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August 17, 2020   Entrepreneurs, Start-ups, Small Businesses, Equity Crowdfunding, Alternative Funding, FinTech and Alternative Finance, Fintech International, Fundraising, Investing, Trading, Research, Stories, Venture Funding and Building   No comments

RegCF Online Investment: Highest Monthly Activity in July; Small Firms Most Affected by COVID-19 Find Ready Investors and Capital

Crowdfund Capital Advisors | Sherwood Neiss | Aug 13, 2020

RegCF trending during Covid 19 - RegCF Online Investment: Highest Monthly Activity in July; Small Firms Most Affected by COVID-19 Find Ready Investors and CapitalOnline investment by both retail and accredited investors into startups and small businesses was legalized by the JOBS Act in 2012. Regulation Crowdfunding, one of the provisions in the Act, allows firms to raise up to $1.07 million online each year and went into effect in May 2016. The industry was slow to gain traction but 4 years later, momentum is building. July, which has typically been one of slowest months, saw records for the highest number of offerings in a single month, the highest amount of commitments, as well as the highest number of investors.

Our data analysis signals a few things:

  1. Based on the number of firms that reference COVID-19, many companies are coming online to search for capital where they can’t get it from banks or government programs like the Payroll Protection Program (PPP). We expect this to continue.
  2. Based on the number of firms that are more than 3 years old and are revenue generating, companies see online finance as a viable alternative that puts them in control of their fundraising efforts as opposed to relying on a bank or venture capital.
  3. Market awareness about this new method of raising funds is finally gaining traction and expanding at a rate we have yet to see.

Here is how July 2020 compares:

See: 

How crowdfunding is supporting Black livelihoods and communities

Video:  FFCON20 Panel - State of RegCF (Equity Crowdfunding) in 2020

Offerings:

  • July is typically the second slowest month for new offerings.
  • This July was the highest month of new offerings since the industry started with 128 new offerings. This was 74 more offerings than July 2019 or a 137% increase.
  • The next month closest to that was October 2019 with 100 new offerings.
  • Since the launch of Regulation Crowdfunding there have 2,768 offerings. Of all these offerings 11% happened in the first quarter of this fiscal year.

Commitments:

  • July was the highest month of investor commitments at $23.2 million. The next closest month was October 2019 with $18.5 million. (See chart below)
  • June and May of this year were the 3rd and 4th highest months of commitments.
  • The first quarter of this fiscal year saw more commitments than the entire first year of Regulation Crowdfunding.
  • We expect this trend to continue throughout the year.

RegCF continues to grow in the US - RegCF Online Investment: Highest Monthly Activity in July; Small Firms Most Affected by COVID-19 Find Ready Investors and Capital

Investors:

  • July was the highest month of investors with more than 40,000.
  • According to interviews with the platforms and issuers, 80% of investors are retail and 20% are accredited and 80% of capital comes from friends, family, customers and followers.
  • October 2019 was the second highest at 39,400.
  • There have been more investors in the first quarter of this fiscal year than the first seven quarters of Regulation Crowdfunding.
  • This proves that there is an appetite among local investors to support their local businesses as more than just customers but as investors as well.

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NCFA Jan 2018 resize - RegCF Online Investment: Highest Monthly Activity in July; Small Firms Most Affected by COVID-19 Find Ready Investors and Capital 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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