The Solectrac Story Shows Equity Crowdfunding's Potential

Hi there!

I wanted to share a story about a startup called Solectrac that really shows how equity crowdfunding can be a gamechanger for investors.

Less than a decade ago, only wealthy individuals or venture capitalists could invest in private companies. But that thankfully changed in 2016 when new rules opened up equity crowdfunding to everyone. Now, any of us can put money into awesome young companies we believe in.

And get this: With the latest rules from 2020, these startups can raise up to $5 million through crowdfunding campaigns! That's a massive increase from the old limit of $1 million. This explosion in crowdfunding has helped young companies raise over $2 billion in just the last two years.

Amazing, right?

Solectrac Delivered Huge Returns in Months

Now, it takes time for startups to reach a big payday like an IPO. But some are getting snapped up quickly before they have the chance to go public — delivering huge returns to their crowdfund investors in the process.

That's what happened with Solectrac. This innovative company makes electric tractors — a budding industry near and dear to my heart as a longtime Montanan — much better for the environment than their loud, polluting diesel counterparts!

Solectrac’s crowdfunding campaign ended in late 2020. Just six months later, the company was acquired for a 68% return to those early investors. Can you believe it? A 68% gain in just half a year!

How Solectrac Aligns with the B.L.A.S.T. System

So why am I telling you about Solectrac? Well, their story shows how my B.L.A.S.T. investing framework can identify startups with immense potential. As I detailed here a few days ago, companies that fit align with the framework must have a Big Impact, Large Market, Adaptable Management, Sustainable Growth, and Transparent Operations.

Let me break it down with the Cliffs Notes version...

First, Solectrac wants to make a big Impact by replacing dirty diesel tractors with clean electric ones. And governments are pumping billions into clean energy — perfect timing!

Next, agricultural tractors are a large market worth an estimated $75 billion globally, including $12 billion in North America alone. The under 40-HP segment (where Solectrac thrives) comprises over 60% of demand. Plenty of room for Solectrac to grow.

I was impressed by Solectrac’s management team; founder Stephen Heckeroth began his career as an architect in the 1970’s focused on energy efficient designs, pivoted to electric vehicle transportation, and ultimately honed in on the promise of electric tractors to more sustainably grow food — “…because food is kind of important,” he mused. His entire career was built on the premise of adaptation.

Meanwhile, Solectrac was already seeing accelerating growth in sales, up 4x from Q2’2020 to Q3’2020, and they were showing no signs of slowing down as they worked to disrupt a multi-billion-dollar market.

Finally, the SEC filing related to the initial crowdfunding campaign outlined Solectrac’s operations in painstaking detail — from its revenue model to its balance sheet, its valuation, compensation, and expansion plans.

Using a System Avoids Hype and Risk

When you invest using a system like B.L.A.S.T., you can avoid getting swept up in hype. I'm here to provide the education and insights required to invest wisely. Objectively. Every month, I'll break down the most exciting startups so we can decide together if they meet the B.L.A.S.T. criteria.

Equity crowdfunding opens up so many new opportunities for every investor, large or small. With the right approach, we can tap into some really amazing companies while they're still young and hungry. Solectrac is one perfect example to that end. But it certainly won’t be the last.