Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Equity Crowdfunding, Alternative Funding
The outlook for debt and equity crowdfunding in 2014
Venture Beat | Coastal Shows | Jan 14, 2014
Crowdfunding leaders converge at the industry’s main event: the Crowdfund Global Expo, Jan. 30-Jan. 31 at the San Diego Convention Center.
The securities crowdfunding industry is leading the charge for huge changes to capital formation, wealth building, and investing. In September, the Securities and Exchange Commission implemented rules governing Title II of the Jumpstart Our Business Startups (JOBS) Act, which permits companies to advertise their private securities offerings to accredited investors. Following that, the SEC announced two months later at its Forum on Small Business Capital Formation that more than 300 companies sent filings to the SEC and raised some $2.2 billion in capital via general solicitation.
Crowdfunding is no longer a trendy buzzword — it’s a movement with active participants, proven financial potential, and maturing seemingly by the month.
Equity-based crowdfunding is on the horizon as the next definitive step for investors hoping to secure a stake in both early-stage ventures and more established companies. On Oct. 23, the SEC released a 500-plus page document detailing the proposed rules and regulations for Title III of the JOBS Act, the piece of legislation that will legalize equity crowdfunding for unaccredited (aka everyday) investors.
View: Canadian resources for proposed U.S. equity crowdfunding rules
The 90-day comment period for these proposed rules will end Feb. 3, and global professionals from traditional institutions such as banks and real estate development companies are poised to enter the sector. As the industry matures and offers cutting-edge user interfaces and access to higher-quality deal flow, online private securities offerings across the board will naturally increase.
The Crowdfund Global Expo presents the leaders of the investment and crowdfunding industries. Dr. Richard Swart, who heads the Crowdfunding Research Program at the University of California, Berkeley, has cited several experts who project that the size of the securities crowdfunding market will range from “$3.98 billion (Nest, Neiss, Stralser & Fleming 2013) to as much as $300 billion over the coming years depending on the level of enabling regulation adopted by governments.”
View: Launch Angels close first equity crowdfunding fund
Finance, real estate, and legal professionals are not only working to disrupt the investment landscape but are also creating new methods for financing small-business loans, debt transactions, and even participating in high-end real estate buyouts.
“No one knows exactly what crowdfund investing performance numbers will look like a year from now. What we do know is that real estate as an asset class has enormous potential,” says Todd Lippiatt, the managing principal of Aristone Realty Capital and CEO of Propellr. “There’s $1 trillion in the 506 market of securities offerings alone. That’s the same size as last year’s entire IPO market. Accredited investors have already shown they’re ready. Our own investors have earned, on average, more than 22 percent return on an annual basis.”
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Michigan Governor Signs Intrastate Crowdfunding Exemption
Forbes | Alan McGlade | Dec 31, 2013
Yesterday Governor Rick Snyder signed Public Act 264 which establishes an intrastate exemption for crowdfunding in the state of Michigan. This allows Michigan residents to invest in businesses that reside within their state through crowdfunding platforms, essentially circumventing federal regulation. According to Governor Snyder, “This legislation enacts useful reforms that will streamline government procedures and eliminate confusing or unnecessary regulations.
What is particularly impressive about P.A. 264 is the speed with which it moved through the legislature and ended up on the Governor’s desk. Republican State Representative Nancy Jenkins, who introduced the legislation, held a hearing before the Michigan House Commerce Committee on October 16 and a little over two months later it became law with overwhelming bi-partisan support.
View: FCAA Approves Canada's First Intra-Provincial Equity Crowdfunding Exemption in Saskatchewan Dec 6, 2013
Michigan is the latest state to implement an intrastate crowdfunding exemption and others are expected to follow suit. Local leaders believe that broad adoption of crowdfunding is inevitable and that they need to take control of their own fate. Nancy Jenkins summed up the sentiment, “By creating an intrastate exemption we are allowing Michigan residents to invest in Michigan businesses and create more jobs at the same time.
In the meantime, the JOBS Act, which authorizes crowdfunding at the national level, is winding its way through the rulemaking process. Title II which allows “general solicitation” of private placements to accredited investors is already in place. The rules for Title III, which permits advertising to non-accredited investors, were published on October 23 for public comment and are expected to be finalized in the first quarter of 2014.
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Open Avenue wants to bring crowdfunding to real estate
Gueph Mercury | By Terry Pender | January 8, 2014
KITCHENER — A new local company wants to bring a crowdfunding platform to the real estate investment market.
Internet-based fundraising campaigns on sites such as Indiegogo and Kickstarter have helped artists, businesses and inventors raise millions for projects.
A local inventor of a pen made of magnets raised more than $800,000 in a crowdfunding campaign. Another inventor raised enough to launch the smartwatch called Pebble. A local director raised more than enough to complete the short film Suddenly Super.
Now, a company called Open Avenue wants to bring crowdfunding to real estate, but that will only happen if the Ontario Securities Commission changes its regulations. The commission published consultation papers regarding crowdfunding and held hearings last year. Proposed changes could be made public in the coming months.
Related: OSC announces that it will publish its crowdfunding exemption proposal for public comment by Q1, 2014
Crowdfunding would allow individuals to invest in existing apartment buildings or in buildings under development — an opportunity that currently is available only to wealthy individuals or institutions. Equity crowdfunding would also allow small and medium-size businesses to raise capital without the time and expense of issuing detailed financial reports and offering shares for sale on the stock market.
Tim McKillican, president and co-founder of Open Avenue, said the terms will run for five to seven years.
McKillican said the objective is to see returns of eight per cent a year for apartment buildings that already exist, and 12 per cent for buildings under development.
The higher returns for buildings under development reflect the risk involved in buying distressed or old properties that need extensive renovations. The rate of return for new projects reflects the cost of getting the approvals, builders and tenants in place for a new development.
"We are the first real estate crowdfunding portal in Canada," McKillican said. "There are a few in the States that have done it, but we are the first to have launched in Canada."
Related: Summary of Canadian Regulations
View: Prodigy Network Bets Big on Crowdfunding Commercial Real Estate
McKillican joined forces with Revel Development Corp., a local developer of infill rental properties. Revel has three properties — two existing and one in development — that are included in the initial offerings for the crowdfunding proposal.
"It's a new way of being able to invest in your community for individuals that does not exist right now," McKillican said. "We are pretty excited about it."
The Revel properties are all in Kitchener, and include the Cedar Brownstones on Cedar Hill in the downtown, the Doon Village Brownstones in the south end of the city, and the proposed Lancaster Brownstones at 361 Lancaster St.
Stephen Litt, president of Revel and co-founder of Open Avenue, said investments can be made by people living in one of the units as a way of building equity, or by others who are who are not living in one of the Revel units.
"The grand vision is that anyone with any sort of money can invest in commercial-grade real estate at any dollar value," Litt said.
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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada crowdfunding hub providing education, advocacy and networking opportunities in the rapidly evolving crowdfunding industry. NCFA Canada is a community-based, membership-driven entity that was formed at the grass roots level to fill a national need in the market place. Join our growing network of industry stakeholders, fundraisers and investors. Increase your organization’s profile and gain access to a dynamic group of industry front runners. Learn more About Us | Prezi or contact us at casano@ncfacanada.org.
Launch Angels Closes First Equity Crowdfunding Fund
Crowdfund Insider | By JD Alois | Jan 6, 2013
Investment platform Launch Angels has closed their first venture fund, Where Angels Fund (WAF), which raised approximately $1 Million. WAF will invest in early stage companies with an emphasis on mobile and consumer internet companies. As WAF closes, Launch Angels is presently securing commitments on its second and third funds, the Early Traction Fund and its Women-Led Fund. All funds are open to any accredited investor. Investments will be augmented by Launch Angels’ equity crowdfunding opportunities.
“The Where Angels Fund empowers smart people looking for smart investments,” said Michael Collins, Co-founder and Lead Manager of Launch Angels. “Launch Angels is a forward-looking investment vehicle for accredited investors interested in venture deals. We make the whole process easier and more secure by scouting and vetting deals, doing paperwork, and tracking portfolios.”
Toronto Event (Jan 15, 2013): Crowdfunding - An Evolution in the Canadian Capital Markets
The WAF is the crystallization of interest in early-stage investing among some current and former Where, Inc., employees. Sarah Hodkinson, Director of Marketing & Sales Strategy, PayPal Media Network, is one WAF participant.
Related Link:
Rise of Angels and Crowdsourcing
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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada crowdfunding hub providing education, advocacy and networking opportunities in the rapidly evolving crowdfunding industry. NCFA Canada is a community-based, membership-driven entity that was formed at the grass roots level to fill a national need in the market place. Join our growing network of industry stakeholders, fundraisers and investors. Increase your organization’s profile and gain access to a dynamic group of industry front runners. Learn more About Us | Prezi or contact us at casano@ncfacanada.org.
How to Set Up an Equity Crowdfunding Campaign!
CrowdClan | Michael Ibberson | Jan 6, 2014
Understanding Equity Crowdfunding in North America and Europe
Equity crowdfunding will continue to rise once the newest regulations have been ironed out and approved. In the meantime, a few start-ups have already launched campaigns for capital in North America, begging the question, “How does one set-up an equity crowdfunding campaign?”
View: Saskatchewan Approves Equity Crowdfunding in Canada
Now that businesses can advertise their want of investment, many of the components of a typical rewards-based campaign transfer over (i.e. social media, security, goal making, storytelling, etc). With this said, there are vast differences to consider if you are an entrepreneur in North America. Let’s take a look at a basic equity crowdfunding model. Keep in mind that these steps will change slightly portal-to-portal, so do additional research prior to launching your campaign:
Create a Profile and Submit Your Financials
Creating a business profile is step one. Doing this beforehand is a great idea to let investors know your future intentions. Every portal will require you to disclose certain information pertaining to your business’ financials. Once this application has been reviewed and approved, you are free to move on to the next step — the business plan.
Posting your business plan helps investors understand the value of your offered equity as well as the promises and risks inherent in your model. The business plan is a very important aspect of the campaign. Since there will be a standard of disclosure, the business plan is the main creative focus for start-ups to attract and intrigue investors.
Related: Canada's premier background check company, Inline Reference Check
Before ever going live, you will also need to establish crowdfunding rounds. An example of this could be private networks versus public networks during the first two weeks. Before starting this phase, however, you should have already begun soliciting and conversing with potential investors in the industry. Like in the rewards-based model, pre-existing contacts is a huge asset.
Finding Investors
Investors registered on each individual website will be able to view your business’ profile and proposed plan. Investors cannot access your disclosed financials until the project creator has given the green light. For security purposes, many portals have measures in place that log investor activity to ensure proper behavior while reviewing such sensitive information. Remember that even if the investor shows interest in your start-up, they can still back-out before the deal closes. Similarly, if your campaign does not reach its goals, all pledged investments are returned in full (all-or-nothing models seem to be most popular so far).
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It might cost you $39K to crowdfund $100K under the SEC’s new rules
VB | Guest post by Sherwood Neiss | January 2, 2014
On October 23, 2013 the Securities and Exchange Commission (SEC) issued the proposed rules for Regulation Crowdfunding. The 585-pages included an explanation of the rules, the feedback it received, and a cost/benefit analysis.
View: Canadian resources for proposed U.S. Equity Crowdfunding Rules
A cost/benefit analysis is common in many regulations to give the public an estimate of the costs associated with implementing the proposed regulation. It answers the question, “Do the costs outweigh the benefits?” For Regulation Crowdfunding it sheds light on the question, “How much will it cost to raise money via crowdfund investing, and how do I keep it to a minimum?” Here’s a closer look at what that analysis tells us.
The Background
The legislation requires that the selling of crowdfund securities take place on registered websites. The websites hosting the transactions are known as funding portals or broker dealers. These entities must register with the Securities and Exchange Commission (SEC) and the Financial Intermediary Regulatory Authority (FINRA). The legislation mandates investors have access to a business plan, use of proceeds, a valuation of the company, and financials. Firm may need to retain a Certified Public Accounting firm to certify the company’s financials or audit the company’s books. Every step costs money, from completing the required documents to retaining professional services to assist in compliance.
Related Link: What the proposed U.S. Crowdfunding rules could cost businesses
The SEC looked at 3 variables:
a) the success fee (in terms of a percent (%) of proceeds) paid to websites for facilitating the transaction,
b) the compliance cost related to the preparation and filing of individual forms both during and after a campaign, and
c) the costs for a Certified Public Accountant (CPA) review or audit (an expense that scales over $100,000). Certain costs like the success fee as a percent of the raise are variable, others scale like the CPA/Audit costs for raises over $100,000 and others like the compliance costs are fixed. The SEC provided both low and high estimates for these costs based on assumptions and surveys it took.
For raises under $100,000, the SEC estimates portal and compliance fees will eat up between 12.9% and 39% of the money raised. For raises over $100,000 but less than $500,000, that figure may drop down to 7.96%. And for raises over $500,000 but under $1M, it may drop to 7.66%.
For those of you who just want to see a graph, my team at Crowdfund Capital Advisors plotted that below. We decided to stick with industry estimates and make individual calculations for every extra $1,000 in capital sought. This is close to what it looks like:
The Strategy
If you are looking to raise money via crowdfunding, the moral of the story is, try to raise as close to the next threshold as possible. The thresholds are at $100,000, $500,000, and $1M. So if you need to raise $60,000 for your business, aim for $99,000. Not only will you pay less for that money but you will have more of it. Of course, this assumes you will be able to secure $99,000 from backers. Same holds true for the $100,000 to $500,000 levels and over $500,000 level. While this was not the intent of the legislation (to force companies to seek more capital than they need), it may make sense when trying to decrease the cost of raising that money.
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2014 Trends for Business Startups and Future Funders
Crowdsourcing | David Drake guest post | Dec 27, 2013
David Drake brings out the crystal ball and writes in to make some crowdfunding predictions for 2014. Attention potential fans and future funders, or to anyone who is enthusiastic about someone’s business or ventures! Previewing part of financial industry trends can be your stepping stone in befriending Mr. Financial Capital. And special mention to the budding entrepreneurs who are checking out at the largest and famous crowdfunding sites for their programs, services, and platforms. Make way for their forecasting stage!
Looking Forward to Accredited Crowdfunding:
Italy Leads the First Equity Crowdfunding Law in the World
“You don’t need to be an Italian to crowdfund in Italy!” Indeed, open to any nationality, Italy’s equity crowdfunding allows all people around the globe to crowdfund in Italy. Italy will enter crowdfunding with their new law with challenges that only a broker dealer reciprocity agreement between FINRA (Financial Industry Regulatory Authority) and SEC (Securities and Exchange Commission) with Consob [Italian Securities and Exchange Commission] could overcome. The enactment of regulations for equity crowdfunding aims to private investments.
Crowdfunding Sites and Platforms Perform Even Better
The crowdfunding phenomenon is their common denominator. These online platforms will not only help you raise money fast for your business, but will also help you get ready to start a really viable one for any specific social, personal, entertainment, or other purposes. Raise awareness and stay in touch with the news, special offers, and updates!
Related: OSC puts equity crowdfunding on agenda for Q1 2014
- CircleUp, a popular equity crowdfunding site will lose its leadership as 3 new entrants will surpass their growth by year end 2014. Israeli OurCrowd has already surpassed its growth in the past 9 months as they now have closed $30 million plus!
- Lending Club will aim for an IPO as they tripled in size, facilitating a total amount of nearly $3.2 billion as of December 2013.
- SyndicateRoom and Angels Den in the UK will find half a dozen imitators to propagate the lead angel investment structure for crowdfund investors.
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