TPG's Winkelried, Powers Join $30 Million CircleUp Fundraise

  • Website allows investors to back private consumer businesses
  • Backers include Capital One's Morris, Thomson Reuters' Glocer

TPG Capital’s Jon Winkelried and Stanford University’s former endowment chief were among backers in a $30 million funding round for CircleUp Network, an online platform for investing in private retail and consumer businesses.

Winkelried, who this month became TPG’s co-chief executive officer, and John Powers, who left Stanford Management Co. this year after nine years as CEO, joined Capital One Financial Corp. co-founder Nigel Morris, former Thomson Reuters Corp. CEO Tom Glocer and others in the Series C round, according to a statement Wednesday from San Francisco-based CircleUp. Venture capital firm Collaborative Fund led the fundraising.

CircleUp, run by CEO Ryan Caldbeck, is one of several websites allowing accredited investors to back private businesses, which was made easier by the 2012 Jumpstart Our Business Startups Act. The 126 companies that have raised $145 million on CircleUp have, on average, increased revenues 80 percent a year since funding and produced annualized unrealized returns for investors above 50 percent, Caldbeck said in an interview Wednesday. CircleUp collects a commission from the companies when money is raised.

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The new funding will be used to expand product and data features, including machine-learning algorithms to screen and evaluate companies on the platform, Caldbeck said. The company also plans to make available to users more of the data it collects on private retail and consumer businesses.

“What we’ve built is a series of engines that evaluate private companies algorithmically,” said Caldbeck, who previously worked at private equity firms TSG Consumer Partners and Encore Consumer Capital. The algorithms, using cash flows, revenue growth and user growth, among other measures, “evaluate companies more efficiently and more effectively than humans.”

The average investment on the platform has increased to $100,000 from $25,000 two years ago as more institutions such as family offices use it to back smaller companies, Caldbeck said. Half of the money invested using CircleUp is from institutions and half is from accredited individuals, compared with 100 percent from individuals when the platform opened in 2012.

CircleUp has raised $53 million in funding since it was started in 2011 by Caldbeck and Rory Eakin, who were classmates at Stanford’s Graduate School of Business. Previous backers include Union Square Ventures, Canaan Partners and Google Ventures.

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