Yesterday crowdfunding site Fundable announced the acquisition of LaunchRock, the online service that helps businesses build an audience before they launch. The deal was finalized in an undisclosed amount of cash and stock, and LaunchRock employees will join Fundable in their Columbus, OH, offices. All 42 investors in LaunchRock will now become investors in Fundable.
With 5 employees, 42 investors, and a free product, the acquisition smells like a LaunchRock bail out. Not saying that’s a bad thing, though. LaunchRock obviously did a great job at building an audience for themselves, with a reported 10 million signups for their service. If an acquisition bails them out and helps them monetize, all the better for the folks that love the product.
Fundable isn’t getting a bad deal, either. In a crowded crowdfunding space, the company has been chugging away at building campaigns specifically for businesses. While Indiegogo and Kickstarter excel at raising funds for projects or charity campaigns, Fundable has been trying to help fund actual businesses. You know, those things with payroll and profits?
“Crowdfunding 2.0” Fundable CEO Wil Shroter told me on the phone.
“The first version of crowdfunding was Indiegogo and Kickstarter,” he explained. “It worked great for projects like albums or for charity campaigns. Projects aren’t when you need to pay payroll. When you start to do it for a product it breaks down, because the more you sell the more you need to be a company.”
Shroter pointed to former Kickstarter successes like Ube, Cregle, and Uncharted Play, who all moved to Fundable to raise expansion capital after their initial crowdfunding ran out.
So how does LaunchRock fit into all this?
For now the 2 services will be completely separate, but eventually they will be streamlined into one user experience. Users will always have the option of using one or the other or both. Shroter sees the 2 services working perfectly together, though.
“LaunchRock builds an audience. People use LaunchRock for validation, which is awesome. Fundable works best for companies who already have an audience.”
The acquisition will also allow Fundable to have a bigger footprint in their market. Many LaunchRock users expressed a desire for crowdfunding, but the company had no way to meet their needs. Now they will be able to seamlessly move on to Fundable. At the moment, Fundable hosts a few hundred campaigns at a time. (The average raise amount is $175k, 12X that of Kickstarter.) Shroter estimates that with the addition of LaunchRock users, the number of campaigns will jump to the the 1000s quickly.