Introducing the Securities Crowdfunding Market Matrix



Nothing is as powerful as an idea whose time has come” Victor Hugo

When analysing the crowdfunding market it is typically broken down into four main categories such as donation, reward, debt and equity. Securities crowdfunding, which is the generic clause for debt and equity crowdfunding, is sometimes also called crowdfund investing or crowdfinance. As argued in a previous post,crowdfunding is not a new asset class; it is rather a new conduit for financial flows which dis-intermediates the supply chain of capital allocation, and provides efficiency and transparency in the investment process, enabling investor and issuer to interact in better and more productive ways. In addition it reduces the search cost for the investor and allows for a high degree of risk diversification.

So it is no surprise that crowdfunding is rapidly dispersing into many sectors of the financial services industry. A wide range of institutional investors are suddenly beginning to show an interest in crowdfunding as it allows them directly to invest small amounts (for them) into projects or companies that offer higher yields compared to traditional bond or equities markets. The key obstacles that normally block institutional investors from making investments in smaller businesses or projects are the excessive “due diligence” requirements in proportion to the size of the investment. This obstacle can be removed by crowdfunding platforms as they provide for standardized and transparent due diligences practises whose results can be shared by many investors. In addition it enhances the liquidity of such assets and gives the investor the ability to optimize and rebalance their portfolio. The advantages for the issuer are equally compelling as they have access to a deeper investor pool and a lower cost of capital. A good example is B2B lending which works in the same way as peer-to-peer lending but with a different type of ‘peers’ and larger amounts.

In order to understand better in which directions crowdfunding is evolving, we attempted to map out the landscape of emerging business models across the spectrum of securities crowdfunding portals. As with most categorisations it simplifies the reality and doesn’t consider distinctive features of each jurisdiction around the globe. For example, equity crowdfunding in the US is so far only allowed for accredited investors while in the UK and other parts of Europe there are different restrictions.

Securities Crowdfunding Market Matrix





ForbesHow Crowdfunding Can Supercharge Your Campaign In 2016ForbesThey say that there are about 7.45 billion people living in this world right now. Imagine that if you could get each of these seven-and-a-half billion people to contribute one cent to your project, well, you know what I [...]

ForbesHow Crowdfunding Can Supercharge Your Campaign In 2016ForbesCrowdfunding has helped a lot of businesses recently. Want to join the queue? Here's how to raise funds for your projects.and more » [...]

San Antonio CurrentSan Antonio Cat Cafe Launched 20K Crowdfunding CampaignSan Antonio CurrentAs Austin's Blue Cat Cafe turned one (and dealt with some gnarly vandalization), San Antonio's Cat Cafe launched a GoFundMe crowdfunding campaign to help open its doors. Casey Steuar [...]

BillboardCrowdfunding for His Life: How GoFundMe Helped Save a Punk Legend's LifeBillboardSo on the advice of a close friend, Julian -- like an increasing number of aging musicians without a lucrative record contract -- turned to crowdfunding, launching a campaign on the No. 1 pl [...]

Minneapolis Star TribuneSEC releases new, relaxed rules on investment crowdfundingMinneapolis Star TribuneNew rules announced this week will make it easier for small companies to raise capital from small-time investors, another step forward for Minnesota's fledgling investment cr [...]

The GuardianCrowdfunding: the new buzzword for academics needing research moneyThe GuardianArchaeologist Dr David Petts, from Durham University, has also used crowdfunding, raising almost £25,000 to fund a project on Lindisfarne, off the Northumberland coast. The dig, in June, led to [...]

How Crowdfunding Has Changed the Startup GameSingularity HubCrowdfunding has become a multi-billion-dollar industry, funneling millions of dollars into thousands of projects. Technology in particular is one of the leading categories on popular fundraising platforms like Kickstarter an [...]

The RecorderFTC Hears From Company Leaders as Crowdfunding GrowsThe RecorderSACRAMENTO — The future of crowdfunding is one of specialization, with an ever-increasing number of firms finding niches in equity, nonprofit and even creative projects silos, industry leaders told a Federal T [...]

Crowdfunding in commercial real estateJournal Record (subscription)jdavidchapman In 1997, a British rock band funded a reunion tour through online donations from its fans. This may have been the first example of a concept now known as crowdfunding. The crowdfunding industry has quickl [...]

Crowdfund InsiderWhen It Comes to Retail Crowdfunding, SAFEty FirstCrowdfund InsiderOn September 22nd, Crowdfund Insider published a post summarizing the arguments presented in our new essay entitled “Crowdfunding and the Not-So-Safe SAFE“ (forthcoming in Virginia Law Review Online). [...]

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