CircleUp, a crowdfunding website, has allowed a number of fledgling companies to raise money over the last two years. Now, CircleUp has attracted some additional money of its own.
The start-up announced on Wednesday that it had raised $14 million in a financing round led by Canaan Partners, a venture capital firm investing in the company for the first time. Previous investors, including Google Ventures and Union Square Ventures, participated in the round.
The fresh capital underscores the excitement in Silicon Valley over new ways of raising money. Crowdfunding, in particular, has drawn interest, and other platforms, like AngelList, have also attracted millions in venture capital. Crowdfunding was made easier in 2012 by the Jumpstart Our Business Startups Act, or JOBS Act.
CircleUp offers investors equity in small consumer and retail companies, which are vetted to weed out potential duds. Prospective investors – provided they are “accredited,” meaning they make at least $200,000 a year or have a net worth above $1 million – can read about the companies on the CircleUp site and invest through the platform. CircleUp collects a commission from the companies.
The companies that have used the site to raise money include Madécasse, a Brooklyn-based chocolate maker, and Ocean’s Halo, a maker of seaweed chips. CircleUp says it has helped more than 30 companies raise over $30 million since the platform opened in April 2012.
Ryan Caldbeck, chief executive and co-founder of CircleUp, claimed that the company, which raised $7.5 million last year, did not need the additional money. But he said he embraced the opportunity to work with Dan Ciporin, a partner at Canaan Partners, who is joining CircleUp’s board.
The addition of Mr. Ciporin, who is also on the board of Lending Club, a fast-growing company that connects borrowers to lenders online, and which is aiming to go public this year, offers a clue to CircleUp’s ambitions.
“There’s a lot that we can learn from Dan’s experience at Lending Club,” Mr. Caldbeck, who formerly worked in private equity, said in an interview. “We viewed that as a really good analogy of what we’re trying to build.”