In order to understand where we are and where we are going next, we need to look at where we have been and learn from all of that experience. Let’s begins with a review of the key milestones in the evolution of investing for individuals and how we have carried innovations from each stage into the next, to reach what I’m calling Crowdfunding 2.0:
The evolution of investing to now include the ability for individuals to invest in small private companies, real estate securities and funds as part of their diversified portfolio allocation using an online brokerage account, whether you manage it yourself or hire an advisor to do it for you.
Investing 1.0 – The 1970s brokerage
Reflect for a moment what it was like to buy a publicly listed and traded stock before the internet and online brokerage accounts. You found a broker, in an office building in downtown, set up a meeting, drove there during business hours, paid for parking, signed a lot of paperwork and wrote a big check to pay for the stock or two that the broker recommended to you. The check had to be big in order to get the meeting with a busy broker, it had to be big because you generally bought at least a hundred shares (a “round lot”) at $20 to $50 each and you were going to pay at least a couple of hundred dollars in commissions to the broker.
Once your account was approved, your check deposited, and your order placed and settled, you would get a paper certificate back showing your ownership of the shares of the company. Then when you wanted to get your money back, you would repeat this process by bringing the stock certificate back to the broker and ask them to sell it.
Given this setup, most people did not invest in publicly listed and traded stocks or other securities because they simply could not afford it. Unfortunately, this is nearly the same process that private companies and the brokers who sold them have used for decades with very little change, except that you had to know which brokers sold these private investments, know which broker represented which offerings you might want, and make even larger investments to participate if you were rich enough to even be allowed to invest in private offering.
Coming Soon Part II
Blaine McLaughlin is the Chief Operating Officer of VIA Folio, an innovative private investment
platform that makes it easy for portals, issuers, brokers and advisors to engage with private debt and equity offerings. VIA Folio supports issuance, custody, servicing and secondary transactions in private equity and debt investments and other unlisted securities. He joined the company in 2007, and has led retail customer acquisition and management, partnerships, licensing, portfolio acquisition, introducing broker services, and other business development activities for Folio Investing.
McLaughlin previously served as a Director of Marketing and Analysis at Capital One for credit card and direct banking divisions, and as an officer in the U.S. Navy. He has more than 15 years of experience in the financial services industry, holds a degree in economics from the University of California at San Diego, and an MBA from the Wharton School at the University of Pennsylvania.