What is the opportunity with Title III crowdfunding?

There have been a couple threads on equity crowdfunding here, but with Title III funding portals getting much closer to launching, I’m trying to puzzle out what those first portals are going to look like… and will these be filled with the dregs of the investment world as most existing equity portals believe.

The basic argument is that there is a vast over-abundance of capital from both institutional and accredited individual investors, and the better companies will get access to that through venture firms, professional angel investors/syndicates and 506(c) type funding portals. What’s left over gets dumped into Title III portals where less affluent investors have to pick through to find the decent stuff… kind of the inner city 99 cent store of finance.
What is the counter-argument?
paulSOM-300x300
Co Founder at The CrowdHub Group
Physically the portals wont look much different. However the investors and the operational methodology will be different for the successful Title III operators than the Title II ones. In saying that some Title II operators will gain say 5 to 20% of their raise from a Title III crowd due to people following Accredited investors they admire.

Offerings in Title III end up there because they are ordinarily not ready for accredited investors. They are often too early and simply do not have the numbers to get traction in the more professional sectors. For this reason they have to gather people 1, 2 and 3 degrees out from the entity. These people are a hybrid of traditional friends and families. To achieve this they need to have a platform built on “investor aggregation” techniques. Meaning through a process of communication, connecting, nurturing and enthusing, people are gathered during pre-raise activity, until the offering goes live and at least 40% of the investment has been identified. The reason they need to do this is that people will be making the decision to invest emotionally rather than analytically.
I’ve written a few articles on this based on my experience running a platform that has had around 300 Title III like raises. http://www.paulniederer.com/2015/10/investor-aggregation-for-capital-raising-and-the-campaign-approach/
Your sentence “What’s left over gets dumped into Title III portals where less affluent investors have to pick through to find the decent stuff”could bereadas true depending on your viewpoint. How I view this is that there are thousands of businesses not headed for IPO or trade sale butsimplylocal or neighbourhood or niche businessesthatneed funding to get to thenext level. They are not “left over” as they are never assessed by accredited investors as they are not yet ready for them. There will be some decent stuff there but not necessary with the analytics more experienced investors require.

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