Innovations in Equity Crowdfunding Take Center Stage in San Diego

2/27/14Follow @bvbigelow

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charging companies a “success fee” for their crowdfunding campaigns, while OurCrowd charges its investors. Both are ostensibly focused on generating investment returns, yet both camps also see an opportunity to make some additional venture capital available to cash-starved entrepreneurs in San Diego.

Ted Roth said the initial idea for OpenRound came from his brother, the late Duane Roth, who led the nonprofit innovation group Connect until he died last summer following a bicycling accident. “Duane was talking about the ‘Valley of Death’ for a long time,” Ted Roth said. “He tried to encourage us to do more with early stage companies.”

Roth Capital does not plan to turn OpenRound into another AngelList, however. There are no plans to crowdfund early stage startups, and Ted Roth said OpenRound plans to initially do just a handful of deals. “We’re not looking for the $1,000 checks,” he said. “We’re looking for the $100,000 checks.

“One of the things we want to do is get this right,” he added. “We don’t want to over-promise to the companies or the investors.”

Accredited investors using the OpenRound website put up more than $1 million of a roughly $7 million round that Mogl has raised from its existing VCs and angel investors, according to Mogl CEO Jon Carder. Although a recent regulatory filing pegs the extended Series B round at nearly $5.9 million, Carder said he expects the number will be closer to $7 million when completed. With the latest round, Mogl has raised about $22 million since it was founded four years ago.

“There’s almost no difference from some of the angels I’ve always used, such as the Tech Coast Angels, and these crowdfunding sites,” Mogl’s Carder said. “My CFO handled most of the due-diligence requests. Roth had a couple of point men who shielded us by answering as many of the questions as they could.”

Jeff Belk

Jeff Belk

Meanwhile, Belk says he started Bright Light Management to identify and evaluate promising startups that meet OurCrowd’s stringent investment criteria, and to help the companies secure funding through the crowdfunding website. Bright Light will focus initially on startups developing innovative technologies in mobile health, wearable devices, wireless, genomics, big data, and consumer lifestyle services and applications.

Belk told me by phone yesterday that he also started Bright Light at least partly to help address a regional shortage in tech funding. “We want to start finding ways of bringing dollars to San Diego,” Belk said. On the other hand, he added, “There’s nothing that’s … Next Page »

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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  • ctblizzard

    The whole point of the original crowdfunding ideas was to appeal to the masses so a much broader segment of society can participate in start ups. Online “crowd-funding” for millionaires is really nothing more than a website to get rich people to invest. We already have poor ownership of stocks in this country and its funny how its ok for people to put money into kickstarter and indiegogo campaigns with the expectation of no ownership but not ok if they can get ownership. Also I am not sure how the final rules will come down or if they did but from what I read companes will needed audited or reviewed statements and that’s a pretty big expense for a small start up. To me the intent of the law is not being met by the regs.