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
Why financial services regulation is crucial to fintech
fscom | by Philip Creed | Jun 30, 2017
Harnessing internet and mobile technologies to create new and superior financial products, FinTech and RegTech firms are uniquely placed to compete with long-established firms and institutions.
Their offerings often far exceed the capabilities of the out-dated services and systems provided by their perennial competitors and can attract tremendous consumer interest.
Yet herein lies the danger.
Whilst innovation, competition and market disruption are always in the interest of the consumer, FinTech and RegTech firms typically explore technologies so new that most regulators struggle to keep up.
In an industry crippled by scepticism and consumer doubt, this is a precarious position for FinTech innovators. A recent survey by Bumberg Capital, a San Francisco-based venture capital firm, found that:
- 70% of those surveyed believe that ‘new solutions such as digital banking, online lending, payments and financial services, are making financial transactions easier than ever’,
- 65% of those surveyed agree that ‘FinTech levels the playing field by providing access to services previously only available to the wealthy’, however;
- 72% of those surveyed ‘listed security as something they worry about with the new banking services online and they are not completely confident their financial information is secure or private’.
The implications are clear. FinTech firms are widely regarded to provide genuine solutions to traditional banking and payment systems, but their public perception is one of vague distrust.
Financial services regulation is crucial to the growth of the FinTech industry.
Not only does regulation protect the end-user from unscrupulous start-ups and innocent failures, but, if done correctly, can foster a truly competitive environment while re-establishing public confidence in the sector and increasing the regulator's understanding of innovative solutions.
The right regulation
The United Kingdom’s Financial Conduct Authority (FCA) is the regulatory body for Great Britain and Northern Ireland, and leads the way in championing a liberal approach to regulation, with a strong focus on promoting both innovation and competition.
The ‘regulatory sandbox’ initiative is part of the FCA’s Project Innovate, and is promoted as a safe space for companies to test propositions that have not previously been offered in the UK.
It allows innovative firms to work with their regulator to trial products in a live environment, promiting effective innovation and competition by allowing FinTech firms to skip the traditional routes to regulatory certainty.
Products are tested in a live, but regulated, environment against real-world rules where, if the product or service fails, there are no consequences for the consumer or the innovator – in this instance, the FCA provides feedback so the innovator can make the necessary changes, and the product can be tested again.
See: Competition Bureau suggests Canadian FinTech sector’s slow growth due to regulation, consumer complacency
This is a marked improvement on the status quo – as firms can often lose their market advantage whilst working through a rigorous authorisation process – and has been held up as an example from which regulatory bodies across the world can learn.
Indeed, Singapore, Hong Kong and Australia employ similarly agile regulatory systems. The United States Office of the Controller of the Currency (OCC) recently stated it is moving to establish a framework for ‘responsible innovation’.
The ‘regulatory sandbox’ is a prime example of the effective regulation that FinTechs and RegTechs require, and it’s far better than the alternative.
A dire alternative
Lax regulation would permit a faulty product to enter the marketplace, where it would fail (and early adopters would lose their money), whilst excessive regulation would prohibit the product from ever entering the marketplace (with the potential innovation lost forever).
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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at ncfacanada.org.
FSB warns of third-party FinTech risk
Financial Stability Board | Jun 27, 2017
Technology-enabled innovation in financial services, or FinTech, is growing rapidly. As a result, the FSB has been analysing the potential financial stability implications from FinTech with a view toward identifying supervisory and regulatory issues that merit authorities’ attention.
This report identifies 10 areas that merit authorities’ attention, of which three are seen as priorities for international collaboration:
- managing operational risk from third-party service providers,
- mitigating cyber risks; and
- monitoring macrofinancial risks that could emerge as FinTech activities increase.
Addressing these priority areas is seen as essential to supporting authorities’ efforts to safeguard financial stability while fostering more inclusive and sustainable finance.
See: Competition Bureau suggests Canadian FinTech sector’s slow growth due to regulation, consumer complacency
While there are currently no compelling financial stability risks from emerging FinTech innovations given the relatively small size of the FinTech relative to the financial system, experience shows that they can emerge quickly if left unchecked.
To draw out the supervisory and regulatory issues from a financial stability perspective of FinTech, the FSB developed a framework that defines the scope of FinTech activities to be covered, classified by their primary economic functions; therefore the analysis is technology neutral. Applying the framework to various case studies of FinTech activities helped to draw out the potential benefits and risks from FinTech. Potential benefits identified in the report include decentralisation and increased intermediation by non-financial entities; greater efficiency, transparency, competition and resilience of the financial system; and greater financial inclusion and economic growth. Potential risks include institution-specific micro-financial risks that could emerge and system-wide macro-financial risks for instance increased connectedness and correlation risk. The FSB will continue to monitor and discuss the evolution of the potential financial stability implications of FinTech developments.
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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at ncfacanada.org.
German Real Estate Crowdfunding Market Booms
CrowdfundInsider | By Therese Torris | June 21, 2017
The German real estate crowdfunding market is set to more than triple in size this year. Real estate developers, asset managers, and, most recently, real estate agents are joining the fray of real estate crowdfunding platforms, trying to unseat the handful of leaders who have already established a strong leadership position in this very young market.
The road ahead for the German real estate crowdfunding market has been cleared. The threat of being excluded from the scope of application of the crowdfunding regulation, the Kleinanlegerschutzgesetzt (KASG), was taken off the table last month. The crowdfunding market can move ahead on its exponential growth path.
Exponential Growth
The German real estate crowdfunding market is very young. Although a few projects appeared as early as 2012, the market has only taken off after the entry into force of the KASG in July 2015. Most real estate projects raise funds in form of subordinated loans regulated by the KASG.
Michel Harms tracks the overall crowdinvesting industry through his crowdfunding barometer and his aggregation site crowdinvest.de which lists all crowdinvesting projects available in Germany. According to his reports, real estate accounts for 80% of the crowdinvesting market. In 2016, the market doubled in size to reach €40 million. In the first five months of 2017 alone, 51 real estate projects raised €52 million. One can reasonably expect the market to triple in size by the end of 2017.
In 2016, more than 80% of the 48 projects were residential development projects (construction, renovation, rehabilitation), half of which were located in big German cities, with Berlin being the top location. As mentioned, most platforms use the regulated subordinated loans, ahead of bank loans and bonds. The average loan duration is 21 months, the median interest rate 6%.
See: Could Real Estate Crowdfunding Help Millennials Retire Sooner?
Three leaders emerge
In the short time since 2015, three leaders have already emerged: Exporo, Zinsland and Bergfuerst, three platforms dedicated real estate crowdfunding. Together, they make up for more than three-quarters of the real estate crowdfinancing.
Exporo was incorporated in 2013 by Simon Brunke, CEO, Björn Maronde, Julian Oertzen and Tim Bütecke. The company launched its first project as Exporo GmbH at the end of 2014. Since then, the platform has broken away from the pack by raising more than €64 million cumulatively, which amounts to a market share of over 40%. The platform has financed more 52 projects, including 21 in 2017 alone. Many of these are large projects, at the upper limit of the German prospectus-exemption of €2,5 million. To fuel its expansion, Exporo recently raised €8 million from e.ventures, Holtzbrinck Ventures, Sunstone and BPO Capital.
Zinsland was founded in 2014 by Carl-Friedrich von Stechow, CEO, Dr. Stefan Wiskemann and Moritz Eversmann. The platform launched its first project in 2015. Since then, it has financed 25 projects, including 10 in 2017, for a total of €18 million. It claims 2,600 members. To meet its aggressive growth plans the company expect to double its number of employees by year end.
Bergfürst was started much earlier than its competitors, in 2011, as an equity crowdfunding platform launched by Dr. Guido Sandler, CEO, and Dennis Bemmann. The platform launched its first real estate project in 2014 and pivoted shortly after to dedicate itself exclusively to real estate projects. To date, the platform has raised nearly 13 million to finance 20 real estate projects. Whereas most competitors require a minimum investment of €500, Bergfürst lets retail investors participate with €10.
Bergfürst transition to real estate crowdfunding is an exception. Other equity crowdfunding platforms who fund SMEs and startups, such as Seedmatch (through Mezzany), Companisto or FunderNation, have tried their hand in real estate crowdfunding with a few projects. But they seem to have given up competing with the more specialized platforms.
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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at ncfacanada.org.
There are Now 29 FINRA Regulated Reg CF Crowdfunding Portals
CrowdfundInsider | By
The number of FINRA approved and regulated crowdfunding portals has been inching higher. Today, there are 29 different Reg CF crowdfunding platforms each targeting the new securities exemption created under the JOBS Act 0f 2012. At the beginning of 2017, that number stood at 22 approved Reg CF platforms with a single entity, Ufundingportal losing it license after FINRA took action after it determined there was significant potential for fraud emanating from the site.
About a year ago, there was less than have this number so interest in launching a Reg CF platform has remained fairly robust.
See: Is Your Crowdfunding Portal Ready for Your First FINRA Exam?
Some interesting new additions to the list include “Good Capital Ventures” based in Massillon, Ohio. According to the SEC filing, Good Capital Ventures was founded by Justin Jeffrey Gantz who is an architect by education. The site is apparently not yet live.
EquityBender, based in Newport Beach, California, is another new platform. Their website indicates their team has experience in raising more than $250 million for early stage and growth companies in the past years.
Sprowtt Crowdfunding in Tampa, Florida, was founded by Mark Robert Jones. Affiliated with Sprowtt Services, Jones is said to have been “asked to actively participate in crafting the JOBS Act, including the equity crowdfunding laws and regulations.”
Title3Funds, operated by Fundivations, is another new addition. Based in Irving, California, this platform was founded by Ronald Hirsch.
To date, over $36.6 million has been successfully raised for Reg CF issuers. The top four platforms lead the way:
- Wefunder – $20.4 million
- StartEngine – $7.9 million
- Indiegogo (Microventures) – $3.2 million
- NextSeed – $2.8 million
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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at ncfacanada.org.
$150 Million: Tim Draper-Backed Bancor Completes Largest-Ever ICO
Coindesk | by Stan Higgins, Alex Sunnarborg & Pete Rizzo | Jun 12, 2017
An initial coin offering (ICO) for a blockchain project called Bancor has set a new industry record, raising approximately $153m in ether, the native currency on the ethereum blockchain, as part of a crowdsale that concluded today.
Data shows a smart contract connected to the sale had collected more than 390,000 ether by the time it ended at 18:00 UTC, an amount worth $152.3m at current prices. As such, the figure is higher than even the funding raised by The DAO, the notorious failed fundraising project that made headlines last year when it lost the millions of the $152m in investor funds it raised in a similar sale.
Overall, 79,323,978 Bancor network tokens (BNTs) were created as part of the ICO, with the top token holders now possessing 83.96% of the tokens, or 66,601,702 BNT. Fifty percent of the total tokens, or 39,661,989 BNT, were sold to the public, while the remaining 50% were allocated for future use.
The ICO attracted 10,885 buyers, according to available data, with more than 15,000 transactions sent to the address for purchases during the sale. One buyer went so far as to purchase 6.9m BNT, or roughly $27m, in the sale.
See: Don't miss the Annual Summer Kickoff Rooftop Networking session June 22 @The Spoke Club
Launched in 2017, Bancor, overseen by the Bprotocol Foundation, has been pitched as a platform designed to make it easier for users to launch their own blockchain tokens.
Of the remaining funds, a blog post by the company states token capital will be directed toward partnerships, community grants, public bounties and project advisors.
Issues with the sale
As with past sales of this kind, the ICO was accompanied by reports that the ethereum network faced significant transaction loads, resulting in delays for buyers.
However, the project itself was adversely affected by long wait times on ethereum.
According to the Bancor website, an initial funding target was set at 250,000 ether, though this figure was not hard-coded into the smart contract deployed. As a result, a transaction sent on the ethereum blockchain in an effort to change the contract and limit the crowdsale in length did not work as desired.
Due to network disruption and delays holding up this transaction, the company said the crowdsale ended up continuing longer than initially desired. Overall, it lasted an two additional hours as a result of the delay.
Posts on social media further suggest that at least some users saw transaction issues during the sale. One thread on Reddit drew complaints about transactions being dropped as long as 35 minutes after they were sent to the ICO address.
Some participants who spoke to CoinDesk also said that they had experienced delays in transacting, including one who had issues moving their ethers off an exchange for the purposes of participating in the ICO.
One exchange operator went so far as to argue that the ICO had increased transaction congestion, colorfully remarking that larger ether buyers were disrupting the sale.
Notable investors
Another factor contributing to the frenzy is that, as sale was getting underway, Bancor revealed it had attracted new and notable investors.
Among those announced to be contributing funds was investor Tim Draper of VC fund Draper Fisher Jurvetson. Though new to the ICO space – he previously backed the Tezos project ahead of its yet-to-be-held offering – Draper has invested in a number of bitcoin startups in the past few years.
In 2014, Draper made headlines when it emerged that he had bought 30,000 bitcoins during US government auction, later picking up an additional 2,000 BTC during a second sale. As part of the funding, Draper will also be joining the project as an advisor.
The Bancor sale was also backed by Blockchain Capital, an investment firm that focuses on startups in the space.
According to a blog post published today, Blockchain Capital is making its investment via its BCAP token, which it launched earlier this year.
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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at ncfacanada.org.
GAME-CHANGERS: Crowdfunding real estate projects in the GTA
Mississauga.com | by Louie Rosella | June 7, 2017
NexusCrowd, a Canadian real estate crowdfunding platform, has a number of projects on the go through crowdfunding, including a $12 million real estate redevelopment project announced in 2015 boasting three properties — one in Mississauga.
Real estate crowdfunding is experiencing explosive levels of growth, particularly in Mississauga and across the GTA.
NexusCrowd, a Canadian real estate crowdfunding platform, has a number of projects on the go through crowdfunding, including a $12 million real estate redevelopment project announced in 2015 boasting three properties — one in Mississauga.
NexusCrowd bills itself as the first investment platform in Canada that provides investors with exclusive access to co-invest with established real estate developers and investors in real estate deals that have reached at least 50 per cent of the funding target.
See: Could Real Estate Crowdfunding Help Millennials Retire Sooner?
Just last fall, NexusCrowd announced it has closed its fourth real estate investment offering, raising $517,000. By partnering with Downing Street Realty Partners, NexusCrowd allowed accredited investors to participate in the development of a mixed-use commercial real estate project located in downtown Toronto.
“We have now raised over $2 million for four private real estate investments using our innovative investment platform,” said Hitesh Rathod, CEO of NexusCrowd. “Offering high-quality exclusive investment opportunities to our investors is our top priority and we are excited to announce that we are working on additional partnerships to further expand our product offering.”
NexusCrowd was part of what was hailed Canada’s first crowdfunded real estate project in fall 2015 and featured another Mississauga location.
“This type of deal is extremely exclusive,” said Rathod in a 2015 interview with The Mississauga News. “I think crowdfunding has huge potential. It just needs to be done the right way. You need to do due diligence. It can be a risky proposition and I work to mitigate risk.”
One of the three assets in the $12 million project is a 25,000-square-foot former pharmaceutical manufacturing facility at 951 Verbena Rd., in the area of Tomken and Britannia roads. The other two properties are industrial facilities in Etobicoke.
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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at ncfacanada.org.
Indiegogo Founder Slava Rubin Talks Equity Crowdfunding on Reg CF Anniversary
Crowdfund Insider | | May 18, 2017
Indiegogo was originally envisioned as a vehicle to sell securities in small companies to the masses. That was back in 2008 and, as we all know, the regulatory environment had not yet caught up to the realities of a world with internet access. Thus Indiegogo pivoted and dove into the perk-based crowdfunding world. Since then, Indiegogo has helped to raise over $1 billion for projects and businesses around the world.
When President Obama signed the JOBS Act into law back in 2012, most people thought regulators would move rapidly and build out the rules that would allow companies to raise capital online.
That did not happen. The wheels of government can move rather slow.
It took four years for each of the crowdfunding exemptions to be completed. The final being Title III of the JOBS Act, the crowdfunding exemption that has received the most popular attention from the media.
See: Indiegogo Could Soon Dominate Equity Crowdfunding
While Title IV (Reg A+) and Title II (Reg D 506c accredited crowdfunding) of the JOBS Act allow issuers to raise a lot more money online, Title III or Regulation Crowdfunding (Reg CF) was ostensible positioned to benefit the smallest startups or the mom-and-pops in need of growth capital. Ignored by VCs and Angel investors, and being too small for bank loans, these companies clearly lacked access to capital. Thus Reg CF was born.
In May 16, 2016, the new exemption went into effect. Newly minted “funding portals”, a type of broker-dealer light entity that could sell these securities online, listed the first investments under Reg CF. One year later, over $35 million has been raised for more than one hundred small companies.
As it stands today, Wefunder and StartEngine lead the space with most dollars raised. But Indiegogo, a late entry into Reg CF crowdfunding, is quickly catching up.
Launched in partnership with MicroVentures (First Democracy VC), an already established accredited crowdfunding platform, Indiegogo has diligently pushed into investment crowdfunding. In stark contrast to the free-wheeling, wild-west world of perk-based crowdfunding, Indiegogo has taken a more selective and conservative approach.
Out of twelve crowdfunding rounds listed by Indiegogo, twelve have fully funded. So Indiegogo is batting a thousand. As far as we know, there is only one other active Reg CF portal that can claim the same.
The deals are interesting too. From a restaurant in Washington, DC, Republic Restoratives, raising $300,000 to the Field Guide of Evil (a film) raising half a million dollars.
On Tuesday, I hopped on the phone with Slava Rubin for a quick update as to how he things are progressing for Indiegogo in the equity crowdfunding side of his business. Rubin, co-founder and Chief Business Officer of Indiegogo, passed the mantel of CEO to David Mandelbrot at the beginning of 2016. He is still very much engaged with Indiegogo and is spending his time focusing on innovation and growth.
Rubin said the Reg CF Anniversary was super exciting and they are generating real data and feedback on selling securities online;
“We launched in the middle of November, so only half the amount of time in operation. We are 12 for 12 for businesses that have reached their target. We are at a 100% success rate.”
I asked Rubin if he is seeing any parallels to the perk-based platform.
“There is no question there is a benefit to the history and experience with the perk business. We have worked with thousands of entrepreneurs and millions of backers. That comes with a lot of people having a good experience and trust. We are building our trust in equity crowdfunding. It has been very helpful.”
Rubin said that it was exciting to see Indiegogo alumni raise funding on their investment side. The perks side is a funnel for potential investment rounds. Rubin also added that having the large existing network of backers has been helpful in getting the businesses funded. “Many times these investors are complete strangers,” said Rubin.
Asked if equity crowdfunding had matched his expectations?
“Yes. Things are going well. It is early, but we expect more growth to come.”
Rubin explained they were receiving a ton of inbound requests because of awareness from their perks side. He said they are making certain that issuers are solid companies. Perks is open but equity – not so much. While he did not know the exact acceptance rate, Rubin said they were far more companies applying than getting posted. Sometimes they will provide feedback to a potential company telling them they need to wait or work to accomplish some more milestones. Sometimes they go to other equity platforms too.
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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at ncfacanada.org.
