CircleUp is a crowdsourcing app that allows entrepreneurs in high-value consumer product and retail businesses to receive investment funds from individuals. The app offers information on evaluating and selecting businesses to invest in. Users can find businesses they love and get involved with them while receiving all of the benefits of investing. None of the companies involve with CircleUp are available on the stock exchange, so CircleUp offers users the chance to invest in companies they might not otherwise be able to become involved with. Because CircleUp works on a first-come, first-serve basis, all investors get a fair shot at enjoying the investments they most want to make.
CircleUp was founded by Ryan Caldbeck and Rory Eakin in 2012. New investment regulations and laws made CircleUp possible. Such a platform hasn’t been possible in the past due to tight restrictions on investments.
The closest equivalent to CircleUp would be Kickstarter. Kickstarter, however, is a donation-based platform, and not an investment platform. CircleUp actually allows people to invest in the companies they love, which means reaping the benefits when dividends are paid, or when the company is sold.
The app is clean, fast, and interesting. However, if a user isn’t an accredited investor (someone who makes over $200,000, or who is a representative of an investment firm, the user won’t get very far. CircleUp only allows accredited users to so much as browse companies, which means smaller households will have to rely on more traditional investment vehicles.
Users may sign up with Facebook or with LinkedIn. Users may also sign up manually. After signing up users must certify that they fit in one of the accredited investor categories. Those who are not accredited investors receive a message which talks about the JOBS act and the potential for allowing non-accredited investors in the future, and are invited to sign up for updates. Since the policies are directly related to legal issues there is not much CircleUp can do to improve on them.
The application is free to use, and there are no fees for investors. Investors, of course, have to pay to make their investments once they have chosen a company to get involved with, but users can interact with the site without paying anything.
Accredited investors can have a lot of fun with this app, and can make a lot of high-yield (if risky) investments in up and coming companies. Since preferred stock usually gets payments quicker than common stock the investments are of a higher quality than those which are available to the general public. On the other hand, investors who like to keep their investments highly liquid might be better served looking elsewhere, since this kind of preferred stock is very difficult to sell or move. Those who work for investment firms and who are charged with seeking out hot new firms will also get a lot of mileage out of this app. The common man, however, has been completely cut out of the app. Some articles indicate Circle Up won’t be changing the policy even when the JOBS Act, which changes the investment laws, takes effect in 2013.