Category Archives: Equity Crowdfunding

There are Now 29 FINRA Regulated Reg CF Crowdfunding Portals

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CrowdfundInsider | By

The number of FINRA approved and regulated crowdfunding portals has been inching higher. Today, there are 29 different Reg CF crowdfunding platforms each targeting the new securities exemption created under the JOBS Act 0f 2012. At the beginning of 2017, that number stood at 22 approved Reg CF platforms with a single entity, Ufundingportal losing it license after FINRA took action after it determined there was significant potential for fraud emanating from the site.

About a year ago, there was less than have this number so interest in launching a Reg CF platform has remained fairly robust.

See:  Is Your Crowdfunding Portal Ready for Your First FINRA Exam?

Some interesting new additions to the list include “Good Capital Ventures” based in Massillon, Ohio. According to the SEC filing, Good Capital Ventures was founded by Justin Jeffrey Gantz who is an architect by education. The site is apparently not yet live.

EquityBender, based in Newport Beach, California, is another new platform. Their website indicates their team has experience in raising more than $250 million for early stage and growth companies in the past years.

Sprowtt Crowdfunding in Tampa, Florida, was founded by Mark Robert Jones. Affiliated with Sprowtt Services, Jones is said to have been “asked to actively participate in crafting the JOBS Act, including the equity crowdfunding laws and regulations.”

Title3Funds, operated by Fundivations, is another new addition. Based in Irving, California, this platform was founded by Ronald Hirsch.

To date, over $36.6 million has been successfully raised for Reg CF issuers. The top four platforms lead the way:

  • Wefunder – $20.4 million
  • StartEngine – $7.9 million
  • Indiegogo (Microventures) – $3.2 million
  • NextSeed – $2.8 million

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

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$150 Million: Tim Draper-Backed Bancor Completes Largest-Ever ICO

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Coindesk | by Stan Higgins, Alex Sunnarborg & Pete Rizzo | Jun 12, 2017

An initial coin offering (ICO) for a blockchain project called Bancor has set a new industry record, raising approximately $153m in ether, the native currency on the ethereum blockchain, as part of a crowdsale that concluded today.

Data shows a smart contract connected to the sale had collected more than 390,000 ether by the time it ended at 18:00 UTC, an amount worth $152.3m at current prices. As such, the figure is higher than even the funding raised by The DAO, the notorious failed fundraising project that made headlines last year when it lost the millions of the $152m in investor funds it raised in a similar sale.

Overall, 79,323,978 Bancor network tokens (BNTs) were created as part of the ICO, with the top token holders now possessing 83.96% of the tokens, or 66,601,702 BNT. Fifty percent of the total tokens, or 39,661,989 BNT, were sold to the public, while the remaining 50% were allocated for future use.

The ICO attracted 10,885 buyers, according to available data, with more than 15,000 transactions sent to the address for purchases during the sale. One buyer went so far as to purchase 6.9m BNT, or roughly $27m, in the sale.

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Launched in 2017, Bancor, overseen by the Bprotocol Foundation, has been pitched as a platform designed to make it easier for users to launch their own blockchain tokens.

Of the remaining funds, a blog post by the company states token capital will be directed toward partnerships, community grants, public bounties and project advisors.

Issues with the sale

As with past sales of this kind, the ICO was accompanied by reports that the ethereum network faced significant transaction loads, resulting in delays for buyers.

However, the project itself was adversely affected by long wait times on ethereum.

According to the Bancor website, an initial funding target was set at 250,000 ether, though this figure was not hard-coded into the smart contract deployed. As a result, a transaction sent on the ethereum blockchain in an effort to change the contract and limit the crowdsale in length did not work as desired.

Due to network disruption and delays holding up this transaction, the company said the crowdsale ended up continuing longer than initially desired. Overall, it lasted an two additional hours as a result of the delay.

Posts on social media further suggest that at least some users saw transaction issues during the sale. One thread on Reddit drew complaints about transactions being dropped as long as 35 minutes after they were sent to the ICO address.

Some participants who spoke to CoinDesk also said that they had experienced delays in transacting, including one who had issues moving their ethers off an exchange for the purposes of participating in the ICO.

One exchange operator went so far as to argue that the ICO had increased transaction congestion, colorfully remarking that larger ether buyers were disrupting the sale.

Notable investors

Another factor contributing to the frenzy is that, as sale was getting underway, Bancor revealed it had attracted new and notable investors.

Among those announced to be contributing funds was investor Tim Draper of VC fund Draper Fisher Jurvetson. Though new to the ICO space – he previously backed the Tezos project ahead of its yet-to-be-held offering – Draper has invested in a number of bitcoin startups in the past few years.

In 2014, Draper made headlines when it emerged that he had bought 30,000 bitcoins during US government auction, later picking up an additional 2,000 BTC during a second sale. As part of the funding, Draper will also be joining the project as an advisor.

The Bancor sale was also backed by Blockchain Capital, an investment firm that focuses on startups in the space.

According to a blog post published today, Blockchain Capital is making its investment via its BCAP token, which it launched earlier this year.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

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GAME-CHANGERS: Crowdfunding real estate projects in the GTA

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Mississauga.com | by Louie Rosella | June 7, 2017

NexusCrowd, a Canadian real estate crowdfunding platform, has a number of projects on the go through crowdfunding, including a $12 million real estate redevelopment project announced in 2015 boasting three properties — one in Mississauga.

Real estate crowdfunding is experiencing explosive levels of growth, particularly in Mississauga and across the GTA.

NexusCrowd, a Canadian real estate crowdfunding platform, has a number of projects on the go through crowdfunding, including a $12 million real estate redevelopment project announced in 2015 boasting three properties — one in Mississauga.

NexusCrowd bills itself as the first investment platform in Canada that provides investors with exclusive access to co-invest with established real estate developers and investors in real estate deals that have reached at least 50 per cent of the funding target.

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Just last fall, NexusCrowd announced it has closed its fourth real estate investment offering, raising $517,000. By partnering with Downing Street Realty Partners, NexusCrowd allowed accredited investors to participate in the development of a mixed-use commercial real estate project located in downtown Toronto.

“We have now raised over $2 million for four private real estate investments using our innovative investment platform,” said Hitesh Rathod, CEO of NexusCrowd. “Offering high-quality exclusive investment opportunities to our investors is our top priority and we are excited to announce that we are working on additional partnerships to further expand our product offering.”

NexusCrowd was part of what was hailed Canada’s first crowdfunded real estate project in fall 2015 and featured another Mississauga location.

“This type of deal is extremely exclusive,” said Rathod in a 2015 interview with The Mississauga News. “I think crowdfunding has huge potential. It just needs to be done the right way. You need to do due diligence. It can be a risky proposition and I work to mitigate risk.”

One of the three assets in the $12 million project is a 25,000-square-foot former pharmaceutical manufacturing facility at 951 Verbena Rd., in the area of Tomken and Britannia roads. The other two properties are industrial facilities in Etobicoke.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

 

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Indiegogo Founder Slava Rubin Talks Equity Crowdfunding on Reg CF Anniversary

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Crowdfund Insider | | May 18, 2017

Indiegogo was originally envisioned as a vehicle to sell securities in small companies to the masses. That was back in 2008 and, as we all know, the regulatory environment had not yet caught up to the realities of a world with internet access. Thus Indiegogo pivoted and dove into the perk-based crowdfunding world. Since then, Indiegogo has helped to raise over $1 billion for projects and businesses around the world.

When President Obama signed the JOBS Act into law back in 2012, most people thought regulators would move rapidly and build out the rules that would allow companies to raise capital online.

That did not happen. The wheels of government can move rather slow.

It took four years for each of the crowdfunding exemptions to be completed. The final being Title III of the JOBS Act, the crowdfunding exemption that has received the most popular attention from the media.

See:  Indiegogo Could Soon Dominate Equity Crowdfunding

While Title IV (Reg A+) and Title II (Reg D 506c accredited crowdfunding) of the JOBS Act allow issuers to raise a lot more money online, Title III or Regulation Crowdfunding (Reg CF) was ostensible positioned to benefit the smallest startups or the mom-and-pops in need of growth capital. Ignored by VCs and Angel investors, and being too small for bank loans, these companies clearly lacked access to capital. Thus Reg CF was born.

In May 16, 2016, the new exemption went into effect. Newly minted “funding portals”, a type of broker-dealer light entity that could sell these securities online, listed the first investments under Reg CF. One year later, over $35 million has been raised for more than one hundred small companies.

As it stands today, Wefunder and StartEngine lead the space with most dollars raised. But Indiegogo, a late entry into Reg CF crowdfunding, is quickly catching up.

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Launched in partnership with MicroVentures (First Democracy VC), an already established accredited crowdfunding platform, Indiegogo has diligently pushed into investment crowdfunding. In stark contrast to the free-wheeling, wild-west world of perk-based crowdfunding, Indiegogo has taken a more selective and conservative approach.

Out of twelve crowdfunding rounds listed by Indiegogo, twelve have fully funded. So Indiegogo is batting a thousand. As far as we know, there is only one other active Reg CF portal that can claim the same.

The deals are interesting too. From a restaurant in Washington, DC, Republic Restoratives, raising $300,000 to the Field Guide of Evil (a film) raising half a million dollars.

On Tuesday, I hopped on the phone with Slava Rubin for a quick update as to how he things are progressing for Indiegogo in the equity crowdfunding side of his business. Rubin, co-founder and Chief Business Officer of Indiegogo, passed the mantel of CEO to David Mandelbrot at the beginning of 2016. He is still very much engaged with Indiegogo and is spending his time focusing on innovation and growth.

Rubin said the Reg CF Anniversary was super exciting and they are generating real data and feedback on selling securities online;

“We launched in the middle of November, so only half the amount of time in operation. We are 12 for 12 for businesses that have reached their target. We are at a 100% success rate.”

I asked Rubin if he is seeing any parallels to the perk-based platform.

“There is no question there is a benefit to the history and experience with the perk business. We have worked with thousands of entrepreneurs and millions of backers. That comes with  a lot of people having a good experience and trust. We are building our trust in equity crowdfunding. It has been very helpful.”

Rubin said that it was exciting to see Indiegogo alumni raise funding on their investment side. The perks side is a funnel for potential investment rounds. Rubin also added that having the large existing network of backers has been helpful in getting the businesses funded. “Many times these investors are complete strangers,” said Rubin.

Asked if equity crowdfunding had matched his expectations?

“Yes. Things are going well. It is early, but we expect more growth to come.”

Rubin explained they were receiving a ton of inbound requests because of awareness from their perks side. He said they are making certain that issuers are solid companies. Perks is open but equity – not so much. While he did not know the exact acceptance rate, Rubin said they were far more companies applying than getting posted. Sometimes they will provide feedback to a potential company telling them they need to wait or work to accomplish some more milestones. Sometimes they go to other equity platforms too.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

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Naval Ravikant hints at future plans for Product Hunt and adding secondary trading to AngelList

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Tech Crunch | | May 19, 2017

Earlier this week, at TechCrunch’s Disrupt event in New York, we sat down with AngelList cofounder and CEO Naval Ravikant to talk primarily about the platform’s new Angel Funds product, wherein a select number of proven “angel-operators” is being provided capital from AngelList and outside VCs to invest in a basket of startups. (We wrote about that new program here.)

Of course, while we had him in our clutches, we wanted to talk with him about other directions in which AngelList might move over time. What we gleaned: the platform, which is famous for continuously iterating on its approach and offerings, may eventually use its late December acquisition of the popular product platform Product Hunt to create a paid offering for companies looking to buy specific technologies or products. It sounds like AngelList may also eventually dive into the brisk secondaries business, wherein investors buy up earlier investors stakes in certain companies.

Here are some outtakes of that chat, edited for length and clarity:

TC: Recently, a crowdfunding marketplace, Seedrs, announced that it’s going to launch a secondary marketplace. It could be interesting to see AngelList get into this business.

NR: We are obviously always looking at secondary marketplaces. The problem is how much liquidity can you have for these things. Generally, if you have a really well-known company, like a Facebook or a Snapchat, before their IPO, there’s demand from later-stage investors for a secondary marketplace. But it’s usually concentrated in a very few names.

See:  A British firm plans a secondary market for crowd-funded shares

We work at the very early stage where, frankly, people don’t know the companies. If someone wants to sell, it’s such a negative signal; it’s not clear that there’s a buyer on the other side. But 1,500 companies on the platform have already raised half a billion dollars and they’ve gone on to raise over $5 billion [in subsequent fundraising rounds], so they’re getting larger and larger and larger, and there will be a point where some of those names become so hot that there will be secondary demand. And then if those companies are open to it, we’ll work with them to fill that secondary demand.

TC: We’re also wondering what you’re doing with Product Hunt, which you acquired in December.

NR:  There’s so much innovation going on, and there’s lots of people funding that innovation, but there’s very little innovation on that infrastructure for innovation itself, so we like to do that ourselves to help companies create more tech companies. So what do tech companies need? They need money, they need talent, and they need customers. So AngelList started out with helping them raise money, now we’re the largest startup recruiting marketplace in the world, with 25,000 startups recruiting and about one million candidates. But the missing piece is helping companies find their early customers. And Product Hunt did an amazing job of that. They’ve now launched 90,000 products; they do millions of product discoveries every single month; and it’s kind of the place where teams from Uber and Facebook and Google and lots of startups go to launch their latest apps. So we were always in awe of Product Hunt and we brought them in to kind of complete the third leg of that triad.

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TC: It sounds like that could be a revenue-generating product, showing companies [needing products] who they should be talking to, what the various tech stacks are of different startups . . .

NR: Yeah, I think long term it can generate revenue. In the short term, we’ve left the team completely independent. They’re still executing on the same plans as before we merged up. And all the team and the management is still there.

TC: You also spun off a crowdfunding platform for non-accredited investors called Republic last year. Can you tell us a bit more about that and how involved you are?

NR: Crowdfunding is going to happen — it’s happening in the U.S. — it’s just happening a little bit slower than in the U.K. as [the U.S. government] works out the final [regulations]. And Republic is a spin-out that we did with some of our best people to go and start doing that. It’s still very early; Republic has done a couple of deals, but I think we’re still in the first inning of crowdfunding.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

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Equity crowdfunding is 1 year old today, Wefunder is top platform

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VentureBeat | | May 16, 2017

Since Regulation Crowdfunding began on May 16 last year, 335 companies have filed offering documents with the Securities and Exchange Commission (SEC) to fundraise on securities-based crowdfunding platforms. Of those companies, 43 percent were funded, 30 percent failed, and the remainder are still open and trying to get funding.

The total capital committed to date on these platforms is in excess of $40 million, with the average successful crowdfunding campaign raising around $282,000 from about 312 investors. The most recent quarter saw the greatest number of companies file with the SEC. This signals that issuers might finally be catching on to the opportunity that Regulation Crowdfunding holds.

And what about the portals that have emerged to host these fundraises? Of the 26 portals registered with FINRA to help companies sell Regulation Crowdfunding securities, nine have already closed, gone out of business, or been shut down. Of those remaining, Wefunder (based in San Francisco and Massachusetts) is leading the pack both in the number of deals and total dollars raised. They have been in business since Regulation Crowdfunding went into effect and have helped 63 companies pull in almost $18 million. Start Engine (in Los Angeles) ranks second with 27 campaigns funded, and Microventures (Austin), NextSeed (Houston), SeedInvest (New York), and Republic (New York) rank third through sixth. Interestingly, the location of these platforms also matches the states that have raised the most capital.

Several platforms (both old and new) have only funded a handful of campaigns. This may signal that brand awareness and marketing by the larger incumbents is driving both companies seeking capital and investors looking for deal flow.

See:  Are Overseas Portals the Next Big Thing in US Equity Crowdfunding?

However, If you dig a little deeper and look at the capital raised during the last three quarters, you will see in that while Wefunder is leading in overall dollars, both Microventures and Start Engine are not far behind in terms of quarterly commitments (see Orange bar to compare Q1, 17 results).

"I expect to see Indiegogo put more time and energy into converting its most successful rewards campaigns into equity campaigns on Microventures."

Microventures, the offshoot of rewards-based crowdfunding platform Indiegogo only launched at the end of last year and is already showing strong results, with 100 percent campaign success. While the platform hasn’t run many campaigns, the campaigns it has run have raised slightly more success than those on Wefunder.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

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Robin Ford, Former BC Securities Commission Executive Commissioner, Joins National Crowdfunding Association of Canada’s Advisory Group

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NCFA Canada | Craig Asano | May 16, 2017

Robin Ford, Advisor, Governance and Regulation

VANCOUVER, MAY 16, 2017 – The National Crowdfunding Association of Canada (NCFA) today announced that Robin Ford, Former British Columbia Securities Commission (BCSC) Executive Commissioner, has joined the Association as Advisor, Governance and Regulation.

After 25 years as a public-sector lawyer and regulator, Robin is now consulting in the areas of financial services regulation, governance, and compliance.  She has extensive experience working with and advising regulators and the regulated, leading projects and teams, and facilitating organizational change.

Robin has served as Executive Commissioner at the BCSC, Chief Counsel, Insurance at the UK Financial Services Authority, and legal adviser to the UK and British Columbia Governments.  She played an important role in an ambitious program of regulatory reform and in integrating 9 regulators into the newly formed UK FSA, as it became a more analytically disciplined, risk-based, and outcomes-focused regulator.

“Having such a highly experienced and capable senior ex-financial services regulator join the NCFA Advisory Group speaks volumes about how much the regulated crowdfunding sector in Canada has developed and its potential to raise, lend, or share capital and facilitate investment. We’re very pleased to have Robin join the community to help bridge the gap between regulators and the alternative markets and to support regulations that are both suitable for online financial marketplaces and globally competitive.”  Craig Asano, Executive Director, NCFA Canada

“I was delighted to be asked to join the Advisory Group of the NCFA, which has already achieved so much to facilitate developments in the crowdfunding sector. I look forward to contributing on regulatory and governance issues." Robin Ford, Former BCSC Executive Commissioner

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About National Crowdfunding Association of Canada

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. For more information please visit: www.ncfacanada.org.

MEDIA CONTACTS:
Craig Asano
casano@ncfacanada.org
416 618 0254

 

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