NEWS PROVIDED BY
Crowdfund Capital Advisors, LLC
August 17, 2020 7am ET
DENVER, COLORADO, August 17, 2020 /iCrowdNewswire/ –Online investment by both retail and accredited investors into startups and small businesses was legalized by the JOBS Act in 2012. Regulation Crowdfunding, one of the provisions in the Act, allows firms to raise up to $1.07 million online each year and went into effect in May 2016. The industry was slow to gain traction but 4 years later, momentum is building. July, which has typically been one of slowest months, saw records for the highest number of offerings in a single month, the highest amount of commitments, as well as the highest number of investors.
This signals a few things:
Here is how July 2020 compares:
The figures above indicate that we are probably at the tipping point for the industry. There more than 70 online investment platforms that have registered with the Securities and Exchange Commission to facilitate these offerings. And there has been over $700 million committed to Regulation Crowdfunding, Regulation A and 506c offerings on these platforms.
According to an SEC report, there has been zero fraud. With the introduction of supporting technology platforms like LawCloud that facilitate offering documents and disclosures, more and more issuers are entering the space with the confidence that fundraising doesn’t have to be as complicated, scary or costly as it used to be. Market awareness is also growing to a point whereby issuers have a choice of which platforms they wish to approach, and platforms are building verticals to differentiate themselves in the space.
The growth in both average number of employees as well as average revenues has been a continual trend and shows that more mature companies are turning online for their capital needs. We expect this trend to continue as the SEC proposed raising the limits issuers can raise under both Regulation Crowdfunding and Regulation A+. This will lead to larger firms turning online. (We encourage the SEC to take up the vote and adopt the amendments such that struggling firms can future leverage online fundraising).
As we’ve seen in economic downturns in the past, opportunities are flourishing. Many of these companies are trying to survive COVID-19 with the help of community investors while others are launching new products or services to address how we will live in a post-pandemic world. We should be doing more to support these businesses.
How Washington can Help:
While our government is focused on bail-outs for big business what we need is a program to prop up and support local communities/businesses. These entities are responsible for the majority of the jobs and economic activity in cities all across our nation.
It is time for our government to create what the United Kingdom has done, the Future Fund. The Future Fund is a co-investment vehicle that invests alongside the crowd. It doesn’t pick winners but helps support business and jobs that local investors believe in. If we can encourage local businesses to seek capital from their local customers and turn them into investors we’ve accomplished a few things:
If we layer this with government funds we’ve created a way for Washington to support local business in local economies all across the USA without having to pick winners or layer on unreasonable covenants that make business owners decide between capital or onerous terms.
Our government should carve out $1 billion or more to support these businesses. If they did, they would be having a direct impact on communities all across the nation. Because the crowd is in control, no one should have to worry about “Washington insiders” getting all the money. And because everything is happening online with a digital footprint, we actually have a real-time understanding of where the money is going and how it was used. This type of transparency is built into the system of how Regulation Crowdfunding works and it doesn’t exist in any other stimulus program the government is backing.
About Crowdfund Capital Advisors
Crowdfund Capital Advisors has created and perfected a data acquisition model that allows it to effectively handle large amounts of data from hundreds of online brokers/dealers as well as online investment platforms. It has proprietary software, built by its own technical team, as well as a large Data Quality team to accomplish this task. Thousands of clients have received information from Crowdfund Capital Advisors to improve their businesses.
Crowdfund Capital Advisors
(877) 427-2350 ext: 701
2095 Tamarac St.
Denver, CO 80238
SOURCE Crowdfund Capital Advisors
Related Links: https://www.theccagroup.com