by Sarah Kessler
Originally published: March 17, 2016
"Traditionally, entrepreneurs have raised money in old-boy networks, typically in San Francisco or New York," says CircleUp CEO Ryan Caldbeck. From CircleUp's start in 2012, it has aimed to help entrepreneurs bypass this network—instead providing an online marketplace that connects consumer-product startups with accredited investors who can make investments through its platform. "On CircleUp, [who you know] is not what’s important," Caldbeck says. "We have the network. We give the network to everyone."
Four years later, about 160 startups—companies that sell everything from organic cosmetics to wearable computers—have together raised $180 million through CircleUp. Although traditional investment firms have contributed more than half of the funding, the group of entrepreneurs whom they have financed has a much different composition than its counterpart in the world of traditional venture funding. Though women own about a third of small businesses, a recent report from the Senate committee on small business and entrepreneurship found that female entrepreneurs receive about 4% of the total value of all conventional small business loans, and only 7% of venture capital funding. Researchers at Babson College found that only 2.7% of venture capital-funded companies had a woman CEO. Among the 160 startups that have raised money on CircleUp, by contrast, 35% have female CEOs or founders, and 34% of all the growth equity invested has gone to those female-led companies.