By Judd Hollas EquityNet CEO, CrowdFunding Beat Guest Contributor,
The Securities and Exchange Commission will finalize the rules for Title III crowdfunding by mid-2015, allowing over 50 million non-accredited investors to invest in private companies for the first time. However, it will be late 2015 before Title III crowdfunding platforms can operate in the market due to the subsequent registration process for them. Platforms must be compliant with the new regulations and they will also be required to register with the SEC and/or FINRA. Although many existing crowdfunding platforms are poised for Title III, the registration process will still take a considerable amount of time.
Over $20 billion in funding transactions will occur globally through crowdfunding in 2015 based on trends from the past three years. This represents a 100 percent increase from $10 billion in 2014, $5.1 billion in 2013, and $2.6 billion in 2012. Estimates from a variety of sources indicate that the yearly total market potential of the entire crowdfunding industry would average around $300 billion by 2025.
Over ten states have already adopted intrastate crowdfunding rules that allow resident non-accredited investors to invest in private companies within a state, and that trend will continue in 2015. However, once the SEC finalizes the national Title III rules, the success of intrastate crowdfunding will be limited. There will still be non-accredited investors who want to invest in private companies within their state, but many will not want to be hindered by geographical constraints. They will want to invest in companies they are interested in, regardless of location.
EquityNet has operated the largest business crowdfunding platform since 2005. The multi-patented EquityNet platform has been used by over 50,000 individual entrepreneurs and investors, incubators, government entities, and other members of the entrepreneurial community to plan, analyze, and capitalize privately-held businesses. EquityNet provides access to thousands of investors and has helped entrepreneurs across North America raise over $250 million in equity, debt, and royalty-based capital.