U.S. Can Learn From the Netherlands Equity CrowdFunding



U.S. regulators are tied up in knots trying to figure out how to write laws for equity crowdfunding to prevent fraud.

Perhaps they ought to take a page from the Dutch.

In the Netherlands, equity crowdfunding from unaccredited investors has been legal for the better part of three years. “The Netherlands are really a frontrunner in equity-based crowdfunding,” Korstiaan Zandvliet, the co-founder of Symbid, said at the Massolution crowdsourcing conference in New York City last week.

What the U.S. Can Learn From the Netherlands About Equity Crowdfunding

Korstiaan Zandvliet is the co-founder of equity crowdfunding platform Symbid.com, which has funded 23 startups with more than 2 million euros.
Images credit: Symbid.com

Symbid is an equity-crowdfunding platform headquartered in the Netherlands that has been in existence since 2011. The platform has funded 23 startups that have raised a total of more than 2 million euros ($2.7 million) from over 15,000 unaccredited investors, according to Zandvliet. “We tend to have a bit of experience,” he says.

Equity crowdfunding is when a company raises capital by selling small pieces of equity to a large number of investors. This differs from donation-based crowdfunding – made popular by sites like Kickstarter and Indiegogo — whereby a company collects small donations from a large number of people and, in exchange, gives each donor some sort of non-monetary reward.

Related: What Entrepreneurs Need to Know About the Historic Change in General Solicitation Law That Goes Into Effect September 23

Currently, it’s legal for businesses to sell equity to the crowd, but they can only sell to accredited investors. An accredited investor is an individual who makes more than $200,000 a year or has more than $1 million in total assets, excluding primary residence.

But that’s all changing. The Jumpstart Our Business Startups Act, or JOBS Act, which was signed into law in April of last year, includes a provision to make it legal for entrepreneurs to sell pieces of their company to unaccredited investors, or “regular investors.” That means almost anyone can become a shareholder in a private company – a process that could leave many investors vulnerable to fraud.

The U.S. Securities and Exchange Commission has already blown past initial rule-setting deadlines and regulators have been in heated negotiations about how best to protect regular investors.

Meanwhile, Zandvliet at Symbid has had zero cases of fraud in three years. “What we have seen so far is that the crowd is a great due diligence tool. They actually find out basically everything,” he says. Of the 15,000 individuals who have made contributions to startups on Symbid, 10 percent are angel investors. Zandvliet says many of these professional investors consider the crowd as effective a tool as any to identify entrepreneurs and startups with the most potential.

Symbid does take precautions to protect investors. For example, it uses an online electronic money institution to convert investors’ money into a digital currency that can be spent on the portal. Furthermore, Symbid gives its investors the option to “disinvest” their money. “It is an ongoing process where the entrepreneur needs to wake up every day and put up his best game in order to secure new investments but also to make sure the older investments remain into that particular proposition,” says Zandvliet.
Read more: http://www.entrepreneur.com/article/228627#ixzz2gHHSjkRP



AZCentral.comTiny companies lure investors under Arizona crowdfunding lawAZCentral.comInvestors who make bets under the state's one-year-old crowdfunding law certainly have the potential to get in on the ground floor, but they must be patient and might not receive any returns. Th [...]

BloombergCouples Desperate For Children Turn to Crowdfunding FertilityBloombergCrowdfunding has become a popular mechanism for many couples who can't afford the high costs of IVF, or adoption and surrogacy. “It's not an easy thing to share publicly,” says Crystal Barrett, 33 [...]

WTTV CBS4IndyCrowdfunding effort to save Dorothy's iconic ruby red slippers from 'Wizard of Oz' raises $300000WTTV CBS4IndyThe Smithsonian has launched a campaign on Kickstarter aimed at raising $300,000 to preserve the ruby red slippers worn by Judy Garland in the belo [...]

Crowdfund InsiderMassive Rule 147 Amendments May Be On The Horizon Impacting ...Crowdfund InsiderAlmost a year ago, the SEC proposed certain amendments to the current Rule 147 which were intended to help foster, and increase the viability of, Intrastat.and more » [...]

Mountain XpressFaces in the crowd: WNC crowdfunding initatives | Mountain XpressMountain XpressEach week, Xpress highlights notable WNC crowdsourcing initiatives that may inspire readers to become new faces in the crowd. This week features a feature ...and more » [...]

MarketWatchWhy a crowdfunding site is giving out $10000 scholarshipsMarketWatchCrowdfunding site GoFundMe announced Thursday that it will award $10,000 to 10 students with pages on their site that fundraise for education. The award is part of a contest the site held throughout Septemb [...]

Android Authority (blog)Crowdfunding project of the week: Remix IO is an Android 4K set-top ...Android Authority (blog)The 'Crowdfunding project of the week' series is where we highlight some of the hottest campaigns from sites like Kickstarter and Indiegogo. There's pl [...]

Huffington PostReal Estate Crowdfunding's Pathway of ChangeHuffington Post“Crowdfunding is just the Internet,” stated Attorney Mark Roderick as he opened last month's RealCap Chicago. RealCap is an annual conference that joins crowdfunding leaders and innovators to propel th [...]

WestwordProgressive-Rock Band Marillion Pioneered CrowdfundingWestwordThat was the beginning of crowdfunding for us — and for every band, really.” When it came time for the recording and release of the followup to the 1999 marillion.com record, Kelly and the band realized that one of [...]

BBC NewsNHS trust 'relies' on crowdfunding to equip wardBBC NewsAn NHS trust has launched a crowdfunding appeal to buy equipment for a new hospital unit because "it cannot get started without donations". The Royal National Orthopaedic Hospital (RNOH) in Stanmore, n [...]

CFB Finance

Press Release

CrowdFund Beat News


Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |