Category Archives: Research

Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunities

CNBC | Kate Rooney | Aug 12, 2019

  • unicorn - Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunities
  • Money spent in venture capital and other alternative investments is surging as investors look for riskier, but higher-yielding investments.
  • The trend coincides with relatively low returns from more conventional Wall Street investments such as stocks and bonds, and a drop in the number of publicly traded companies.
  • “In a world where big institutional investors find themselves starved for returns, it’s not surprising that they have steadily increased allocations to private markets and you’ve seen capital continuing to flow into the asset class,” says McKinsey Partner Bryce Klempner.

Many global investors are turning toward Silicon Valley instead of Wall Street in search of returns.

The total invested in private markets hit all-time highs last year and continues to break multi-decade records this year. In the first half of the year, total investments in venture capital hit a 19-year high of $53.3 billion, according to data from Refinitiv published last week. That marked a 21% increase by total dollar amount compared to the first half of 2018.

The steady stream of funding comes alongside a drop in the number of publicly listed companies, rock-bottom global bond yields, and historically weak small-cap performance.

“The incentives for early exposure to rapidly growing, mature companies are still intact,”

PitchbBook senior manager Garrett James Black said in the firm’s 2019 “Unicorn Report” published Monday. “With those imperatives in place and current market conditions — despite concern about a supposed imminent recession— looking to persist, unicorns aren’t going away anytime soon.”

Analysts say the trend is largely the result of relatively lower expectations for Wall Street investments such as stocks or bonds. As the trade war between the U.S. and China escalates and economic indicators weaken, investors have fled to safer assets such as Treasurys. The 10-year Treasury note fell below 1.7% Monday.

‘Starved for returns’

Money managers for pensions and endowments are turning to alternative investments — private equity, venture capital or hedge funds – to “keep up with expectations that they set years ago with their stakeholders,” according to McKinsey Partner Bryce Klempner.

“In a world where big institutional investors find themselves starved for returns, it’s not surprising that they have steadily increased allocations to private markets and you’ve seen capital continuing to flow into the asset class,” Klempner told CNBC in a phone interview. “Private equity has, on average, managed to outperform public markets over the last couple of decades.”

Growth in smaller public companies has been significantly slower than their private-market counterparts. PitchBook looked at the valuations of late-stage, Series D funded companies compared to the small-cap benchmark Russell 2000. That index is in correction territory, trading nearly 14% below its 52-week intraday high in August of 2018. The S&P 500 is off by 4% from its high.series D growth - Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunities

See:  Blockchain’s potential will continue to spur public and private investment

Meanwhile, there has also been a contraction in the total number of public companies. Part of that is due to mergers and consolidation, but Klempner said managers — not just investors — tend to prefer private ownership, too. They’re able to operate “outside of the quarterly spotlight or the glare of public markets,” and often take a longer-term view, he said.

“As a consequence, you’ve seen considerable management talent migrate to private equity portfolio companies,” Klempner said.

One factor allowing companies to stay private was a change in legislation. The 2012 JOBS Act raised the limit of private shareholders in a company from 500 to 2,000 – meaning companies can stay private until they reach that limit. And in many ways, companies don’t need to go public: They can raise money with ease from private investors and don’t need the cash injection that comes with an initial public offering.

Foreign buyers

Foreign investors are also looking for early entrance into quickly growing tech companies, which in the case of Uber and WeWork, stayed off of public stock exchanges for a decade. Last year, venture capital deals that included “tourist” investors soared to more than $45 billion over 102 investments. Halfway through 2019, the deal total was at 53.

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NCFA Jan 2018 resize - Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunities The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Crowdfunding for a Startup: How it Builds a Business’ Credibility

Guest Post | Aug 14, 2019

Funding meeting - Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunitiesYou see a need. You know that your new business can fill that need.

The problem is that it takes an incredible amount of capital to start a business. Besides purchasing equipment, raw materials, and computer systems, you also have the expenses that no one ever thinks about when opening a shop. Did you figure in the cost of hiring an accountant, a lawyer, and paying for workers compensation insurance?

Instead of heading to the bank with your business plan in hand, you may consider whether working with a crowdfunding site might be another feasible way to raise cash for your business expenses.

Here’s how crowdfunding sites work.

Cash in Exchange for Equity

Have you seen Shark Tank? On this TV show, investors decide whether or not they would like to provide capital for startups in exchange for a piece of the company. Sometimes the hosts compete against each other for the opportunity to invest. Sometimes they pool resources and form investment partnerships for a portion of ownership in the company. Occasionally budding entrepreneurs are sent away empty-handed.

See:  Regulation Crowdfunding Surpasses $250,000,000 in Commitments The Model is Working but its Potential is Much Greater

Equity crowdfunding works in the same way. Using a crowdfunding website such as FrontFundr, your investors provide you with funding to move your business forward for a portion of the future profits.

Donations

Perhaps your business may provide a needed service or product for a blighted area. Maybe you are interested in starting a nonprofit group to serve the greater good. If this describes your scenario, you could seek donations from crowdfunding sites. The gifts can be used to get your idea up and running, and of course, there is nothing to repay.  Interested?  Check out FundRazr, Canada's leading donation-based platform, that has helped raise north of $130 million dollars for individuals and organizations.

Donations - Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunities

Borrowing from Individuals

Instead of borrowing money from a traditional bank, you could borrow money from individuals leveraging the compliance and match making services of a platform like Lending Loop. You will still pay a set annual percentage rate like you would when taking out a conventional loan.

Rewards

Some investors are inspired to fund new businesses by an offer of a product, service, or gift they will receive in exchange for the cash donation. For example, if you are opening a car wash, perhaps investors will give you a set amount of money for you to purchase equipment with the idea that they will receive free car washes for six months after the business is up and running.

See:  OurCrowd Double IPO Success Provides Crowdfunding Validation

If you had told someone twenty years ago that they would be able to collect cash from strangers over the internet to open a business or pursue a creative endeavor, they would have thought you were crazy. You could have found investors for your business, but only among your friends or family. Otherwise, entrepreneurs were forced to work with traditional banks who may not have been open to offering cash for products they couldn’t understand.

Rewards - Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunities

But when you receive money for your idea through crowdfunding, that means that you not only won the backing of a single loan officer at a lending institution. It means that dozens, hundreds, or even thousands of people think that your idea is good enough to support.

Crowdfunding sites have different specialties. Kickstarter connects creative people with resources they can use to bring their ideas to life. Kickstarter has helped artists, musicians, filmmakers, and designers. You no longer have to be a millionaire to be considered a patron of the arts.

Inventors often use Indiegogo, a crowdfunding website that has allowed entrepreneurs to raise over 1 billion dollars. Investors can receive equity in the company or receive a share in the revenue.

All you techies out there will appreciate Crowdsupply, a crowdfunding website for hardware designers and innovators. The hardware must be original, useful, and respectful.

Perhaps you already have a following, and you know you could increase your cash flow by offering exclusive content or behind-the-scenes experiences for your fan base. You may want to check out Patreon.

See:  What You Should Know About Crowdfunding Your Start-up

Designing a campaign - Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunities

There are several websites you can visit to help raise money for a nonprofit entity. Go Fund Me was started by Indiegogo. You could also visit StartSomeGood, which allows you to submit your project for free as long as you agree to pay a service fee of 5% of your project is fully funded.

If you are seeking funds to open a business, take a look at WeFunder. This website has more than 150,000 who are interested in keeping the American Dream alive. The site is quick to tell investors that they may undoubtedly lose their money on the investments since so many small businesses fail.

Do you have a dream, but you need to raise some capital to see it to fruition? Consider seeking the help of family, friends, and strangers through a crowdfunding website.

 


NCFA Jan 2018 resize - Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunities The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Large Enterprises Are Betting On Blockchain In 2019

Forbes | Biser Dimitrov | Aug 13, 2019

Blockchain and enterprise - Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunities2019 is the year when the blockchain ecosystem and the crypto industry as a whole had to get sober. After a wild 2017 and a bear 2018, the blockchain space is back on an upwards trajectory with new developments. There are no more Initial Coin Offerings (ICOs) to distract the crypto ecosystem and the building mentality is back on. This post-ICO and post-useless-PR-partnerships age urges the blockchain community to be less focused on the current price of bitcoin and more focused on producing meaningful services and advancements. Big projects from established enterprises like Facebook Libra are taking all the media space now and this is net positive for the enterprise blockchain space as well.

The first half of this year was full of blockchain developments led by large enterprises in almost all important sectors, including insurance, financial services, supply chain, healthcare and trade finance.

There is a huge benefit in joining a specialized industry-focused blockchain consortium because you sit at the same table with your main competitors but at the same time you work toward the same goal. You are not alone in figuring out the benefits, implementations and roll-out of distributed ledger technologies.

See:  Element AI: The market is still figuring out how to share data with enterprise AI startups

There is also a financial benefit when commonly building applications as sometimes the membership fee is lower than the cost of hiring and training blockchain developers. Some of the big names in leading blockchain consortia networks that have made significant progress so far in 2019 are:

  • B3i, a blockchain consortium focused on the insurance industry, recently launched its first live product on R3’s Corda platform. Their members include big insurance and reinsurers companies like Allianz, Munich Re, Swiss Re, Tokio Marine, XL Catlin and Zurich.
  • Energy Web Foundation (EWF) launched their enterprise-grade public blockchain with 17 applications already on it. That network consists of 100 affiliate members like Total, Shell, GE, Siemens, Duke Energy and PG&E.
  • Global Shipping Business Network (GSBN) was created by five of the ten largest container carriers: CMA CGM, COSCO SHIPPING Lines, Evergreen Marine, OOCL, and Yang Ming.
  • Two of the largest health insurance companies in the United States, Humana and UnitedHealth Group, have teamed up to tackle the massive datasets of provider demographic data from hospitals and medical partners.
  • Health Utility Network was formed by Aetna, Anthem, Health Care Service Corporation, PNC Bank and IBM to drive digital transformation and blockchain enabled-solutions within the healthcare industry.
  • In the space of trade finance, the biggest names are project Voltron, focusing on letters of credit; Marco Polo, implemented on R3’s Corda; and we.trade, which runs on IBM Blockchain and consists of 12 of the biggest European banks, including CaixaBank, Deutsche Bank, HSBC, Santander, Société Générale, UBS and UniCredit. They are all moving forward with pilots and we have seen live results, like the completed transaction between the European Union and Asia on Marco Polo.
  • The owners of the famous Louis Vuitton label, LMVH, launched a special blockchain that will help prove the authenticity of expensive goods. It is built on Ethereum with the help of Microsoft.
  • Samsung launched a consortium including six major South Korean companies, focused on launching a blockchain-based mobile ID system. The company is already pretty advanced in their blockchain and crypto developments with the release of the Galaxy S10 phone with designated crypto wallet and Blockchain Keystore online app marketplace. Moreover, Samsung released a developer-friendly Blockchain SDK.
  • The IBM Food Trust network launched. Built on Hyperledger Fabric, the network aims to create a traceable audit log for time-sensitive foods and when an issue occurs, the network participants will be able to pinpoint exactly where the damaged items shipped and won’t have to empty all their shelves. The consortium consists of companies like the European giant Carrefour, Walmart, Nestle, Dole Food, Tyson Foods, Kroger and Unilever.
  • Walmart, similarly to Samsung, is involved on several different tracks with blockchain. They have joined MediLedger, a private consortium that aims to create a drug supply chain. Apart from that they are also partnering with KPMG, Merck and IBM as part of the FDA’s program to evaluate the use of blockchain to protect pharmaceutical product integrity. Recently it become public that Walmart also filed a patent for issuing a digital currency on a blockchain, or stablecoin, as they are known in the industry.

See: 

The whole private consortia ecosystem is still in early development but the right mentality is there. We will see how the technology develops over time to support those formations. A popular approach might be a hybrid infrastructure, where consortium members interact with each other in a permissioned environment or a shard but eventually anchor to some public blockchain for audit and reference purposes.

From the enterprise blockchain technology perspective, this first half of 2019 was pretty interesting and the major blockchain platforms made progress in not only improving and maturing their services but releasing new products. The general sentiment has been to focus on privacy, consensus options and digital asset standardization in anticipation of the tokenization revolution.

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NCFA Jan 2018 resize - Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunities The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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The Global Currency War Has Begun. China’s Yuan Breaks the 7 to $1 Band. Why is The Dollar Rising?

Global Research | Dr. Jack Rasmus | Aug 5, 2019

US vs China currency war - Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunitiesOver this weekend, China’s Yuan currency broke out of its band and devalued to more than 7 to $1. At the same time China announced it would not purchase more US agricultural goods. The Trump-US Neocon trade strategy has just imploded. As this writer has been predicting, the threshold has now been passed, from a tariff-trade war to a broader economic war between the US and China where other tactics and measures are now being implemented.

Trump will no doubt declare that China is manipulating its currency. A devaluation of the Yuan has the effect of negating Trump tariffs imposed on China. But China isn’t manipulating its currency. Manipulation is defined as entering global money markets to buy and/or sell one’s currency in exchange for dollars (the global trading currency) in order to influence the price (exchange rate) of one’s currency in relation to the dollar. But China is not doing that, so it’s not manipulating. What’s happening is the US dollar is rising in value (or expected to) and that rise in effect lowers the value of the Yuan. The same is happening to other currencies as well,as the dollar rises. Why is the dollar then rising? There’s a global stampede to safety and that means buying US Treasuries–which are now in freefall in terms of interest rates (and escalating in terms of price). Prices from one year or even less, to 10 and 30 year Treasuries are accelerating. But to buy Treasuries, foreign investors must sell their currencies and buy dollars before buying Treasuries. That escalating demand for dollars is what drives up the value of the dollar, which in turn drives down the value–i.e. devalues-the Yuan in relation to the dollar.

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In other words, the slowing global economy which is being driven by the Trump trade wars is what is causing the flight to the dollar and to the safe haven of US Treasuries. Trump’s policies are at the heart of the global slowdown (already in progress due to fundamental forces stalling investment and growth). That slowdown is what’s driving the dollar and in turn lowering the Yuan. Trump policies are ‘manipulating’ the Yuan.

China is of course allowing the devaluation to occur. Previously, it was entering money markets to buy Yuan in order to keep it from devaluing. Now it’s just allowing the process to occur. This is China’s response to Trump’s imposing an additional 10% tariffs on $300 billion of China imports last week. It signals that the ‘trade’ war (now becoming an economic war) has moved beyond tariffs.

With Trump’s recent actions, and China’s now response, the potential for a trade agreement in 2019 looks even more unlikely than before.

What will Trump now do? If he remains true to his past behavior when bargaining partners stand up to him, he’ll try to find a way to ‘up the ante’ as they say, and take additional action. He could step up his attack on Huawei and on other China corporations’ partnerships and investments in the US. China will in turn impose restrictions on US corporations doing business in China (i.e. more licensing, more customs inspections, and imposing more non-tariff barriers). It could unleash an anti-American goods boycott in China. It could reduce the export supply of critical ‘rare earths’ it has. It could suspend its previous decision to allow US corporations doing business in China to have a 51% ownership of those operations. And then it has its ‘nuclear options’, as they say: to cut back sharply or cease purchasing US Treasuries and thus recycling US dollars back to the US. Should that happen, the US government would have to borrow more from other sources to offset its annual budget deficit. That would raise the national debt annually even faster than it has been growing–now more than $22 trillion and projected now to rise more than $1 trillion this year. Should recession occur, the deficits and debt could rise as much as $1.7 trillion, according to the US Congressional Budget Office, CBO, research arm.

See:  Central banks should consider using digital currencies: China think tank

But with demand for dollars to buy Treasuries surging, the US Treasury and Fed would have more difficulty selling Treasuries, equal to China’s decline of purchases, given that Treasury prices are escalating and interest rates falling.

In short, the US-China trade war, the slowing global economy (now about to spill over to the US economy), the US budget deficit, and Fed interest rates are all inter-related. Trump policies are creating economic havoc on all these fronts.

What are some of the likely responses therefore to the China responses to Trump’s hardball strategy-driven by US neocons since May?

The neocons will have attained their goal, which has always been to scuttle negotiations with China unless the latter capitulated on the technology issue. Behind the tariffs, behind the trade war, has always been the war over next generation technologies (cybersecurity, 5G, and AI). It’s now clear that China will not capitulate, so no trade deal is possible so long as the US neocons remain in control of the trade negotiations which, at this point, they still do. The neocons will now use China’s strong response to Trump’s latest tariffs to convince Trump to take an even harder line against China corporations in the US and abroad with obsequious US allies like the UK and Canada.

Trump’s campaign re-election staff will see this as an opportunity to start blaming China for the slowing US economy. Themes of ‘China the currency manipulator’ and ‘China the source of US opioids’ may become the mantra from the White House.

US big business and multinational corporations will be further motivated to put pressure on Trump to go back to the negotiating table and settle. To date, however, they’ve been largely unsuccessful with influencing Trump and the trade negotiations. The Pentagon, military industrial complex, and US war industries have Trump’s ear and they’re shouting ‘technology capitulation’ or no deal’.

The US Farm sector will be in dire straits now. It’s almost certain that within the next six months Trump will have to provide them a third bailout, costing $20 billion or more. That will mean a total of $50 billion cost in farm subsidies due to the China-US trade war.

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Globally, emerging market economies are likely to be big losers from the worsening trade relations between Trump and China. Their currencies will decline like the Yuan. But they have far fewer resources than China has to weather the crisis. Declining currency values in emerging market economies (EMEs) will mean more capital flight from their economies, seeking ‘safe haven’ in US Treasuries, in other currencies (Japan’s Yen as ‘carrying trade’), or in gold. That capital flight will slow their domestic investment. Their central banks will then raise interest rates to slow the flight, but that will slow their domestic economies further. The declining currencies will also mean rising import goods inflation and drive their domestic inflation levels higher, as their economies simultaneously slow. EMEs will face both more recession amidst rising inflation.

The China-US trade deterioration will also likely exacerbate inter-capitalist conflicts, as is already beginning to appear in the current South Korea-Japan trade dispute.

The worsening US-China situation will also have a negative effect on Europe’s economy, already about to slip into recession soon. More dependent on exports, especially Germany, the deterioration of global trade will accelerate Europe’s slowdown. The growing likelihood of a ‘hard’ Brexit coming at the same time in October, will almost certainly plunge Europe into another major recession as well, even before the US.

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NCFA Jan 2018 resize - Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunities The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Regulation Crowdfunding Surpasses $250,000,000 in Commitments The Model is Working but its Potential is Much Greater

Crowdfund Capital Advisors | Sherwood 'Woodie' Neiss | Aug 7 ,2019

RegCF - Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunitiesIt has been just over 3 years since Regulation Crowdfunding (Reg CF) went into effect and most recently the industry surpassed a quarter of a billion dollars in commitments. Since inception over 1,800 companies in cities all across the United States have filed to raise money under Regulation Crowdfunding. Over 271,000 investors, most of which are friends, followers or customers of these businesses have made commitments to start, scale or expand operations.

The average raise stands around $237,000 which firmly addresses the Valley of Death[1] issue. Most of the successful companies are raising funds in less than 90 days which is far faster than other forms of financing like Venture Capital or Bank Loans. There’s been no fraud or Wild West as opponents had claimed.

“Essentially we built a financing mechanism which is doing exactly what we said it would,” said Sherwood Neiss Principal at Crowdfund Capital Advisors (CCA) “We’re funding local businesses with a vested group of local investors that is creating local jobs and powering local economies.”

Regulation Crowdfunding began on May 16, 2016. It allows any startup or small business to raise up to $1,070,000 online from family, friends and followers (accredited or not) provided issuers use an online investment platform that is registered with the Securities and Exchange Commission (SEC) and disclose information about their company and financial wellbeing.

See:  The SEC Publishes Report on Reg CF: “The number of crowdfunding offerings as well as the total amount of funding during the considered period was relatively modest”

Since the industry began, Crowdfund Capital Advisors has been collecting information on every offering in its CCLEAR Database. CCLEAR is the leading Regulation Crowdfunding database that collects, cleans, aggregates and reports on all companies seeking funds via Regulation Crowdfunding as well as those doing parallel 506(c) offerings[2]. This information includes financial performance, security offering, valuation, industry, daily commitments and number of investors. The information is summarized and published on a daily basis on the CCLEAR Regulation Crowdfunding dashboard.

Here are some key data trends:

  • Capital commitments – From FY17[3] to FY18 capital commitments increased 178% from $45.7M to $81.1M. The second full FY of Reg CF saw capital commitments increase 139% to $113M. Total capital commitments to date is over $250M.
  • Issuers – During the same period the number of companies seeking to raise funds increased 187% from 317 to 592 and 137% to 810 in FY19. Total issuers to date is over 1,800.
  • Investors – The number of individual investors grew from 44.5k in FY17 to 92.6K in FY18 to 117.8K in FY19. Total investors to date is over 270,000.

“No matter how you look at it, there’s been an impressive growth of at least 250% in 2 years,” says Neiss. “If we extrapolate out over the next 2 years, we estimate that over 3,400 companies across the United States will receive half a billion dollars by over half a million investors.”

CCLEAR captures a maximum of 56 different industries from Advertising and Marketing, to Healthcare and Utilities. During the first fiscal year there were 44 industries represented. That number increased to 47 last fiscal year. While application software, alcoholic beverages, business services, consumer packaged goods, entertainment, personal services and restaurants were the most common industries seeking funds, financial services, business services, employment services and retail saw the greatest increase in offerings between the first and third fiscal years.

“The wide representation of so many industries speaks to the broad appeal of regulation crowdfunding to both companies seeking and investors looking to deploy capital,” says Neiss. “No matter what industry you are in, if you have an engaged group of customers that could be investors, Regulation Crowdfunding is something you should explore.”

Companies in 48 of the 50 States have registered to raise funds via Reg CF.

See:  OurCrowd Double IPO Success Provides Crowdfunding Validation

From an employment perspective, the data shows that Reg CF continues to sustain and support local jobs. In the first fiscal year over 1,482 jobs were supported. This grew by another 3,150 in the second fiscal year and another 4,448 in the third.

“Collectively almost 10,000 jobs have been supported around the United States since the launch of Regulation Crowdfunding,” says Neiss.

“We expect this number to grow by another 10,000 in the next 2 years. 20,000 jobs means 20,000 people employed by local businesses and reinvesting their income back into these communities through mortgage payments, groceries, dining out, education and more. This is how we support local economies. And we are doing it despite the current $1M cap on company raises. Imagine what we could do if we increased these caps from $1M to $5M, $10M or $20M? It is easy to see how we could increase this from 20,000 to 200,000 jobs.”

While not all Regulation Crowdfunding companies are revenue generating those that are had over $400M of Revenue in their most recent fiscal year.

“Given that the majority of these firms are growing and reinvesting their earnings, you can only imagine the multiplier effect that this has on local economies,” says Neiss. “Businesses are reinvesting into their local economies by purchasing goods and services to support them and hiring employees. And employees are using their paychecks to support themselves. Together we estimate they are pouring close to a billion dollars into local economies.”

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NCFA Jan 2018 resize - Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunities The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Bitcoin is an Unstoppable Force

Daily Fintech  | | July 29, 2019

BTC quarterly price change - Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunities

TLDR. During the recent House Committee on Financial Services’ hearing about Facebook’s, Libra, Rep. Patrick McHenry described Bitcoin as an unstoppable force:

“The world that Satoshi Nakamoto — author of the Bitcoin white paper — envisioned, and others are building, is an unstoppable force. We should not attempt to deter this innovation, and governments cannot stop this innovation, and those who have tried have already failed. So the question then becomes, what are American policymakers going to do to meet the challenges and the opportunities of this new world of innovation?”

Today, the entire market cap of digital assets was around $263 billion. Digital currency market caps, coin prices, and overall trade volumes have dropped since June. Looking at what’s been happening over the last few months, the question on everyone’s mind is how is this time different from the past, when Bitcoin reached highs and then came down crumbling.

Well, many things are different.

One of the things is that most of investing is not happening by retail investors, as it did in 2017. Google searches for “Bitcoin” are only 10% of what they were in 2017. FOMO by retail investors has not really kicked in yet. I can only imagine what will happen with the price of BTC when it does.  Source: google trends

Another thing that’s different is institutional demand for Bitcoin. Its soaring. Institutional interest is high, as booming derivatives trading on CME can attest. On June 17, open interest at CME Group saw 5,311 contracts totaling 26,555 BTC, approximately $246 million, dwarfing the volumes during the 2017 price peak. Fidelity, Bakkt, and TD Ameritrade all have plans to launch institutional trading products for BTC.

See:  Visa Makes Its Second Investment Into a Crypto Startup

More importantly, network fundamentals better than ever. Hash rate has increased, driving up security. Security is measured by how much it costs to mount a 51% attack on Bitcoin. The more hash rate, the more security. Over the past five years, Bitcoin’s hash power has increase 1000x, growing to 70 million trillion hashes per second.  Source: blockchain.com

The increase  of daily on-chain transactions and block size, indicate that more people are transacting. Both the on-chain transactions per day (line below) and average transaction value in USD (fill below) have risen significantly since last year.  Source: coinmetrics

The average BTC block size (fill below) has increased substantially, when you compare it to last year’s.

Best of all, average transaction fees have been relatively low, compared to those in 2017. Currently its around $1.92, despite increased block size and on-chain use. Scalability have kept fees substantially lower than late in 2017.

historical daily average bitcoin transaction fee - Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunities

Source: bitcoinfees.info

All this is happening almost a year before Bitcoin’s block reward halving, which set for May 2020. Next May, mining rewards will be reduced from 12.5 to 6.25 BTC, which will reduce the number of Bitcoins minted when a block is verified, and the number of Bitcoins potentially sold to the market.

See:  A Global Review Of The Regulatory Considerations Relating To Crypto-Asset Trading Platforms

As Bitcoin’s supply gets tighter and tighter, its inflation rate drops. Unlike governments that can print fiat currencies and risk inflation, Bitcoin’s inflation rate by 2024, the will drop under to 1% and over time it will decrease toward zero.

Today, the number of Bitcoins in circulation is  17.8 million Bitcoins. There will only be 21 million Bitcoins ever issued and we will not reach that number for another 120 years. While we only have another 3.2 million Bitcoins that will ever be created, this limited supply does not restrict Bitcoin’s use as a medium of exchange. Each Bitcoin is equal to 100 million Satoshis. So, if Bitcoin’s price ever reached $1 million, one Satoshi would be worth just a penny.

And it not the only thing that’s happening.

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NCFA Jan 2018 resize - Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunities The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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The future of finance: Insights into tomorrow’s financial system

Deloitte UK Financial Services | July 31, 2019

Future of financial system - Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunitiesFinancial services continue to go through major disruptive changes that are redefining their role and structure. Recognising this, the Bank of England (BoE) launched an initiative on the “Future of finance”. Ahead of the publication of the conclusions of the BoE’s initiative, Deloitte UK considered the current focus in financial services and what the future will look like.

TechnologyHow can technology enable cheaper, better and faster provision of financial services and improve the efficiency of markets?

The major changes in technology are being driven by: customer expectations; competition and margin pressures; the availability of greater computing power (including through Cloud computing); the ability to draw customer and market insight from structured and unstructured data using artificial intelligence ; and the willingness of customers to engage with digital interfaces.

This has refocussed attention in two key areas – the industry-wide opportunities to reduce friction and challenges arising from the way new technologies are deployed within firms.

The future of finance is expected to be on-demand and flexible with firms offering tailored products on a point‑in‑time basis and enabling customers to switch between providers and products seamlessly. This will accelerate the expansion of platform-based financial services, where all customer interaction is consolidated in one interface or platform. Firms and the governments will also increasingly explore the role of utility-based functions (for areas such as Know Your Customer and onboarding requirements) to reduce customer friction and costs.

See:  The future of finance report

One of the inherent challenges with increased automation is the significant increase in speed and potential lack of transparency around decision making and related controls. How firms govern these innovative technological solutions, and identify and manage risks, from the design stage through to execution and post-deployment, is a challenge for them, and will be an area of focus for regulators.

In addition to reviewing the regulatory perimeter, regulators are expected to experiment with innovation themselves specifically in areas such as regulatory reporting, market surveillance and enforcement. In the longer term, the ability to interrogate and draw insight from firm and market level data at a granular level will have a significant influence on supervision, enforcement and policy development.

Low-carbon economyHow can finance support the transition to a low-carbon world?

The major changes under way in the low-carbon economy are being driven by: rise of new technologies, increasing pressure from customers, and increasing regulatory response to the financial risks posed by climate change.

The transition to a low-carbon world in the future will need to be accelerated by the access of financial services to “green” data. Therefore, for financial markets to work efficiently, new third parties will emerge to provide estimates of firms’ carbon footprint based on a stream of different data sources (e.g., satellite data, market sentiment and disclosures could be overlaid). In addition, financial services will (need to) think about what role they can play in reducing their customers’ carbon impact. As such, financial services firms may increasingly include a penalty factor or an incentive factor as part of the terms on which they provide finance to both business and personal borrowers. This will ultimately help reduce the inequality of carbon consumption across end users.

See:  The Future of Government… in a Digital Age

The key challenges will be for financial services firms to ensure a shared understanding of the low-carbon strategy across product development, risk management and sustainability teams. In addition, firms will need to boost their climate change scenario analysis capabilities (e.g., by exploring foresight over forecast) so as to price the climate change externality. As some “brown” firms will continue to exist, another key challenge will be for financial services to assess the utility of “brown” firms – in addition to their cost and carbon-efficiency.

Regulators will need to accelerate this transition by helping financial markets measure “green” data by framing and standardising it in order to allocate resources efficiently.

Emerging markets: How can we facilitate the increasing integration of emerging markets into the global financial system?

Major changes are under way in emerging markets, driven by the rising share of global growth that they account for (forecasted to grow to almost 65% of global GDP by 2022).

The BoE expects that deeper global financial partnerships with emerging economies” will be the most important drivers of global growth in the decades ahead.”

As capital flows between developed and emerging markets increase, financial activity will naturally follow. Emerging markets will become better integrated into the global financial system through a combination of increased issuer participation, broader investor base and improved market access and efficiency. This integration is likely to lead to greater market liquidity and lower capital costs, and will present investors with new opportunities for investments and risk-sharing.

See: 

Regulators will need to ensure that this ever-greater integration is matched by increasing integration of rules and standards, and supervisory oversight. There is of course precedent for cross-border cooperation, but for a variety of reasons it is less well established with many of these economies. A plan announced by the UK government in May to expand a programme that sends BoE officials to help emerging economies reform their financial sectors is an example of how this cooperation will be built. The agreement between the UK Financial Conduct Authority and Chinese Securities Regulatory Commission on the "Shanghai-London Stock Connect", which will support mutual access to each country’s capital markets gives an indication of how integration may developed.

The BoE (as the central bank) will also play a role in developing infrastructure to support cross-border capital flows in the currencies of emerging markets. Analysis also points to emerging market debt and equity funds being more responsive to prices falls than advanced economy funds, with implications for financial stability. Authorities in the UK are considering system-wide stress scenarios and macro prudential tools.

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NCFA Jan 2018 resize - Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunities The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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