CircleUp in 2019: Investing in the Future

By Robert E. Siegel, Blake Kavanaugh
2019 | Case No. E694 | Length 16 pgs.

CircleUp was founded in 2012 as a marketplace that matched accredited investors to emerging consumer packaged goods companies. A tool that the team developed early-on to reduce the friction involved in finding and evaluating new companies, Helio, gradually become very accurate in predicting the growth trajectory of early-stage companies.

Ryan Caldbeck, co-founder and CEO of CircleUp, decided in 2018 to shut down the marketplace and focus the company on leveraging Helio’s insights to directly provide equity and credit financing to CPG startups. This decision was followed by two difficult, significant discussions. First, Caldbeck met with the board of directors, where one investor reacted negatively and asked to sell his stake in the company. Second, Caldbeck presented the new direction to CircleUp employees, some of whom worried what would happen if the company became an investment firm instead of a tech company.

By 2019, Caldbeck was on the precipice of another big change for CircleUp. The firm was raising a large fund to begin systematic investing, but finding investors for the disruptive offering was proving difficult. Additionally, as word spread about the power of Helio’s insights CircleUp began receiving partnership offers from large, established companies. These offers caused Caldbeck to debate if CircleUp should further monetize Helio.

Learning Objective

This case covers a company making a significant business model shift, facilitating a discussion around how to keep teams motivated during pivots and how perceived industry can impact company valuation. Additionally, the case focuses on a company seeking to apply data-enabled investing to private markets, providing a basis for questioning the efficacy of data-enabled investing in different industries and then the existential crisis a burgeoning firm faces as it seeks to acquire funding.
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