgeist, the next crowdfunded unicorn may not be so far off. As the rise of crowdfunding continues to account for more and more investment, looking to one day usurp venture capital and angel investing, the likelihood of more crowdfunded unicorns is great.

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