May was an exciting month for startups and investors! The thirty-two largest funding rounds reported by CrunchBase totaled over nine billion dollars in investments.
Unsurprisingly, Snapchat led the pack, as the company raised $1.8 billion in its Series F. The second largest round went to the Chinese ride-hailing company, Didi Chuxing, which received a $1 billion investment from Apple. This dwarfs the $250 million investment by Alphabet, Google’s parent company, into Uber. Bloomberg reported Didi Chuxing planned to go public in the next year and half, but the company denies having such intentions.
The most dollars went to the social media, energy, and transportation industries, respectively. Interestingly, there were seven energy companies and only one social media on the top 32 list. This would indicate the month of May followed the trend among institutional investors to invest more in fewer companies. However, equity crowdfunding threatens to break this tendency.
D.A.O. raised $163 million on the virtual currency platform Ethereum. This is the largest equity crowdfunding round to date.
Since Title III of the JOBS Act just went into effect on May 16, 2016, there will likely be more companies raising rounds through equity crowdfunding. While the rounds are capped at $1 million from the crowd, platforms like FlashFunders will enable startups to raise an unlimited amount of capital from accredited investors. This is first time since 1933, non-accredited investors, who believe in a company’s mission, can invest. Hopefully, increasing the pool of funds that can potentially be invested in early stage companies will spread investment across a greater number of startups.
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