CircleUp Breakup: Lending Fund Sold, VC Fund in Transit, AI Play Fate Unknown
Big changes are afoot at CircleUp, a former equity crowdfunding platform that had transformed itself into a significant source of investment and lending capital to early-stage CPG brands.
The company has begun divesting its financing vehicles, including a venture capital fund and a credit platform. Over the years, the CircleUp Growth Partners fund had taken part in capital raises for nearly 30 brands, including Everything Legendary, Koia, Coconut Cult, Nutpods, Barnana, Liquid IV, Good Crisp, 4505, and more.
CircleUp Credit Advisors, the company’s loan fund, is now controlled by Brightflow AI, a venture-backed technology platform that offers a suite of financial tracking services for brands and lenders. The agreement was announced earlier this month and Brightflow has also absorbed several CircleUp team members as part of the transaction
Sources told NOSH they believe CircleUp exited the lending business because of rising interest rates and in order to lower the company’s risk profile.
“[CircleUp] was a great partner,” said Greg Lopez, CFO of accounting services and fractional CFO company The Eventus Group. Lopez utilized the CircleUp credit offering while CFO at Gravity Blanket “My guess is the CPG space is difficult and many businesses they lent to were not yet profitable, creating a high-risk portfolio that in turn was not profitable for them.”
CircleUp’s VC fund, CircleUp Growth Partners, is also in the process being sold to another multi-strategy asset manager, although the buyer has not yet been identified.
Joe Carr, co-founder of Serenity Kids, a CircleUp portfolio company said that he was told by CircleUp that the venture group would be changing hands.
“There’s some kind of separation of different wings of the business: the data, the debt and the PE,” Carr said. [We were told CircleUp] isn’t going to leave us, that we’re [still] going to have [them] on our board and that it shouldn’t affect us — and so far, it hasn’t affected us.”
What will become of CircleUp’s AI-driven brand data and insights platform, Helio – which tracks product and category trends for investors and companies alike – is still unclear. NOSH was unable to confirm if that business will operate as a standalone business, or will be sold off or merge with another entity.
CircleUp had touted Helio as a kind of predictor of brand and category success, taking into account thousands of factors to inform investment and product strategy decisions, and using the program to inform its own fund, as well. The platform was also used to position the investment fund as a strategic partner, with portfolio companies offered access to Helio.
The change to the company comes six years after CircleUp had first pivoted its business strategy. Founded by investors Ryan Caldbeck and Rory Eakin in 2012 as an equity crowdfunding marketplace that allowed both qualified individual and institutional investors to invest in potentially high-growth CPG brands. The company also added matchmaking services to the platform, helping later stage brands privately find investors offline.
In 2017, the company shifted to an investment and financing model. The company raised a $125 million fund to invest in brands based on a mix of Helio’s insights and the work of a team of more traditional investment professionals. The first two investments by the fund were supplement brand HUM and meat snack producer 4505.
The company also began a loan fund for emerging CPG brands, eventually sunsetting the crowdfunding marketplace. At the time, CircleUp executives also looked to diversify through Helio, selling access to the platform to other venture groups looking to do their own due diligence, brands conducting competitive analysis, and retailers seeking new items.
According to CrunchBase, the company has raised $235 million in backing.
Several brands that BevNET spoke with were aware change was coming at the fund, but had not been informed as to where their investors would ultimately land. As for Helio itself, at least according to Carr, it remained a few datasets shy of comprehensive.
“Until it really accesses and integrates, [other data services] Spins, IRI, 8451, like until they literally buy every piece of data in the country and put it into [Helio] it’s [limited],” Carr said of his experience with the data platform. “If it could do that, that would be amazing.
