Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Crowdfund Insider | Jamie Finn | Mar 22, 2022
Traditionally, only accredited investors, private equity firms, or major financial institutions have been able to invest in early-stage, high-growth companies before an initial public offering. While there are many VCs and angels out there, they hear many pitches, they have many options, their funding often makes up only part of what a start-up needs and can come with some significant strings attached.
But in March 2021, the U.S. Securities and Exchange Commission (SEC) changed a key regulation known as Regulation A, Tier 2, now enabling U.S. based companies to raise up to $75 million every 12 months from a wider range of investors, including retail investors. This was a major, under-reported addition to the startup founders’ toolkit.
Blockchain and digital investor onboarding technology are now making it comparatively easy for founders to turn to retail investors in funding their still-privately held businesses, with shares issued in the form of tokens securely recorded on public blockchains such as Avalanche, Algorand, Ethereum, or permissioned chains if more privacy is needed. This can be a fundamentally better way to raise capital, and privately held companies and their customers are already taking notice.
Gone are the days of Microsoft, Amazon, and Oracle, whose early IPOs were seen as opportunities for individual investors to share in unicorn-driven wealth. While an IPO used to be a sign that a company had “made it”, today it can just as easily be a sign of its decline. Creating a market for shares of private businesses before they go public can create both liquidity and eliminate the fall to earth that often follows an IPO.
Let’s explore why a Mini-IPO capital raise from individual investors can make sense for your business:
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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