Sony recently launched a crowdfunding platform, not so much about raising money but rather, as an R&D tool. We all read about the Greek bailout effort, a novel idea, raise $1.8 billion to cover the IMF payment now in default. In theory, it can work – in practice it will probably not work but the point is well taken, we can expect more governments (local and national) to think about this more and more. FINRA registered brokers have their ears on the rails and some, have moved from listening to taking action, Wealth Forge in Florida is focusing on alternative financing and they claim $1 billion in deals in the pipeline in a matter of months. Crowdfunding platforms are beginning to behave much like the SROs (self-regulating organizations) which is what the exchanges are. Stock exchange disruption? – Without a doubt! There are now some 1,250 Crowdfunding platforms worldwide. The estimated size of the global Crowdfunding market in 2015 is now at $34 billion dollars and the early stage investment market is estimated at $300 billion.
iCrowdNewswire is disrupting the press release newswire business and using crowdfunding to do so – not one of the established big old wires ever ran one thousand releases a month in their first five months of existence. And not one of the big old wires can run releases at the price points we can. Companies like Krowdster and Dealindex are taking the lead in Crowdfunding analytics and research, in fact Dealindex just launched a dashboard (see release here…) and global platforms are gravitating towards it. 30 are already featured. “We are delighted to have our deals showcased on DealIndex, an aggregator of global crowdfunding opportunities from leading platforms”, said Josh Daniell, Co-founder & Head of Platform, Snowball Effect. “DealIndex’s easy to use dashboard helps end users quickly source investment opportunities, as well as visualize fundraising data from the world’s most promising private companies. As New Zealand’s leading equity crowdfunding platform, partnering with DealIndex broadens our outreach to sophisticated investors from all corners of the world.” In a recent article, JP Morgan Chase CEO Jamie Diamond was quoted as saying that they now have to “pay attention to alternative financing developments”. Anyone watching the Peer-to-Peer lending growth would say yes, you need to pay attention. Not to mention the disruption in investment banking that is underway.
When I recently came upon a 2013 article published by Grow VC CEO Valto Loikkanen, I thought he was talking about my vision. Since we have been in this business only a few months, I thought to myself that this guy must have a crystal ball. So I asked for permission to re-publish his article and let all of my 5 thousand plus LinkedIn connections, and the rest of the 5 million unique visitors that our press release distribution network reaches, come to their own conclusions. Enjoy this article – it is always a lot of fun to look at someone’s vision statements form years back – the Grow VC effort goes further back than 2013 – and now we can all judge the vision.
By: Valto Loikkanen
It’s been quite some time from my previous update. The reason is that we, as the entire Grow VC, we have been through a deep, action oriented learning and development mode for the past several years.
History and Our Learnings
Grow VC is a known global pioneer in the securities crowdfunding market since 2008. During this time we have operated in the market and seen it develop from when the term crowdfunding was merely a novel concept, to today where the market is really opening and many countries, industries, businesses, financial players at all levels are seeing the new crowdfunding market as a major source of disruption, but also a significant solution for several problems associated to the old financial market.
Based on our years of learning in the market, we see that for this new market to have a healthy future, it will require a lot of trial and error. And most of all, it requires cooperation between the old and new, the big and small. It also calls for the emergence of different financial models and instruments to work together as the new financial ecosystem goes through this major paradigm shift.
Like any other disruption in past, this paradigm shift will involve a variety of aspects, including;
- Surprising new players will enter this new financial market.
- Completely new segments of experts will emerge.
- New business models will be tested and broken in the real market.
- Existing players will be forced to adapt to this new development through their own services and the buying and consolidation of existing services.
- A large part of seemingly picture perfect models will fail under the force of the markets development pace and timing mismatches.
All of this is a natural evolution that this new market is about to go through. Eventually this transition and disruption will start to settle down into what we will call “the new market”, or at that time, plainly “the market”.
The Disruption on an Unprecedented Scale
How low-end disruption occurs over time.
This disruption we are about to witness will affect the biggest market of them all, and the impact will be bigger than anything that we have ever experienced before. After all, money affects each and every aspect of life.
As a global team of experienced entrepreneurs, we see this disruption clearly as the biggest opportunity the world has seen in several decades and as such, we have been working and investing our time and money passionately in seizing this opportunity, in order to be as prepared as we can for the disruption that we are about to experience.
A disruption of the magnitude that we are about to see rarely happens in the lifetime of a person. When it does, it’s often even less so with timing like this. If we consider the position we have built, the amount of learning and the global, committed team we have had the privilege of assembling – all this with the experience and knowledge already built in – while being at the prime of our working lives with several decades of offline and online venture experience behind us.
A Few Words on Timing
We are truly humbled and honored by the timing of this market transition, as any experienced entrepreneur could say, it’s close to impossible to plan for such timing. Regardless of all our planning, strategies and the hard work we have done so far, we are also lucky to be in the position we are today, with everything we have set up to be ready for the large scale disruption ahead. That being said, it is easier to understand the position we have chosen to approach this market disruption and the related opportunity.
From the very beginning, 2008 to summer 2012 we focused on developing the first global equity based crowdfunding platform and related services for the global markets. We tested various business models and also local approaches in India and China with franchising. We also invested in developing the startup ecosystem tools to help connect this new equity crowdfunding market with enough information and venture data (history, track record etc) for added credibility for early, new ventures.
This combined effort has granted us enormous learnings and experience from this emerging market that is just about to open up widely. We have also already seen many players and approaches come and go.
During the summer of 2012, we held our biannual strategy workshop where we opened up and questioned our long term strategy and put that against our original vision and what we had learned so far. Combined with envisioning the impact of the JOBS Act entering into effect, we outlined our new strategy going forward and went head down into execution mode for a solid year.
Today, after over one year into executing this new strategy, all the activities and new learnings from following along with the markets development, we know our change of strategy was the right one for us to make. As part of the new strategy, we have moved away from being “one of the operators in the middle” to one step deeper, to being an enabler, a knowledge resource, supporter and credibility developer for those looking to start, develop, enter, operate or connect to this new market.
This is the strategy we execute through our various companies and business units that are all part of our global
The Era After September 23rd
While this new market has been emerging and that we have been part of developing for years, still the biggest single, global tipping point will be seen after September 23rd, when Title II of the Jobs Act will come to effect (securities marketing law update). This will, probably, be followed by the Title III several months after (non-accredited investor participation).
The significance of Title II stems from it happening to the biggest, most visible and attended financial market in the world, the US – which will remove the ban of an 80 year old law that has forbidden general advertising and general solicitation of private securities offerings. This comes at a time when Web 2.0 is already old news, having changed the way information travels around the world and how people take action based on that information. Those who have seen the inner workings of financial services technology, will realize the leaps and strides it will have to take, to meet the demands of the new world.
We welcome the new market with open arms and with a full focus to playing a pivotal part in the paradigm shift to help develop a more healthy, efficient and transparent new financial market.
We welcome all of you to join the ride with us!
Published with permission from Valto Loikkanen, CEO, Grow VC
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