Raleigh startup’s crowdfunding site closes $185,000 deal

Raleigh crowdfunding company Malartu Funds has enabled a group of Charlotte startups to raise $185,000 from investors through its online platform.

The funding, which closed last week, marks the first investment deal that Malartu facilitated since its website went live in April, CEO Jon Spinney said Monday. Nine technology startups that graduated from the QC Fintech accelerator program in Charlotte are sharing the funding equally.

“We’re very happy with the way our technology functioned,” Spinney said. “We are very much looking forward to have more deals closed.”

Malartu’s website currently is hosting one other company’s fundraising effort and will post another offering next week, Spinney said. Another three to five deals are expected to launch on the website before the end of the year. A majority of the new offerings will be for out-of-state businesses.

“It’s another tool in the toolbox for entrepreneurs … to raise capital,” Spinney said.

The QC Fintech funding came from 13 investors, all but one from North Carolina, who invested at least $10,000 each. All told, several hundred investors have signed up to review deals offered on Malartu’s website, Spinney said.

Dan Roselli, co-founder and managing director of QC Fintech, couldn’t be reached for comment.

Founded last year, Malartu takes advantage of a provision in the federal JOBS Act signed into law in 2012 that permits startups to solicit funds online from accredited investors – that is, individuals with a net worth in excess of $1 million or an annual income of more than $200,000.

The JOBS Act also includes a provision that would allow non-accredited investors to invest in startups online, but that portion of the law hasn’t yet been implemented. Bills that would expand crowd funding to non-accredited investors also have been introduced in the state legislature but didn’t become law.

Requiring investors to be accredited and other regulatory issues could hold back Malartu in the short-term, said venture capitalist Ben Brooks of Southern Capitol Ventures in Raleigh.

Still, Brooks called companies like Malartu “the wave of the future.”

“I’m a big fan of those guys,” said Brooks, who isn’t involved in the business. “I think they are on the right track.”

Malartu’s co-founders are: Spinney; Sean Steigerwald, chief operations officer; and Lewis Sheats, chief strategy officer. Spinney, 32, and Steigerwald, 24, are recent graduates of N.C. State University’s entrepreneurship program; Sheats is senior lecturer of entrepreneurship at NCSU and director of the school’s Entrepreneurship Clinic.

Although Malartu charges companies administrative fees when they raise funding, Steigerwald and Spinney said those fees only cover expenses.

“We only make money when investors make money,” Spinney said. Malartu takes 10 percent of any profits that investors make when a company they have invested in is sold or goes public.

Because it can be a number of years for an “exit event” such as a sale of the business to happen, Malartu also is seeking to work with “hybrid” funds that make loans alongside purchases of equity stakes. That would provide a quarterly revenue stream as the company makes its debt payments.

In addition, Malartu may decide to charge other fees, such as a brokerage fee, down the road. But “for right now, we’re focusing on growing the user base,” Spinney said.

This story was originally published October 12, 2015 at 4:10 PM with the headline "Raleigh startup’s crowdfunding site closes $185,000 deal."