In the last month a number of new accredited crowdfunding platforms have come online. They join FundersClub, CircleUp, and Angellist in facilitating private equity transactions entirely online. Here’s a list of crowdfunding platforms that have recently opened their accredited doors:
- 99Funding (Startups/Existing SMBs)
- Collaperty (Real Estate)
- EarlyShares (Startups/Existing SMBs)
- RealtyMogul (Real Estate)
- RockthePost (Startups)
- SeedInvest (Startups)
- WeFunder (Startups)
Perusing their websites, you’ll notice the absence of investment opportunities shown on the homepages. The ban on general solicitation and advertising is still in full force so platforms must closely control the distribution of offering information, lest it be considered general solicitation ;-). Of course, they are allowed to advertise completed transactions. SeedInvest raised $140k for StearClear in 5 days. And RealtyMogul launched out of Beta with a successful deal under it’s belt, having raised $110,000 to help fund AH Capital’s purchase of a real estate property in Los Angeles.
I suspect these platforms are launching pre-Title II to capitalize on awareness, branding, and customer acquisition while the market is less crowded. Not to mention the acquisition of invaluable learnings through testing/iterating their assumptions and processes (marketing, on-boarding, education, customer service, acquisition costs, etc). Marketplaces can be brutal as the customer economics have to be nailed for more than one party.
While a gaggle of additional platforms are waiting on the full implementation of Title II to come online—which will support a much more productive marketplace as companies and platforms will be permitted to generally advertise their offerings—these platforms provide an early glimpse of what’s to come. The dawn of accredited crowdfunding is upon us. The first major change in security law in over 70 years is set to unshackle the internet from its legislative quarantine, and unleash its disruptive efficiencies into financial services. A spectacular sight it will be :)
Accredited Crowdfunding for Startups and Small Businesses
The 27.5 million existing small businesses (1) and ~6.5 million new startups created each year (2) will be given access to investor networks at a scale previously unimaginable. (“Hi 15,000 impassioned Alumni [on LinkedIn], we’re raising capital for our healthcare company which was spun out of our team’s doctoral research. If you’re interested, here’s a link: [link] We’d love to hear your feedback!”) By no means will funding come easy—the investment Crowd has proven highly discerning in international markets— but at least they’ll be given an audience. Enough can’t be said about how enormously implicative this is. It’s an opportunity multitudes across underserved geographies and social classes do not have today.
And distilled to its core, I believe this is the wondrous quintessence of investment crowdfunding: It’s not about the outcome, it’s about the opportunity.
Crowdfunding For Accredited Investors
~8.6 million accredited investors in the U.S. (3) will be invited to embrace a re-imagined asset class; one that provides direct access to private investment opportunities across every shade of affinity, geography, maturity, and industry. Minimum investment sizes, ranging from $1k – $5k, will be a fraction of the status quo, allowing for easier market entry and broad diversification. The ultimate empowerment of the accredited investor.
As for the rest of us, it’s unclear how long it will take for the clouds to part, and for our dawn to come. For our opportunity, we wait.
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Update: Bill Carleton adds great context to the discussion with his latest post. Check it out! The jury’s in: the JOBS Act has unleashed angel crowdfunding
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