CrowdFunding Beat Media,
By Brian Dally, Co-founder and CEO, Groundfloor and Nick Bhargava, Co-Founder and EVP Regulatory Affairs, Groundfloor
Future of online investment platforms
In 2015, we’re going see a spike self-directed investing platforms, largely due to excitement around a new class of accessible online trading newcomers, like Robinhood and Wealthfront. These new self-directed platforms play to the preferences of the masses; fees are not in vogue, diversification is easier than ever before, and consumers are ready to instill more trust in set-it-and-forget-it trading automation tools.
On the flip side of the coin, the American people are eager to lock-in earnings from 2014. The stock market is enjoying a bull year and returns are approaching all time highs. Investors will continue to put in, but between the high-fiving and back-slapping, a healthy skepticism is growing, driving investors to look for ways to diversify quickly and preserve the wealth they’ve created. As a direct result, more stable industries, such as real estate, consumer goods and healthcare, will enjoy an influx of fresh capital ready to go to work, and the niche investment platforms fine-tuned to these markets will similarly enjoy growth in 2015.
Real Estate CrowdFunding
Once just a novel idea a few years ago, real estate crowdfunding is now one of the hottest areas for VC investment. VCs invested more than double the investment total previously captured in a single quarter in Q3 of 2014. Venture Capitalists see an opportunity to crown the first unicorn in crowdfunding and they’re acting aggressively to seize it. 2015 will be a growth year for real estate crowdfunding companies.
At the same time, the nature of real estate crowdfunding is growing up. The vast majority of real estate crowd funding deals in the market in 2014 were only accessible to accredited investors, somewhat defeating the promise of “crowd” funding. That will start to change in 2015, as non-accredited investors finally get a piece of the pie. This new investor group is hungry for opportunity and familiar with real estate; and that combination is a winning mixture destined to produce a healthy flurry of activity in real estate crowdfunding.
The JOBS Act will either still be in deadlock, or prove unworkable.
Rulemakers are taking a careful and deliberate approach to ensuring the JOBS Act will succeed. While some pundits speculate that the act will prove unworkable, we think otherwise; the JOBS Act will actually do precisely what it is designed to do: flood the market with newly available cash ready to go to work. If the rules, processes, or manpower are not in place to oversee and regulate this flood, the SEC will have a much bigger problem on their hands. We have full confidence that our rule makers are taking the appropriate steps to ensure the success of the JOBS Act in a responsible manner.
Reg A+ rules will be impact and generate a storm
Regulation A+ will have a non-trivial impact on small and medium sized businesses.
The most promising ideas in Reg A+ are the increased annual raise limit from $5 million to $50 million, and public solicitation of both accredited and non-accredited investors. America’s savings have been waiting dormant for a moment precisely like this, and when it comes, we could we very well see the next financial revolution powered by the crowd.
— Nick Bhargava, Co-Founder and EVP Regulatory Affairs, Groundfloor
10- What the SEC can learn from intrastate CrowdFunding
We can learn a lot from intrastate crowdfunding, and local pockets of it are a great precursor of what we expect to see at national scale in 2015.
Georgia welcomed crowdfunding in 2011 with the Invest Georgia Exemption, which allowed companies to sell debt or equity securities to non-accredited and accredited state residents. Shortly after the state embraced it, a flurry of activity has occurred, with several successful small business campaigns at low scale. Because of the Invest Georgia Exemption, crowd funding is not merely a novelty, as it is for the rest of the nation; it represents hope, opportunity and the promise of profit more broadly distributed.
— Brian Dally, Co-founder and CEO, Groundfloor
A team of experts in peer-to-peer lending, finance and real estate brings an Internet sensibility to finance. Learn more about the people behind GROUNDFLOOR and connect with us to get involved.