Bend-based Lora DiCarlo apparently had a successful equity crowdfunding campaign on the Republic platform. The startup, which makes sex tech products, launched the campaign in April and raised $1.7 million from 3,339 individuals.
However by mid-November, Republic withdrew the campaign. The investments would be refunded.
It all happened after Lora DiCarlo filed updated information with Republic about an executive opting to leave and a new shareholder coming in through a private sale of that former executive’s equity.
“We spent 11 months and put countless dollars toward marketing, advertising, photography, legal fees (for the campaign),” said founder and CEO Lora Haddock DiCarlo. “To have that entire raise pulled out, along with the money we spent to get it up and running — was not pleasant.”
The experience reinforces the risk on all sides when turning to the emerging equity crowdfunding space. At the end of 2020, the Securities and Exchange Commission increased the cap on how much companies could raise through regulated crowdfunding campaigns, from $1 million to $5 million over a 12-month period. That increase made these kinds of rounds more attractive to founders.
Once it became clear the crowdfunding money was in jeopardy, Haddock DiCarlo started pulling together a traditional Series A with accredited investors. She opened that round Nov. 22. She had existing contacts with venture funds and individual investors who were all interested in investing.
“I’m working with an investment syndicate that favors female founders and mission-driven teams,” she said. “I’m confident this will produce two to three (times) the funding in a fraction of the time (versus the crowdfunding campaign).”
Lora DiCarlo's business has steadily grown. The company has 11 products on the market and logged 2020 sales of $7.5 million.
The new investor is Greg Dalli of San Francisco-based Centauri Capital, who had been in touch with the company for the last eight to 10 months and had been interested in investing once the Republic campaign closed but welcomed the chance to come in earlier.
When Lora DiCarlo first launched the campaign, the capital wasn’t needed, but the team wanted to open ownership to those who want to join its mission to de-stigmatize sex tech, pleasure and sexual wellness in a manner inclusive of all bodies and identities.
By the end, and after spending several hundred thousand dollars on the campaign itself, the company needed a bridge to the end of the round, Haddock DiCarlo said.
“We are still a startup. What was disappointing, there are perceived protections for investors,” but there were risks for the company as well, she said.
Republic had no comment for this story. Haddock DiCarlo said she was unsure if this is an unusual outcome for a campaign and had no real clear answer as to why the campaign was withdrawn.
Overall, Haddock DiCarlo said she wouldn’t do a crowdfunding campaign like this again. She added that her advice for other founders is that the compliance review process for these campaigns doesn’t end once a campaign launches.
That said, her company is getting back on track. It’s launched several accessories as well as a CBD lubricant. It also has plans for more product launches next year.
“We will recover just fine. It’s a disappointing outcome. There were thousands of people excited to invest,” Haddock DiCarlo said. “We intend to grow quite a bit more and in a holistic approach to sexual health and wellness.”
