Boxabl, Aptera Get Big Bucks Through Crowdfunding As VC For Consumer Startups Dwindles 

When first raising funding for solar car startup Aptera in 2007 and 2008, founders took the traditional venture route, securing more than $50 million from Google and other prominent investors. But things didn’t work out as hoped, and the company eventually shuttered.

More than a decade later, after repurchasing liquidated assets of the old Aptera and relaunching the brand, co-founder and CEO Chris Anthony was intent on going in a different direction.

“This time we recognized early on that our business plan would probably have great consumer appeal,” Anthony said — a notion supported by the prototype photos of the futuristic-looking three-wheeled vehicle.

So he turned to crowdfunding. It’s turned out favorably so far, with a series of campaigns on investment platform Republic.

To date, per Anthony, the Carlsbad, California-based company has pulled in about $70 million in total from crowdfunding initiatives and another $20 million from private investors. Many backers are signing up to reserve vehicles as well.

While few companies have landed such large sums, aptera isn’t alone among consumer-facing upstarts raising capital from crowdfunding of late. Rising interest comes as consumer products companies have fallen out of favor with venture investors. That may be prompting more founders in the space to try their luck at fundraising from a different demographic: actual consumers.

A future of solar cars and tiny homes

Of course, it helps to have the right product to sell. The most popular equity crowdfunding  campaigns often share common elements, including an ambitious vision, affordable entry prices and a cool-looking prototype.

These attributes apply well to Boxabl, the largest crowdfunding fundraiser of the past year. The Las Vegas-based company has raised more than $140 million from 40,000-plus investors 1 to manufacture tiny homes that unfold from a compact box shape, complete with bathroom, kitchen and living area.

Like Aptera, Boxabl is collecting reservations along with investments, with a target price of $50,000 for its flagship Casita offering. Buzz amplified around the company last year after it was reported that Elon Musk owned a unit. To date, Boxabl says, more than 160,000 people have reserved Casitas, representing over $9 billion in potential revenue.

Other intriguing crowdfunding campaigns have also pulled in  funding in recent months, albeit on a smaller scale, including:

• Geoship, a startup building geodesic dome dwellings out of bioceramic composites, pulled in more than a million dollars in its crowdfunding campaign.
• Blendid, a developer of robot-operated smoothie kiosks, says it has raised over $8 million from crowdfunding to date, and it is still raising.
• AEssenseGrows, a developer of automated aeroponic vertical farming systems, seeks to raise $5 million in its latest crowdfunding effort.

It should be noted that equity crowdfunding differs fundamentally from its better-known cousin, project crowdfunding, popularized on sites like Kickstarter and Indiegogo. Rather than getting a product or other perk, funders get some form of financial stake in the company.

Offerings can be open to accredited investors, who must meet worth guidelines or, to a more limited degree, nonaccredited investors. Per Securities and Exchane Commission guidelines, a nonaccredited investor can invest up to a maximum of 10% of annual income or net worth.

A different value proposition for founders and investors

For founders, per Anthony, an added appeal of crowdfunding investments is that one can sell nonvoting stock. Since investors have minuscule stakes in the company, voting rights don’t move the needle on whether they choose to invest. Founders, meanwhile, can maintain tighter control of company decision-making.

The bigger draw for consumer-facing companies taking the crowdfunding route, however, is the ability to get a built-in fan base along with financial backing. In aptera’s case, for example, having thousands of investors provides an army of evangelists talking up the coolness and energy efficiency of its vehicles, which will reportedly have the ability to travel up to 40 miles a day on free power from its integrated solar panels and up to 1,000 miles on a single charge.

Backers seem to hew to particular demographic profiles, per Anthony, with most hailing from big metro areas in California, Texas, Florida and New York. The average early investment was around $330, and over 85% of investors were male.

Crowdfunding equity investors are also likely to be glass-half-full types, willing to bank on a futuristic vision in spite of high risks.

For pessimists in the crowd, however, it’s worth noting that buzzy campaigns do have a history of fizzling out, including a number of well-known product crowdfunding ventures. The EV space is also a notoriously tough one to crack, with a long history of flameouts.

Still, technological breakthroughs and startup success stories do happen against long odds. To make it, it helps to have believers. Having thousands of believers — each with a vested financial interest in seeing the vision come true — also probably doesn’t hurt.

Illustration: Dom Guzman

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