Jun 19th marks a major milestone in investment history: the SEC is allowing individuals to invest in private companies via crowdfunding. In a historic first, here is some the industry expert view. The rulings under Title IV of the JOBS Act, paving the way for private companies to raise up to $50M from both accredited and unaccredited investors.
Joseph Barisonzi CEO Community leader
The new regulation a and A+ bring to market the most authentic representation of the spirit of crowdfunding to date This new financing tool, will provide individuals the opportunity to engage the companies and projects they believe in not only as a donor but as owners. RegA+ is good for companies, good for individuals and good for our communities
Jim Borzilleri CEO CrowdEngine,
CrowdEngine, the world leader in equity crowdfunding platforms is ready for Reg A+ by providing clients the ability to offer Reg A+, Reg D and intrastate deals on the same portal at the same time using their new “Compliance Engine” functionality. Jim Borzilleri, President of CrowdEngine says that, “Our clients now have a competitive edge in the market, by not being limited to a single offering type or jurisdiction to raise crowdfunding capital.” Before the new Reg A+ guidelines were announced, CrowdEngine was already building a platform to allow multiple types of offerings, in multiple jurisdictions, on the same portal at the same time, while maintaining compliance. We saw this need to manage multiple offering types with multiple jurisdictions early so we had already began architecting an equity crowdfunding solution with the robustness and flexibility to handle any current guidelines, and equally important, any future one yet to be established through new legislation. RegA+ was announced and it was just perfect timing.”
Steven Cinelli Founder of PRIMARQ,
While a celebration may be in order for this new level of broader capital raising, I believe the jury remains out as we will have to watch the quality of the issuers that use this vehicle, how they are initially priced, but even further, whether sufficient liquidity will exist to fairly price in the aftermarket. As you know, while there is certainly company risk, the aftermarket price risk may be greater in one’s quest to achieve investment returns. It is worth noting that the two high-profiled “alt-finance” platforms that went public last year, namely Lending Club and OnDeck are now both trading below IPO levels and about half of the immediate run-ups. Now with lock-up periods expiring, might that portend for further downside movement? Recall, we discussed the IPO valuations of both in an earlier piece. May be worth revisiting. While both companies are growing and have stronger balance sheets, the aftermarket is saying something.