As we dive in to 2014, we’re facing a growing – and maturing – crowdfunding industry. With the implementation of Title II this fall, we’re starting to see more market entries from people with higher-level finance backgrounds. There are still offerings from upstarts out of Silicon Valley in the space, but we’re also starting to see offers from veterans from Goldman Sachs, Morgan Stanley, and the high-end real estate market join the crowd.
In recent conversations, there are two developments I keep coming back to, which I believe we’ll see come into maturation in the next couple of years – that new entrants in the market will be more sophisticated, garnering higher-rated deals, and that vertical-specific platforms will start to become the norm.
Naturally, as these types of players usher in Crowdfunding 2.0, the types of deals being made will also become more sophisticated. Financial industry veterans are seeing crowdfunding as a viable space and are beginning to launch platforms around things like structured debt and biotech funding. These platforms bring more visibility to accredited investors, effectively expanding their options in the financial world.
As the marketplace becomes more complex, I’m also seeing it become more specialized. Niche platforms are developing as cradle-to-grave solutions for growth companies, helping them find capital from their seed stage through their exit. More companies are taking the CircleUp Network approach, in which they specialize in a sector and partner with an enterprise-level company – in this case, specializing in consumer brands and partnering with General Mills. The enterprise uses the crowdfunding platform as a data mine for research and development, sometimes simply purchasing promising company offerings.