EquityNet's beginnings came from what CEO Judd Hollas described as a capital marketplace "epiphany" on a walk home from work in Fayetteville more than 10 years ago.
There were eager entrepreneurs. There were interested investors. So Hollas figured there had to be a method to create an efficient online marketplace that would give those entrepreneurs an easier way to gain access to a large group of investors.
"I got turned down a lot back in the early days by people telling me I was crazy, investors would never go online to do this," Hollas said about the company, which began operations in 2005. "They thought it would always be done the old-fashioned way."
Hollas, 42, and his company are reaping the rewards from the idea. The Fayetteville-based company has topped $330 million in funding raised by entrepreneurs since its inception, and the platform now lists over 16,000 companies on its website, including 220 based in Arkansas, and 21,000 investors.
While platforms like Kickstarter and Indiegogo are considered crowd-funding giants, EquityNet also is a big part of a booming industry showing no signs of letting up.
Research firm Massolution collected data from 1,250 active crowd-funding platforms and reported that they had raised $16.2 billion since 2014. That represented a 167 percent increase from the 2013 total of $6.1 billion. Those platforms raised $2.7 billion in funding in 2012, and Massolution projects another big jump to $34.4 billion in 2015.
The projection is no surprise to Warwick Sabin, the executive director of the Arkansas Regional Innovation Hub in North Little Rock. Sabin said the crowd-funding potential, especially for startups, is limitless even though it may never serve as a major long-term source of capital investment for any company.
"It's a great way for a startup to get off the ground and to get that initial infusion of capital that allows them to operate and get through the first few months of existence and prove their value proposition through customer acquisition and product development," Sabin said. "Where you have people who are interested and willing to invest and you have a platform that allows for this kind of engagement, it can only be beneficial for everyone involved."
EquityNet's focus is on the business side of crowd-funding and open to all types of companies seeking capital from interested investors. Much of the platform is free for entrepreneurs, but certain features require payment of subscription fees that range from $199 a month to $1,308 per year. EquityNet also is free for investors, but the company puts them through a screening process before granting full access.
The company reports that its web traffic, revenue and activity are growing at rates of 100 percent to 500 percent annually. Hollas, who began his career as a chemical engineer before getting swept up in the dot.com boom in the late 1990s, is proud of the progress after the company experienced early struggles.
Hollas said it took six months for EquityNet to receive its first investment. There were issues with the initial management team as well. Hollas even considered moving the company to Austin, Texas, at one point, but EquityNet remained in Fayetteville and is building a strong reputation. EquityNet has been granted five patents for its platform, which the company uses as a means for funding as well.
"EquityNet has raised millions of dollars for itself for us to grow this business," Hollas said. "The first 500,000 we raised the old-fashioned way. After that, we started using our own system. Over the last three or four years, I've raised millions of dollars for EquityNet through our own system."