September 26th, 2018
The 2017 State of Regulation Crowdfunding: US Securities-based Crowdfunding under Title III of the JOBS Act
Recently, my company crafted a report for the US Securities and Exchange Commission that summarizes progress on Title III of the JOBS Act of 2012, also referred to Regulation Crowdfunding or Reg CF. This newest securities exemption was added to the options that smaller companies could utilize to raise both debt and equity capital within the US.
Regulation Crowdfunding allows startups and SMEs to raise up to $1,070,000 per year from both retail and accredited investors by utilizing registered funding portals (or broker-dealers) to conduct exempt offerings online. At the end of 2017, there were 36 FINRA approved crowdfunding portals.
This exemption requires issuers to file in a Form C and post online disclosures about a company’s operations, team, financials and other material information for investors to review. Regulation Crowdfunding started in the United States on May 16, 2016. The second calendar year for the industry ended on December 31, 2017. Because data about issuers, their financial well-being, and the capital that is committed is public information we can analyze the data and bring transparency to a segment of the markets (exempt private offerings) that has been fairly opaque until the JOBS Act went into effect.
Key findings of our report:
- The number of unique offerings increased 267% from 178 in 2016 to 481 in 2017
- Proceeds increased 178% from $27.6 million in 2016 to $49.2 million in 2017. Total proceeds by the end of 2017 was $76.8 million
- The number of successful offerings increased 202% from 99 in 2016 to 200 in 2017
- The average success rate of offerings to date is 66.7%
- The total number of investors in Regulation Crowdfunding increased 158% from 28,180 in 2016 to 44,433 in 2017
- Issuers that filed annual reports and reported creating jobs created on average 13.9 jobs.
- Revenues for Issuers that filed annual reports increased on average 131% between the year in which they leveraged Regulation Crowdfunding and the Prior Fiscal Year.
The National Crowdfunding Association of Canada (NCFA Canada) is a national non-profit actively engaged with social and investment crowdfunding, alternative finance, fintech, peer-to-peer (P2P), initial coin offerings (ICO), and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, networking opportunities and services to thousands of community members and works closely with industry, government, academia and eco-system partners and affiliates to create a vibrant and innovative fintech and online financing industry in Canada. For more information, please visit: ncfacanada.org