Equity crowdfunding platforms are the new stock exchanges. As I mentioned in Part 1 of this series, companies using crowdfunding to generate operating capital are either early stage startups that can’t meet stock exchange application requirements or smaller companies that aren’t there yet. But they still need funding.
One of the ways crowdfunding sites are beginning to act more like stock exchanges is the services they offer their customers. Analytics and intelligence come to mind.
Stock Exchange Intelligence and Analytics Services
Both NASDAQ and the London Stock Exchange (LSE) offer robust intelligence and analytics reports for companies seeking investors. LSE provides monthly reports and analysis that detail which fund managers have shown an interest in the company’s stock, the market value of the company’s stock, peer comparisons, retail investor objectives with peer comparisons, media channels data, and analyses of which investors purchased a company’s stock.
Through LSE’s reports, a company can tell how many investors they are reaching, who those investors are, how they are being reached, and more.
NASDAQ offers similar services through its Corporate Solutions division. Companies can track investor engagement, identify potential shareholders, get eyes on real-time data regarding the value of their stocks, and more.
Companies aren’t the only ones that need information, however. Investors need it too.
What Crowdfunding Analytics Involves
Valto Loikannen is a pioneer in equity crowdfunding and was one of the first to start a platform, GrowVC Group, to connect investors with companies seeking funding. He did this as early as 2009. He says analytics are as important for investors as for companies.
“We have experienced a big gap between real data and factual information and real-time information about the market,” he says.
Before DealIndex.co entered the scene (co-founded by Loikannen and Neha Manaktala), Loikannen says investors and companies seeking funding had to rely on information provided by surveys, which wasn’t always accurate and didn’t reflect real-time raw data. “There are many things you can do with raw data,” he says. “You can benchmark, compare geographics, hone in on business verticals, and much more.”
Right now, most analytics services are offered by third parties like GrowVC Group, Krowdster.co and Crowdnetic, but as equity crowdfunding grows in popularity worldwide, demand for services will force the platforms themselves into incorporating these services for a more holistic experience on both sides of the transaction.
The Growth Crowdfunding Intelligence
If analytics are important, intelligence is even more so. After all, the former extends from the latter. Tracking and reporting can only take place if there is something to track and report. Loikannen says which information is important depends on who is doing the asking.
“Media are interested in trends,” he says. “Companies seeking funding are interested in comparing competitors.” Investors, of course, are interested in background information on potential investments. “The main thing is to collect data and geographies.”
Information collected and reported by DealIndex include:
Equity valuation data
- Private company deal historical trends
- Geographical data
- Platform and sector comparisons
- Media reports
And that’s just the beginning.
Crowdfunding, Intelligence & Analytics: A Marriage of Destiny
It’s just a matter of time before these services are rolled into crowdfunding platforms. Some, like Crowdcube, already showcase a limited amount of data to members. This data includes a financial snapshot of companies seeking funding, competitive and market analyses, and even company exit strategies. While this may be useful information to investors, it is provided by the companies, so investors still have to perform their own due diligence. Crowdcube could improve this data by rolling third-party source information into its platform as a benefit to all interested parties.
“Stock exchanges take raw data and create their own value on top of that,” Loikannen says.
While that’s true, and crowdfunding platforms aren’t there yet, I see a future where equity crowdfunding operates like true financial markets, collecting raw intelligence and turning into robust analytics that keeps all parties informed about real-time market moves.