CircleUp, a startup that connects investors with retail and consumer companies that wouldn’t attract traditional venture funding, has raised a $7.5 million Series A.
The round was led by Union Square Ventures. New backer Google Ventures also participated, as did previous investors Rose Park Advisors, Maveron, and David Topper. Union Square’s Andy Weissman is joining the CircleUp board, while Google’s David Krane is becoming a board observer.
The company launched about a year ago, and since then it says 12 companies have used the platform to raise more than $10 million in total. Those companies include 18 Rabbits granola bars, baby food maker NurturMe, and Willa Skincare.
What links these companies, according to CEO and co-founder Ryan Caldbeck, is the fact that they’re “too small for private equity” and “aren’t the right industry to pitch Sand Hill Road.” Nonetheless, they’re real, growing businesses, usually with more than $1 million in annual revenue and growing more than 70 percent, and they want access to more funding to fuel their growth.
When CircleUp first launched, we described the model as “AngelList with a crowdfunding twist” — like AngelList, it connects accredited investors with businesses, but it also serves as the broker-dealer, allowing the actual transactions to take place through the CircleUp site.
I asked if the company might look at expanding to a broader audience of investors once the JOBS Act is fully implemented. Co-founder and Chief Operating Officer Rory Eakin said CircleUp is taking a “wait and see” approach, but that it’s “not optimistic” because of the additional requirements on businesses that want to raise money this way. On the other hand, he said he’s excited about the JOBS Act’s loosening of restrictions around general advertising, which creates an opportunity “for small businesses in particular to reach out to customers and supporters and inform them of a potential capital raise.”
CircleUp previously raised $1.5 million.
