While crowdfunding waits for the SEC, companies like DietBet close seed rounds on SeedInvest

By Erin Griffith , written on April 12, 2013

From The News Desk

Remember crowdfunding? Buzz around it reached a fever pitch around this time last year, and with the passing of the JOBS Act, the wait began. We waited, and we're still waiting, for the SEC to establish the rules around the new form of investing. It was supposed to happen end of last year. Like I said, we're still waiting.

In the meantime, some of the 9000+ crowdfunding sites out there have tried to hold onto the buzz they generated by helping companies raise money from accredited investors on their platform. Aside from rewards-based crowdfunding on Kickstarter, Indiegogo, RockthePost, etc., raising  from accredited investors is the only way to sell equity to the masses until further notice from the SEC.

That's how companies like Microventures (which is a registered broker-dealer), FundersClub, SeedInvest, CircleUp and AngelList have thrived. SoMoLend does it, too, but with debt. They each promise various layers of service and access as incentives to lure companies and angel investors to their platforms.

SeedInvest, for example, touts its access to 434 investors, and its selectiveness in choosing companies. There is also a diligence tool for Q&A and a livestreaming option for meeting the team. The platform only accepts around 1.5 percent of companies which apply to crowdfund on its platform, says CEO and co-founder Ryan Feit. Like CircleUp, the company is founded by former private equity investors (TSG Consumer Partners for CircleUp, Wellspring Capital Partners and Francisco Partners for SeedInvest).

Today SeedInvest announces a new company has raised capital on its site. DietBet, an app for managing health and weight-loss bets, closed a bridge round of funding worth $308,000. DietBet previously raised a seed round worth $1.1 million and is in the process of closing its Series A. While raising the Series A, the company realized it could use some breathing room, Jamie Rosen, founder and CEO of DietBet says. The bridge round came together on SeedInvest in a month.

DietBet's model is actually kinda genius. Often friends, clubs or companies will host contests for losing weight or meeting health milestones. Often there is money involved. DietBet simply hosts all of that, using goals like "lose 4% of your body weight," not "whoever loses the most pounds" and an elaborate photo-based weigh-in system for verifying weight loss. More than 30,000 people use the app now, and DietBet takes a roughly 15 percent cut on each pot. The company just crossed $1 million worth of bets, Rosen says.

Previously a startup called StearClear raised a seed round of funds on SeedInvest, making DietBet the platform's second funded company.

[Illustration by Hallie Bateman]