Global fintech and funding innovation ecosystem

Category Archives: Equity Crowdfunding, Alternative Funding

Insights and Challenges of Raising Capital via Reg A+

Reg A+ | April 2, 2024

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The complexities of Reg A+, Opportunity to Raise Up to $75 Million via Online Solicitation

The Jumpstart Our Business Startups (JOBS) Act of 2012 introduced Reg A+, enabling companies to raise up to $75 million from both accredited and non-accredited investors offering businesses a significant runway for growth through online solicitation.  Reg A+ represents a flexible and accessible means for smaller companies to access investment capital markets, balancing the need for capital formation with investor protection measures.   Learn more: SECs page on Reg A/A+

Overview of Reg A+

Company Eligibility

  • Generally, only companies incorporated and operating in the United States or Canada are eligible to use Reg A+. This includes both private and public companies that are not already required to file reports with the SEC under the Securities Exchange Act of 1934.
  • Companies must not have any "bad actors" in key positions. This includes directors, officers, significant shareholders, and others associated with the offering who have not been involved in certain criminal convictions, regulatory or court orders, or other disqualifying events related to securities laws in the past.

See:  CCA Report: Investment Crowdfunding 2024: Key Insights

  • There are no specific financial requirements for companies to qualify for Reg A+, unlike other exemptions that might require a certain asset size or financial performance. However, Tier 2 offerings require audited financial statements, which implies a certain level of financial organization and transparency.
  • Certain types of businesses are not eligible to use Reg A+. These typically include investment companies registered or required to be registered under the Investment Company Act of 1940, companies that plan to offer and sell asset-backed securities, and certain other excluded categories.
  • Companies must not have any outstanding filings including failure to file required reports or providing inaccurate information in previous filings.
  • Companies that are subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 are eligible for Tier 2 offerings but are generally not the primary target of the Reg A+ exemption, which is aimed at easing access to capital for smaller, non-reporting companies.

Two Tiers of Offerings

  • Tier 1 allows companies to raise up to $20 million within a 12-month period. This tier requires companies to meet state securities (blue sky) registration and qualification requirements, which can vary from state to state.

See:  U.S. Expanding Access to Capital Act Boosts Startup Funding

  • Tier 2 allows companies to raise up to $75 million within a 12-month period. Tier 2 offerings are exempt from state securities registration and qualification, but they require issuers to provide audited financial statements, adhere to stricter ongoing reporting requirements, and limit the amount non-accredited investors can invest based on certain financial thresholds.

Other Considerations

  • For Tier 2 offerings, there are limits on the amount that non-accredited investors can invest, which is based on the greater of their annual income or net worth for natural persons, providing a layer of protection to retail investors.
  • Tier 2 issuers are subject to ongoing reporting obligations, including annual reports, semi-annual reports, and current event updates, which increase transparency and investor protection.
  • Issuers must prepare an offering statement on Form 1-A, which includes three parts: the notification, the offering circular, and exhibits. This document must be filed with and qualified by the SEC before sales can be made under Reg A+.
  • Both Tier 1 and Tier 2 issuers can "test the waters" or gauge investor interest in a potential offering before and after the offering statement is filed, allowing companies to better understand market interest without committing to a full offering.

See:  SEC Publishes Accredited Investor Definition Review

  • Tier 2 offerings are exempt from state securities registration and qualification requirements, significantly reducing the complexity and cost of compliance for issuers aiming to raise capital across multiple states.
  • Shares sold in Tier 2 offerings can be freely traded by non-affiliates in the secondary market post-offering, potentially providing investors with liquidity and companies with a more attractive investment proposition.

Challenges and Insights:  'Good to Know'

The Reg A+ journey comes with regulatory intricacies, high costs, and operational challenges that demand attention and strategic planning.  Below are some insights based on an issuer's firsthand experience based on an interview conducted by our colleagues at Crowdfund Insider in the U.S..

  • Full compliance with the SEC, including the submission and qualification of offering documents comes with an administrative burden and the need for a dedicated CFO and possibly internal counsel underscore the complexity of compliance.
  • Launching a Reg A+ campaign can incur costs ranging from tens of thousands to $100,000, with ongoing expenses between $50,000 and $150,000+ annually. This financial commitment extends beyond the campaign, incorporating annual financial audits and additional regulatory compliance costs.

See:  U.S. Seed Fundraising Insights and Trends

  • There's currently a limited number of experienced lawyers and accountants with specific Reg A+ expertise, and the discrepancy between claimed expertise and actual capability can derail timelines and inflate costs, highlighting the need for a preferred vendors list.
  • Current ongoing reporting requirements are too burdensome, and should be simpler and without legalese for the benefit of investors.  Compliance should be shorter and more concise which will in turn attract more issuers and help them with ongoing disclosure requirements.  Issuers should take a proactive approach to compliance and financial planning.

Conclusion

With its dual-tier system allowing significant raises of up to $75 million, Reg A+ is a blend of opportunity and regulatory oversight, fostering an environment where startups and SMEs can thrive.


NCFA Jan 2018 resize - Insights and Challenges of Raising Capital via Reg A+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, artificial intelligence, 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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U.S. Expanding Access to Capital Act Boosts Startup Funding

Policy | March 13, 2024

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New legislation in the U.S. opens doors for startup investment

The House of Representatives has recently passed the Expanding Access to Capital Act, an important piece of legislation sponsored by Patrick McHenry, which aims to streamline and enhance the funding process for entrepreneurs and startups.

The bill was approved with a vote of 212 to 205, reflecting a division along party lines. Fifteen Representatives abstained from voting. Although the bill did not receive support from Democrats, the final version of the legislation included several amendments proposed by Democratic members.  Although the House has passed the legislation, its reception in the Senate remains uncertain.  Before becoming law, legislation must pass through several stages, including potential amendments and approvals by different legislative bodies (e.g., the Senate in the United States). Until it is finalized and enacted, the exact provisions and their implications 'may' change.

See:  Neiss Advocates for Economic Growth via H.R. 2799

The Expanding Access to Capital Act introduces several regulatory changes aimed at democratizing investor participation by making it easier for a broader range of investors to engage in the funding of startups and small businesses, such as:

  • By simplifying the securities regulations, the act aims to lower the barriers for small businesses and startups to access public and private capital markets. This simplification could involve reducing the paperwork and compliance costs associated with issuing securities, making it more feasible for smaller companies to raise funds.
  • Crowdfunding has emerged as a vital tool for democratizing investment in startups. Regulatory changes may include increasing the limits on how much money can be raised through crowdfunding platforms, as well as easing restrictions on who can invest through these platforms, thereby widening the pool of potential investors.
  • The act seeks to modify the definition of "accredited investors" to allow more individuals to invest in private offerings. Currently, accredited investor status is largely based on income or net worth, limiting investment opportunities to a relatively small portion of the population. By broadening this definition, more people could participate in early-stage investments.

See:  NASAA Intensifies Access to Capital Debate

  • For investors in startups and small businesses, the lack of liquidity can be a significant barrier. Regulatory changes aimed at improving the liquidity of private securities could make it easier for investors to sell their stakes, thereby attracting more participants who are concerned about the ability to exit their investments.
  • By reducing the complexity and cost of reporting and disclosure requirements for small businesses, the act could make it more attractive for these entities to seek investment from a broader audience. This approach balances the need for investor protection with the goal of reducing burdensome obligations that can deter small businesses from seeking public investment.
  • The act may also include provisions to support the development and use of innovative investment platforms and technologies that facilitate easier access for investors. This could involve regulatory sandboxes or other measures that allow for the testing of new financial technologies and investment models without the full weight of regulatory compliance from the outset.

Outlook

As we await its final approval and implementation, the outlook for entrepreneurs seeking to bring new ideas to market is decidedly more optimistic, signaling a shift towards a more accessible and dynamic financial ecosystem.  These regulatory changes are designed to create a more inclusive investment ecosystem, where more individuals have the opportunity to invest in startups and small businesses.

See:  NCFA Response to the Modernizing Ontario’s Capital Markets Consultation Taskforce

By lowering barriers to entry and making it easier for companies to raise capital, the Expanding Access to Capital Act aims to foster a more vibrant and diverse economic landscape.   Canadian capital markets and regulators are you listening?


NCFA Jan 2018 resize - U.S. Expanding Access to Capital Act Boosts Startup FundingThe 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, artificial intelligence, 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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A Guide To Financing Your Business’s IT Infrastructure Upgrades

March 4, 2024

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In today’s dynamic business landscape, having an advanced IT infrastructure is essential for staying competitive. Upgrading technology enhances efficiency, strengthens data security, and supports expansion efforts. However, the financial commitment for such upgrades is significant, demanding careful planning and strategic financial management.

Considering IT infrastructure upgrades necessitates a detailed evaluation of your organization’s current and future needs. Despite the substantial investment, a well-timed upgrade can significantly improve productivity and operational efficiency.

Read on to learn how to effectively finance your business’s IT infrastructure upgrades and begin your journey toward technological advancement.

Explore Various Financing Options

Financing your business’s IT infrastructure upgrades is a pivotal step toward future-proofing your operations and enhancing efficiency. Selecting the right financing option can make a significant difference in the implementation and success of these technological improvements.

Below are some key avenues to consider when looking to fund your IT infrastructure upgrades:

  • Business loans: Opting for secured or unsecured loans offers a straightforward way to access the capital needed. Secured loans might come with lower interest rates, given the collateral involved, whereas unsecured loans provide quick funding without the need to pledge assets. This makes business loans a versatile option for businesses seeking immediate financial support for IT upgrades.
  • Leasing: This option breaks down the cost of IT equipment into manageable monthly payments, making state-of-the-art technology more accessible. Leasing also offers flexibility to upgrade to newer technology more frequently.
  • Government grants and incentives: Many governments provide grants and incentives to boost technological innovation. These can significantly lower the financial barrier to upgrading IT systems, especially for projects that align with specific government interests like cybersecurity or green IT.

It’s crucial to assess each option’s fit with your business’s financial health and growth strategy. Interest rates, repayment terms, and the overall impact on your company’s cash flow are key factors to consider. Some options offer lower upfront costs, while others provide more flexibility or non-repayable funding, depending on your eligibility.

Leverage Tax Incentives And Depreciation

Maximizing financial advantages through tax incentives and depreciation is a strategic approach to managing the costs associated with IT infrastructure upgrades. These tax benefits can substantially lower the effective cost of new technology investments, making it easier for businesses to implement necessary updates.

Below are key strategies to consider:

  • Section 179 deduction: The Section 179 deduction permits companies to fully deduct the cost of eligible equipment and software acquired or financed within the tax year. The immediate deduction can significantly lower your business’s taxable income.
  • Bonus depreciation: This is typically used after the Section 179 spending cap is reached. Bonus depreciation can be claimed on new or used equipment, allowing for the acceleration of depreciation. It’s a valuable tax saving that can reduce the cost of capital investments in new technology.

Engaging with a tax professional to explore these options can provide tailored advice, ensuring your business maximizes its tax benefits. This step is crucial for understanding the specific qualifications for each incentive and how they apply to your investments in IT infrastructure.

AdobeStock 682811212 IT Infrastructure Professional - A Guide To Financing Your Business’s IT Infrastructure Upgrades

Use Crowdfunding Or Angel Investors

Turning to unconventional funding sources like crowdfunding and angel investors can offer your business a unique opportunity to finance IT infrastructure upgrades without relying solely on traditional loans or capital reserves.

Below are insights into these innovative financing avenues:

  • Crowdfunding: This approach allows businesses to raise small amounts of money from many people, typically via the Internet. Platforms such as Kickstarter and Indiegogo let you present your project to potential backers who can contribute funds in exchange for rewards or equity. Crowdfunding is a way to raise funds, validate your project, and engage with your customer base.
  • Angel investors: These wealthy individuals fund new business ventures, typically in return for convertible debt or a share of equity ownership. Often, they are retired business founders or executives who seek investment opportunities not just for financial gain but also to provide mentorship. They bring experience, management advice, and essential networking opportunities.

By exploring these options, you gain access to funding that can be more flexible than traditional loans and might not require collateral. However, it’s essential to consider that both methods involve sharing information about your project with the public or potential investors, which could affect your business in various ways.

Conclusion

Financing IT infrastructure upgrades requires a multifaceted approach that balances innovation with financial prudence. Whether through traditional loans, leasing, government incentives, tax benefits, or tapping into the power of crowdfunding and angel investors, businesses have various tools to support technological advancement.

See:  CCA Report: Investment Crowdfunding 2024: Key Insights

Each option presents advantages and considerations, emphasizing the importance of a strategy tailored to your business’s unique needs and goals. Embrace these opportunities to enhance your operational efficiency and secure a competitive edge in the digital era.


NCFA Jan 2018 resize - A Guide To Financing Your Business’s IT Infrastructure UpgradesThe 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, artificial intelligence, 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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Wealthtech Startup, Allocations, Surpasses $2 Billion AUA

AI Innovation | March 1, 2024

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Streamlining Investment Documents and Democratizing Deals with AI

Per VentureBeat's briefing, Allocations, a pioneering fintech startup, has achieved a huge milestone by surpassing $2 billion in assets under administration, showcasing the burgeoning demand for alternative investments and the transformative power of artificial intelligence (AI) in the financial sector.  Founded by Kingsley Advani, Allocations uses AI to streamline the process of private capital fundraising, making it faster, more efficient, and less costly. The platform's AI capabilities enable the instant generation of customized legal documents necessary for fund launching, such as private placement memorandums and operating agreements, a task that traditionally consumed hours of legal work and significant financial resources.

  • By employing machine learning models trained on over 100,000 investment documents, Allocations can generate legal paperwork in seconds, a stark contrast to the traditional, labor-intensive process. This efficiency allows each employee at Allocations to service up to 70 funds, dramatically outperforming the industry average.

See:  Revolutionizing the Legal Function Through Legal Process Automation

  • Allocations is not just about efficiency; it's also about accessibility. The platform has facilitated investments in high-profile deals, including a $23 million investment in Leeds United and SPVs for SpaceX, OpenAI, and Anthropic. By automating the creation of legal entities and regulatory filings, Allocations lowers the barriers to entry for investing in alternative assets, enabling deals with minimum investments as low as $5,000.
  • Allocations plans to launch a mobile app to cater to a generation that prefers managing finances via smartphones, aiming to power over $1 trillion in private market assets by 2030.

May Help

  • By automating the generation of legal documents and facilitating the launch of funds with minimal effort, Allocations lowers the barrier to entry for smaller players. This democratization allows smaller asset managers and family offices to compete more effectively with larger institutions.
  • The platform enables the creation of special purpose vehicles (SPVs) with lower minimum investments, making it feasible for angels and retail individuals to participate in deals that were previously out of reach due to high capital requirements. This opens up opportunities for a broader range of investors to engage in private equity, venture capital, and other alternative investments.

See:  WealthTech in Asia-Pacific: A Trillion-Dollar Opportunity

  • By facilitating easier access to capital through SPVs and other investment vehicles, Allocations can help startups and emerging companies find the funding they need more efficiently, potentially leading to a more vibrant and diverse innovation ecosystem.

Might Hurt

  • The automation of tasks such as generating legal paperwork and performing compliance checks, which traditionally required significant manual effort and expertise, could reduce the demand for these services from traditional providers. This might lead to a shift in the market, where traditional roles such as fund administrators and law firms need to adapt to the new technology-driven landscape.
  • While not directly hurt, large institutional investors might find the competitive landscape changing as smaller investors gain access to deals that were once exclusive to them. This could lead to increased competition for high-quality investment opportunities.

See:  AI Metamorphosis in Venture Capital

  • Individuals or entities that are slow to adopt new technologies or are skeptical of AI's role in investment decision-making might find themselves at a disadvantage compared to those who embrace these innovations.

Conclusion

AI-driven efficiency and accessibility are breaking down traditional barriers. This evolution empowers a wider range of investors to participate in alternative assets and also fosters a more inclusive and dynamic financial ecosystem.


NCFA Jan 2018 resize - Wealthtech Startup, Allocations, Surpasses $2 Billion AUAThe 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, artificial intelligence, 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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CCA Report: Investment Crowdfunding 2024: Key Insights

Report | Feb 27, 2024

CCA Regulated Investment Crowdfunding Trends Report 2024 - CCA Report:  Investment Crowdfunding 2024: Key Insights

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Impact of Investment Crowdfunding: Insights from the 2024 Trends Report

Crowdfund Capital Advisors just opened up complimentary access to the "Investment Crowdfunding Trends 2024" report, a comprehensive analysis leveraging data up to December 31, 2023, offering invaluable insights into RegCF markets in the U.S., trends, and impact on the economy, business, and investors.  The article below is a snapshot of living markets.  Download the data-driven report to stay informed and learn the financing and investment opportunities in regulation crowdfunding markets to see if it's right for your portfolio or business.

Overview of Investment Crowdfunding (up to Dec 2023)

Investment crowdfunding has emerged as a transformative force, redefining access to capital and igniting economic growth.

See:  Neiss Advocates for Economic Growth via H.R. 2799

  • Issuers/Deals: Over 6,800 issuers with more than 8,000 deals
  • Cities across the United States: Participation from over 1,800 cities
  • Funded Capital: $2.2 billion
  • Investors: More than 1.9 million
  • Jobs Created: Approximately 310,000
  • Economic Stimulus: $6.8 billion annually
  • Enterprise Value: $75.6 billion
  • Compound Annual Growth Rate (CAGR): 59%

Platform-Specific Insights

  • Investor Count by Platform: The top 3 platforms receive most of the industry’s checks written
  • Average Check Size by Platform: Fundify has the largest average check size
  • Success Rate by Platform: Success rates vary, depending significantly on minimum funding targets
  • $1m+ Raise Count by Platform: Wefunder leads in the million-dollar club
  • Economic Stimulus by Platform: Issuers on StartEngine have the greatest economic impact

See:  U.S. RegCF Trends: Investment Engagement by Age

Business Maturity Insights

  • Investor Preference: Investors generally prefer investing in established companies
  • Average Check Size by Business Maturity: Larger checks are written to established issuers compared to startups
  • Success Rate by Business Maturity: Established issuers have a higher success rate
  • $1m+ Raise Count by Business Maturity: More established issuers are in the $1M+ club, though many startups also achieve this milestone

Other Insights

  • Total Investments: Investors show a preference for funding equity issuers despite opportunities in debt
  • Average Raise: Equity issuers tend to raise the most
  • Investor Count: Equity investors far outweigh debt investors
  • Average Check Size by Financing Type: Larger checks are typically written to debt issuers, possibly attracted to immediate returns
  • Deal Count by Region: The West, particularly California, leads in deal count and investment amounts, showcasing regional disparities in crowdfunding activity
  • Investments and Revenue Growth: There's an average growth in revenue of 284.5% between the year an issuer was successful and the following year, indicating significant financial growth potential for companies utilizing investment crowdfunding

See:  Current State of Crowdfunding in Europe 2023 Market Report

  • Business Longevity: Only 17.8% of funded companies have gone out of business, compared to the Bureau of Labor and Statistics report that approximately 50% of all new businesses fail within 5 years, suggesting a higher sustainability rate for crowdfunded companies
  • Role in Financing: Investment crowdfunding dollars as a percentage of VC pre-seed/seed investments are increasing, highlighting its growing importance as an alternative financing source

Conclusion

This "Investment Crowdfunding Trends 2024" is data-driven proof of the sector's resilience, potential, and transformative impact, offering significant alternative finance options for entrepreneurs, investors, and the broader economy.  Through democratizing access to capital, fostering job creation, and stimulating economic growth, investment crowdfunding stands as a beacon of progress and opportunity.   Stay tuned for an upcoming episode of Fintech Fridays podcast with Sherwood Neiss, Co-Founder of Crowdfund Capital Advisors.


NCFA Jan 2018 resize - CCA Report:  Investment Crowdfunding 2024: Key InsightsThe 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, artificial intelligence, 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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NASAA Intensifies Access to Capital Debate

Access to Capital | Feb 5, 2024

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NASAA Opposes Expanding Access to Capital Act, Citing Investor Protection Concerns; Industry Leaders Disagree

In a recent letter, the North American Securities Administrators Association (NASAA) has voiced strong opposition to the Expanding Access to Capital Act (H.R. 2799), a piece of legislation aimed at enhancing financing access for small firms and entrepreneurs. This opposition is met with concern from private capital market leaders including investment crowdfunding platform operators, who argue that the Act could democratize capital access for everyday Americans and stimulate economic growth.

See:  AOIP Advocates for Enhanced Capital Formation and Investment Opportunities for SMEs

  • Sponsored by Congressman Patrick McHenry, H.R. 2799 seeks to improve small firms' and entrepreneurs' access to financing and broaden investment opportunities for smaller investors.
  • The Act includes provisions for a "micro-offering exemption" allowing securities offerings of $250,000 or less, among other measures to streamline capital formation and investment processes.
  • NASAA criticizes multiple titles within H.R. 2799, particularly those facilitating private placement brokers and finders, creating micro-offering exemptions, limiting liability for funding portals, and easing trading of private securities off-exchange.  NASAA's opposition may stem from fears of reduced state authority in securities regulation, continuing a history of resistance against federal measures perceived as limiting state powers.

Industry Reaction

Rebecca Kacaba, CEO of DealMaker, criticizes NASAA's opposition, highlighting the Act's potential to expand investment opportunities and drive job creation and economic opportunity, reflecting the broader dialogue on how best to support small businesses and investors in an evolving economic landscape.

NASAA’s opposition to HR 2799 and the Improving Crowdfunding Opportunities Act is concerning. The act serves to expand investment opportunities for everyday Americans. NASAA’s focus appears to be on state rules, rather than the identification of inadequate investor protections for Americans. As the SEC has noted, large investors have a limited focus on smaller companies, but HR 2799 provides [an improved] pathway for smaller investors to finance these businesses. This, in turn, drives job creation and economic opportunity. We continue to support the democratization of access to capital.”

As this debate continues, the perspectives of both investor protection advocates and proponents of democratized capital access will need to balance both safety and growth in the financial markets.

See:  UK Changes to HNW Rules Will Impede Access to Capital

Background:  The "Improving Crowdfunding Opportunities Act" represents a significant effort to refine and enhance the crowdfunding ecosystem in the United States. By reducing regulatory burdens, clarifying the roles and liabilities of funding portals, and expanding the opportunities for both issuers and investors, the Act aims to make crowdfunding a more attractive and viable option for raising capital. These changes could lead to increased innovation, support for small businesses, and broader investment opportunities for the general public, contributing to economic growth and the democratization of investment.

Importance

The debate over H.R. 2799 underscores a critical tension between state-level investor protection efforts and the push for federal legislation to facilitate broader access to capital and investment opportunities. The outcome of this legislative process could significantly impact capital formation, investment opportunities, and economic growth, making it a matter of keen interest for all stakeholders in the financial and entrepreneurial ecosystems.


NCFA Jan 2018 resize - NASAA Intensifies Access to Capital DebateThe 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, artificial intelligence, 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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Seedrs Restructures 15% of European Workforce

Equity Crowdfunding | Jan 24, 2024

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Seedrs is laying off 15% of its European workforce as part of a restructuring effort. This decision will affect around 15 employees.

As reported by Sifted, Seedrs (part of the US-based Republic) a prominent crowdfunding platform in Europe, has recently reduced its workforce by 15% across Europe. This move is a part of Seedrs' strategic realignment in response to challenging market conditions and is seen as a necessary step for ensuring the long-term sustainability and growth of the company.

See:  Seedrs to Offer Investors Venture Capital Trusts

Founded in 2009 in the UK, Seedrs has played a leadership role in early-stage funding for startups, including notable companies like Revolut. However, the company has faced various challenges recently, including a blocked merger attempt with Crowdcube by the UK competition watchdog in 2021. Subsequently, Seedrs was acquired by Republic in a deal valued at $100 million.

The company is closing its offices in Spain and Sweden, aligning with a strategic shift to focus on areas closer to profitability. Despite these closures, Seedrs will continue to support European companies across the continent, not withdrawing entirely from these markets.

The layoffs, affecting around 15 employees, are part of a broader trend in the venture capital and private equity markets, which have experienced a downturn over the past couple of years. Despite these challenges, some industry observers anticipate a potential rebound in 2024 as interest rates begin to stabilize and investors seek higher returns.

See:  Equity Crowdfunding Growth: It Took UK Seedrs 8 Years to Raise the First £1Billion and Only 2 Years for the Next Billion

Recent Investment Platform Innovations

  • Many investment platforms, including Seedrs, have been focusing on integrating advanced digital solutions to streamline the investment process. This includes automating due diligence, investor communications, and post-investment monitoring.
  • Seedrs has been a leader in developing secondary markets for crowdfunding investments, allowing for greater liquidity and exit opportunities for investors. This innovation has been a significant draw for both investors and startups.
  • European platforms are increasingly facilitating cross-border investments, overcoming traditional geographical barriers. Seedrs, for instance, made strides in enabling startups to raise funds across the EU, UK, and the US.
  • Some platforms are exploring the use of blockchain technology for tokenization of assets, which can offer more efficient, transparent, and secure transactions.

Outlook

The restructuring might temporarily affect investor confidence in crowdfunding platforms. However, the focus on sustainability and profitability could lead to long-term benefits.  As some platforms streamline operations, there may be more consolidation in the market, potentially leading to fewer but stronger players.

See: 

AI Metamorphosis in Venture Capital

R/Note: Tokenized VC Dividends on Avalanche

Specific sectors like green technology, health tech, and social enterprises might see increased crowdfunding activity due to growing investor interest in these areas.  Ongoing regulatory developments could further shape the landscape, potentially opening up new opportunities or imposing additional constraints. The European equity crowdfunding market is expected to remain resilient, adapting to economic challenges and evolving investor needs.


NCFA Jan 2018 resize - Seedrs Restructures 15% of European WorkforceThe 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, artificial intelligence, 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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