Fortune |Jeremy Quittner  | July 5, 2016

Indiegogo plans to launch an equity crowdfunding service in the next few months.

Later this year, Indiegogo will take a giant leap into the new world of equity crowdfunding. And though it has yet to reveal its exact plan, the popular fundraising site could instantly become one of the largest platforms for such offerings.

Equity crowdfunding is an evolving sector of fundraising that has only been accessible to the general public since May, when Title III of the Jumpstart our Business Startups Act (JOBS) took effect. In a nutshell, the law lets small-time investors purchase a small equity stake in startups, which can raise up to $1 million a year through such events. Previously, only investors who had either $1 million or more in assets or an annual income of at least $200,000 could participate.

See:  Progress Report: Data From 30 days of Title III Equity Crowdfunding

To date, crowdfunding sites such as Indiegogo have only allowed companies to raise money from customers in exchange for “perks”–early or discounted products, or other services. Title III lets companies sell actual equity. Regulators stipulate that such sales must be handled through a registered online portal, through a broker-dealer, or through a partnership with such entities. Indiegogo would not reveal whether the platform will partner with a broker-dealer, but said it is “exploring ways to implement the regulations.”

While Title III is potentially a big deal for any small business looking for alternative ways to raise cash, entrepreneurs haven’t exactly risen to the occasion. Since May, about three-dozen companies have sought to raise just over $3 million, by the calculations of Wefunder, one of the 10 funding portals authorized by federal regulators to conduct such offerings.

Yet Indiegogo has the potential to become the 800-pound gorilla when it officially launches its own equity crowdfunding service. For one thing, it comes pre-loaded with 7 million backers of 650,000 campaigns, who have collectively raised close to $1 billion over the past eight years. (About 350,000 of those campaigns have been for small business ventures, Indiegogo says.) What’s more, 15 million people who are curious about the company’s campaigns visit the site every month, according to Indiegogo.

It also won’t face competition from rival Kickstarter, which has clearly stated that it has no interest in offering equity crowdfunding to its users. “You won’t see equity investment on Kickstarter,” said Justin Kazmark, a company spokesman, in an emailed statement. “The investment model is powerful and there’s a need for it, but it’s also limiting. Our mission is to help bring creative projects to life. Not all creative ideas are meant to be investment vehicles.”

See:  Indiegogo Is Testing Optional Insurance Fees For Crowdfunded Products

For the past two years, Indiegogo has been quietly adding products and services for entrepreneurs that help them build complete businesses, from their initial concept all the way through to manufacturing the finished product. Equity crowdfunding should round out the process.

“We’ve been developing products and forming partnerships to help entrepreneurs at all stages of their journey,” says David Mandelbrot, who took over as CEO from co-founder Slava Rubin in January.

Two years ago, for example, Indiegogo rolled out its InDemand service, which lets entrepreneurs continue raising money even after their campaigns have closed. The product works as a critical order management tool that lets fledgling companies keep track of sales and customers. InDemand is also not exclusive to Indiegogo campaigns, Mandelbrot says. Kickstarter users, for example, can move their completed campaigns over to the service, he says.

At the beginning of 2016, Indiegogo waded into so-called intrapreneurship, launching an enterprise platform that makes it easier for innovation teams, or simply aspiring entrepreneurs, within large companies, to test products with consumers. Whirlpool, for example, tested its Vessi home brewing kit with consumers before launching it in May. Similarly, GE frequently tests products from its product incubator FirstBuild on Indiegogo.

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Business Insider UK | Oscar Williams-Grut | July 4, 2016

The UK's biggest crowdfunding site Crowdcube is planning to raise £5 million ($6.6 million) from its members on its own site, as its CEO claims equity crowdfunding is "vibrant post-Brexit."

Crowdcube, founded in 2011, lets ordinary people buy chunks of fast-growing, private startups from as little as £10. The platform has over 290,000 registered investors and over 400 companies have used its platform to raise over £170 million.

Notable brands that have raised money on the platform include the Eden Project and River Cottage. Investors have so far had two exits — where they get any profit or loss when a business is sold. They were from Camden Town Brewery and E-Car Club.

Crowdcube, which also operates in Spain, announced in an emailed release on Monday that it plans to raise £5 million in an equity crowdfunding on its own platform later this month. It will issue a full prospectus for the raise, meaning investors will be able to take a good look under the hood of Crowdcube's business to see profit and loss, business volumes, and other key metrics.

The latest accounts filed with Companies House show the business made a loss of £4.8 million on revenue of £2.7 million in the year to September 2015. That was up from a loss of £1.3 million in 2014 on revenue of £1 million.

See:  The 5 secrets of Britain’s most successful crowdfunder

The UK's biggest crowdfunding site Crowdcube is planning to raise £5 million ($6.6 million) from its members on its own site, as its CEO claims equity crowdfunding is "vibrant post-Brexit."

Crowdcube, founded in 2011, lets ordinary people buy chunks of fast-growing, private startups from as little as £10. The platform has over 290,000 registered investors and over 400 companies have used its platform to raise over £170 million.

Notable brands that have raised money on the platform include the Eden Project and River Cottage. Investors have so far had two exits — where they get any profit or loss when a business is sold. They were from Camden Town Brewery and E-Car Club.

Crowdcube, which also operates in Spain, announced in an emailed release on Monday that it plans to raise £5 million in an equity crowdfunding on its own platform later this month. It will issue a full prospectus for the raise, meaning investors will be able to take a good look under the hood of Crowdcube's business to see profit and loss, business volumes, and other key metrics.

The latest accounts filed with Companies House show the business made a loss of £4.8 million on revenue of £2.7 million in the year to September 2015. That was up from a loss of £1.3 million in 2014 on revenue of £1 million.

Related:  The backing of the crowd – What has crowdfunding done for great British businesses?

CEO and cofounder Darren Westlake says in an emailed statement announcing the new fundraising:

"The UK has a long and proud history as a hotbed of entrepreneurialism and innovation. In just five short years we have firmly established our position as a global fintech pioneer and the UK’s dominant equity crowdfunding platform but we’re not stopping there. We’ve got ambitious plans for the future and we’re excited to be able to give the crowd the opportunity to join us on our next exciting phase of growth."

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Crowdfund Insider | Bret Conkin | June 11, 2016

Banks have been criticized in the media for failing to provide lending to worthy people and businesses since the sub-prime lending crisis.  Real estate investors and developers faced restricted access to the capital they sought for their property or project.  Fortunately, new financial technologies have emerged to disrupt old ways of banking.  The banks are noticing.

VestMunity’s innovative approach caught the eye of Citi, the fourth largest bank in the USA.  Mason’s passion and plan to enable other Florida entrepreneurs to finance “fix and flips” won him a $10,000 prize at the Miami Fintech Forum, the first event in the Inclusive Enterprise Series, a new program backed by Citi Community Development and Village Capital.  (For more, see VestMunity on the Citi blog here).

An accessible solution

Mason is actually trying to solve two problems related to accessibility.  The first is that while regular Americans may own a residence, they lack a simple and secure way to build wealth by investing in other properties.  Title III regulated crowdfunding was introduced last month providing new access for retail investors. By teaming up with other investors, each contributing small amounts, soon they can.

Mason commented, “Three of the top five metro areas in the country for distressed properties are in my home state of Florida, according to RealtyTrac. But while rehabilitating and reselling homes can result in a lift to neighborhood property values and provide local investors with wealth-building opportunities, the cost of doing so is often prohibitive even for experienced real estate developers.”

“The average person has very limited access to the information and resources they need to safely pursue these types of investments, which is why I started VestMunity – I wanted to create a platform that connects everyday people to accessible investment opportunities.”

So the second problem being solved is an innovative method to provide “crowd” financing to select real estate rehabbers since banks may not be an option, particularly if the borrowers are women or minorities.

As Georgia Quinn, CEO of iDisclose, stated recently in Crowdfund Insider, “Title III opens up financing opportunities for many types of businesses that have traditionally been denied other means of capital.”  She explained that traditional funding sources have a race and gender profile that “looks like themselves” and their tendency to fund those “with similar backgrounds.”

Quinn believes that crowdfunding provides the platform to utilize assets like social networks, brand equity and other strengths that banks and other funders fail to incorporate into their criteria.

VestMunity is a platform then that offers a solution to both problems.  VestMunity provides high yield real estate secured returns to investors for as little as a $1,000 investment.  Second, VestMunity offers a better financing option for distressed properties that provides lower cost capital plus market exposure for renovators.

Is a refurbished Florida property a good investment?

In 2006, according to Zillow, the median Florida home value was $256,000.  In 2012, the value dropped as low as $126,000.  As of April 2016, the value has grown 48%, or roughly 12% per year, as values bounced back to a median Florida home value of $187,000.  Could the values continue their climb back to 2006 peak levels and beyond?

See: 

• Crowdsourcing expands world of corporate real estate investing

• Prodigy Network CEO Rodrigo Niño Updates on Real Estate Market & Future Plans

One indicator is comparing the annual performance of US Housing to other asset classes like gold, commodities, stocks, bonds and so on.  For the period of 2011-2015, US Housing was the 3rd best performing asset class of nine measured at a 5.73% return nationally with only stocks and commercial real estate higher.  For 2015, US Housing was the top performing asset class. (Source: BullionVault).

While the economy and other factors impact value, the renovation and repair of distressed properties in good neighborhoods is a proven method of achieving strong returns for investors.  The cost of the refurbishment tends to have a relatively greater impact on the value, enabling the home to be sold at an attractive profit in a relatively short period.

Currently available deals include rehab loans in Miami, Plantation and Coral Gables with targets of $65,000-$300,000, 12-month terms and target returns of 18-20%.  Prospective investors can view photos, details on the property and loan, comparable homes values post-rehab and even view the neighborhood and home on Google Street View and Google Maps.

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