Founded 5 Years Before Kickstarter, Arkansas-Based EquityNet Remains a Crowdfunding Powerhouse
Hollas, who earned a bachelor of science in chemical engineering from the University of Tulsa, is an entrepreneur who started the web-based crowdfunding platform EquityNet. Making the leap away from science and toward business wasn’t exactly something Hollas ever planned. Indeed, the Arkansas-based innovator says it largely resulted from circumstances far beyond his control.
“I got caught up in the dot-com boom in the late 1990s, which is what drew me into finance,” says Hollas, whose work experience includes a stint at Phillips Petroleum. “What really propelled me into crowdfunding was that I got involved with this startup that was going to provide insurance on venture capital investments. It was a crazy idea—I mean who can calculate risk reliably for that?”
After the company he was working for at the time failed, Hollas was left without a job in a shrinking economy. Reluctant to return to his former role in supply chain automation, Hollas channeled his mental and creative faculties into starting his own business. It was during this extended brainstorming session, Hollas says, that he recognized there was value in the research he had conducted at his firm.
“I was sitting there with some tools that I had been building and that’s when I had an epiphany,” Hollas recalls. “I realized that if you combined an e-marketplace with the kind of technology I’d been working on, you could have a super scalable and efficient platform with hundreds of thousands of members that would work so well that it wouldn’t be crushed under its own weight.”
EquityNet was born of this dawning understanding, explains Hollas, who credits the site’s enhanced usability for its success. Unlike other kinds of marketplaces that overwhelm users with an avalanche of data and information, EquityNet offers visitors the ability to seamlessly screen through thousands of companies seeking capital infusions, eliminating needless search clutter.
“One of the key principles that we have is that our investors are not inundated with word-based business plans,” he says. “They have some really powerful tools they can use to screen through the thousands of companies available to them.“
This method appears to have worked well for EquityNet. Since 2005, when Hollas officially launched the crowdfunding e-marketplace, the company has connected more than 22,000 entrepreneurs with approximately 20,000 investors. These connections, Hollas says, have resulted in fundraising deals collectively worth more than $240 million.
Aside from its streamlined approach to search, EquityNet has retained a significant share of the crowdfunding market by offering a number of other helpful features for entrepreneurs and investors alike. The site has also benefited from provisions of the Jumpstart Our Business Startups (J.O.B.S.) Act, Hollas stresses, which took effect in April of 2012.
“Our companies can publish themselves privately for investors to see only on EquityNet behind a password firewall. They can also publish themselves publicly,” Hollis explains. “We’ve got a feature where not only can our entrepreneurs engage our investors inside of EquityNet and share documents and communicate, they can also use our Crowdcast function to literally click a button, upload 5,000 contacts from LinkedIn, and then click another button that sends an email to all of those people, inviting them to view their profiles on EquityNet.”
The introduction of Crowdcast, Hollas says, represented a vast improvement in user experience, as it allowed entrepreneurs to fundraise not only within its ecosystem, but also outside of it. “That’s probably the most advanced form of crowdfunding,” he argues.
“It’s not just about the investors we provide. It’s about the broader mechanism of casting a wide net out to our base investors, and casting an even wider net out to the broader web through our Crowdcast ability. That works well for the entrepreneur and, of course, it works well for us, too, because it helps us acquire large populations.”
Though EquityNet has managed to thrive for almost a decade, Hollas doesn’t attribute the company’s success to its long history. Being the first company to surface in any given industry doesn’t come without its challenges, he points out, citing a handful of examples within the technology sector.
“Google came out years after the initial movers like Alta Vista and Yahoo, and that’s common in the 10 or 20 years since,” Hollas stresses. “You’ll often see that the leader now was not necessarily the first mover—and we weren’t, either. There were a handful of rudimentary, bulletin board platforms before we got started, and the word ‘crowdfunding’ didn’t even exist. That’s typically the case that, by the time you see a product become popularized, it’s been around for a long time.”
For Hollas, who moonlights as an investor and has personally backed a number of startups over the course of his career, EquityNet’s single most important contribution to society is that it’s helped entrepreneurs and investors overcome what was once a considerable obstacle.
“What we’ve found—and we’ve used our own platform to raise money for ourselves—is that platforms like EquityNet have eliminated geographic barriers,” he says. “By that I mean you’re finding investors in Florida, California, or wherever who are completely fine with investing in companies that are states away. That’s a wonderful result because there is more capital on the coasts and there are a lot of companies in the Midwest that need money. Now they have a mechanism that they can use to eliminate those geographic barriers that existed before.”