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Need Cash? A Different Kind of Crowdfunding Service

For entrepreneurs who make granola or baby skincare products, a crowdfunding service called CircleUp may be the secret to their next leg of growth.

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CircleUp is the first crowdfunding service focused just on consumer products companies. Unlike crowdfunding sites like Kickstarter, which are about donations to creative ventures, CircleUp allows accredited investors to snag a piece of a fast-growing company thanks to a partnership with W.R. Hambrecht, so it can act as a broker-dealer. \(Read More: Kickstarter's 10 Biggest Success Stories.\)

Since launching in April, CircleUp has closed raised $3 million for four companies — Little Duck Organics, a kids snack company, granola company 18 Rabbits, baby skincare company Episencial, and Melt, an organic butter spread. They each raised money in just a matter of weeks, a fraction the time it would have taken offline.

The matchmaking role CircleUp plays aims to meet demand on both sides: Accredited investors are looking to diversify away from stocks into other fast-growing areas, and consumer products companies are hungry for new sources of investment. (Read More: Crowdfunded Businesses May Owe Taxes, Too.)

Consumer products comprise 20 percent of the economy, but only 4 percent of angel funds, said CEO Ryan Caldbeck.

He noted that the average angel investor in consumer products make three and a half times their investment over a period of about four years.

The platform is focused on companies with more than $1 million in revenue, and it carefully vets the investments — accepting fewer than two percent of applicants. Because investors are buying a piece of a public company, they legally have to hold on to shares for at least a year. (Read More: 10 Ideas That Made $100 Million.)

CircleUp just announced a partnership with General Mills , which is looking to the platform as a good way to find and screen potential investments or acquisitions. Such a big name partner could help the platform draw even more startups, solidifying its reputation as the go-to place for the products that land on Whole Foods shelves.

—By CNBC's Julia Boorstin
@JBoorstin

Questions? Comments? MediaMoney@cnbc.com

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.