Category Archives: angel investor

We proudly invite you to 4th Annual Crowdfunding USA on May 4-5, 2017 National Press Club Washington, DC.

Crowdfund Beat Media Presents: 
 
The Important gathering will discuss what’s new on State of Investing and Risk Mitigation through evolving Internet finance space under the label “2017 the Year of 2.0 Equity & SME Finance-Online Lending or Investing- Crowdfunding “Jobs Act” under new congress & President Trump administration”

 See Conference website & Full Agenda Speakers 

 
For Promotional Opportunities, Group Discount, Sponsorship, and how to become a panelist call 1-888-580-6610 or email to info@crowdfundingusa.com

CF USA AGENDA’s  SNAPSHOT

SEC – FINRA – JOBS ACT – Early Investing
Family Offices – IRA Trust
Rules and Regulations Consideration
Rule 506(c) – Title II Tittle III REG D REG CF
Definition of accredited investor?
Liquidity for the private securities space
Redefining Securities Distribution through Crowdfunding

Real Estate Crowdfunding

Why Hot Real Estate CrowdFunding Is The Next  New Frontier?
Impact of crowdfunding on real estate finance and deal-making
Is Real Estate Crowdfunding Offers An Attractive Alternative For Secure Investments?
The Impact of Technology and Internet on Real Estate Crowdfunding

Trump to Lift Community Bank Regulations (and what that means for house flippers)

Shadow Banking
Dodd-Frank: A Republican Congress
will likely be looking for ways to scale back time and money on business regulation.
Real Estate Crowdfunding and Community Development

Pros & Cons of Internet finance and lending 

2017 State of CrowdFunding

Business of Crowdfunding & Reaching the Goal – How to Make It Happen

Multiple Faces of Crowdfunding on Equity

Future of EB-5 Business Finance & Crowdfunding
Disruption of Equity Crowdfunding on VC’s – Angel Investors
Is Online Lending & Fintech industry here to stay?

Exploring Title II
Why it dominates and will continue to dominate crowdfunding
What initiatives are being pursued to create secondary markets or other means
Effect of IPO window

Regulation A+ Mini IPO
Many of the Reg A deals got pulled this last year.
Is this offering type holding up to investor interest.
Need research on Reg CF, Reg A+ and other offerings.
How much was raised, and how have they performed.
Aftermarket performance of Reg A+ deals

After hours Networking 

Round table discussion

 

Political Crowdfunding: Building a Community Instead of a Campaign

By Anum Yoon, Crowdfund Beat Media Guest Editor,

Throughout the past few years, crowdfunding has become a source of fundraising for charities, life-saving surgeries, new products, individual travel goals, research projects and more. With crowdfunding platforms and social media, it’s easier than ever to set up a page where friends and family can donate to whatever it is you’re passionate about or need money for. But does this new fundraising fad have a place in politics?

Election-Money

Politicians who are starting campaigns or building platforms need money, and it’s a fairly new possibility that this money could come from small individual donations from people on crowdfunding websites instead of the wealthy upper class. Here’s everything there is to know about crowdfunding in the political arena.

Traditional Political Fundraising

In the past and even currently, campaigns have been funded by the appropriate political party the candidate is running for. Additionally, wealthy donors throw large amounts of money into the politician’s bank account and, more often than not, cash in the donation for a favor later on down the road.

With this system, the upper class and politicians are completely running the show. Campaigns are based on who got money from the top dogs, and elections are based on those campaigns. So, it’s not hard to see how the average person isn’t exactly included in the political process.

Changes Being Made

In 2008, Barack Obama, who would be elected president that year, changed the game of fundraising in politics. He was the first candidate who collected funds for his campaign from the average working class family.

Obama successfully built a campaign that got American families interested and invested in him – literally. He asked for donations on his website in order to fund his campaign and raised millions of dollars from small donors who simply donated what they could afford, even if that was only a dollar.

Obama’s strategy worked, obviously. Since then, politicians at the local and federal level have used similar campaign strategies. Bernie Sanders, who ran for the Democratic nomination in the 2016 presidential race, prided himself on not accepting money from billionaires. Instead, he wanted to be funded only by the average American. It was easy for his supporters to support him because donating was just a few clicks away thanks to the ease of electronic payments.

He would often send out emails to his supporters asking for just $3 before midnight to send a message to Washington that Americans are tired of billionaires buying elections. The average campaign donation was $27.

On the surface, it seems like Sanders’ strategy did not pay off, since he did not win the nomination. However, Bernie Sanders made quite a name for himself in just a few short months and was a serious contender for the nomination, running on only small donations through crowdfunding efforts. His effort is a look into what could be the future of political fundraising.

Building a Community

The idea behind crowdfunding is to build a community. Crowdfunding started with individual stories. People who wanted to travel and do philanthropic work. Somebody who needed a surgery their family couldn’t afford. An entrepreneur with a great business idea. A young girl who wanted to go to Disney World.

The stories behind each crowdfunding page are what drives people to donate money. People tell their story in the hopes of touching others and convincing them to donate to their cause.

For this reason, crowdfunding in the political arena could be a great thing. Imagine politicians building their campaign not around the nitty gritty of politics, but around a story that touches the American people — a story of hope and resilience. Campaigns and politics in general could become so much more personalized, and Americans could really play a part in the government.

Of course, there are always some things that could go wrong. Politicians could somehow corrupt this system. There will always be billionaires to buy out politicians in their own best interest. There are holes in every system, but it’s also possible to patch up those holes. Since crowdfunding is such a new idea, there is much to be said and discovered about how the system would actually work when utilized by many politicians.

So, crowdfunding in politics could be great, it could be terrible or it could be somewhere in the middle. Only time will tell how politicians will use crowdfunding for their campaigns and how people will react to this new way of fundraising.

 

 

 

 

2017 Real Estate Crowdfunding: Surveying the Landscape

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“Copyright” By Jonathan B. Wilson CrowdFund Beat Sr. Guest Editor, Partner, Taylor English Duma LLP

The impact of crowdfunding on real estate finance and deal-making has been one of the hottest topics of the past year.[1]  With the advent of crowdfunding, real estate developers and investors have multiple pathways to finance their projects and even to plot their exits.  But in many ways the impact of crowdfunding has not yet arrived.  Crowdfunding for real estate is still in the early stages and may take several detours along the way to its final destination.

What is Crowdfunding?

The idea of “crowdfunding” has been in the news a great deal but investors have only just begun to realize its potential for the industry.  Crowdfunding is the idea that a large number of people, with no particular expertise, can accurately predict the likely success or failure of a venture by combining their own observations and communicating with each other.  James Surowiecki‎, in his book, The Wisdom of Crowds[2], recounts dozens of examples where a large group of people who were able to collect and share information were able to make more accurate guesses about the success of a project than the best guess of any individual expert in the topic.  The Internet, with its ability to collect a large number of people quickly and easily, makes it possible to collect a “crowd” to evaluate an idea better than was ever possible before.

Crowdfunding applies this idea to the process of evaluating investment opportunities, allowing members of the crowd to put money behind their predictions and preferences.  Proponents believe that by allowing a crowd of potential investors to share their opinions about the investment and the information they collect that crowd will be better able to predict the success of the investment than individual investment experts.  Sydney Armani, the publisher of CrowdFundBeat, says, “People get excited when they engage with a new product that arouses their passions.  Those passions take on even greater intensity when they can invest in that new product.” [3]

Crowdfunding can take several forms.  Popular crowdfunding sites like Kickstarter and Indiegogo let project sponsors describe their projects to the public and ask for donations.  In an “affinity” campaign, supports of a project pledge funds for a project because they like it and support it.  Their affinity for the project is their only reward.  In a “rewards-based” campaign, project sponsors offer rewards for cash contributions.  Rewards may range from recognition on a website or on a wall, to t-shirts, products samples and more.

Securities-Based Crowdfunding

Securities-based crowdfunding is possible through several recent changes in U.S. securities laws, most of which are derived from the 2012 Jumpstart Our Business Startups Act (or “JOBS Act”).  In particular, the JOBS Act created three types of crowdfunding: (a) crowdfunding to “accredited investors” under Rule 506(c), (b) crowdfunding for up to $50 million each year under new Regulation A+ and (c) crowdfunding to both accredited and non-accredited investors in small offerings under Title III.

Investing Under Rule 506(c)

First, a sponsor could offer debt or equity securities to “accredited investors” under Rule 506(c).  The JOBS Act changed some of the rules affecting private offerings under Rule 506 so that sponsors could publicly-advertise their offerings.  Before this change in the law, public solicitations of private offerings were strictly prohibited.  Under new Rule 506(c) however a promoter that wants to advertise publicly must take various steps to ensure that every investor who participates in the offering is “accredited”, which is defined as having a net worth of over $1 million (excluding the investor’s principal residence) or having an income of more than $200,000 for two consecutive years ($300,000 is the investor is married and files tax returns jointly with a spouse).

Crowdfunding under Rule 506(c) has been feasible for more than a year and several websites, have had some success hosting real estate crowdfunding campaigns that have included securities under Rule 506(c).  Most of the popular real estate crowdfunding sites included in our survey, however, require accredited investors to create a membership on the site before they can view any live offerings.  As a result, the offerings made available to members are intended as a private offering, and not a general solicitation.  Because there is no general solicitation, those websites take the position that their offerings are private offerings under Rule 506(b) rather than publicized general solicitations under Rule 506(c).

Investing Under Regulation A

Another legal change that came from the JOBS Act was a change to Regulation A, an SEC rule that allows a private company to qualify its securities (which may be equity or debt) through filing a formal prospectus with the SEC.  The SEC reviews the prospectus to ensure that it adequately describes all of the risks of the business and the risks to investors.  Once the issuer’s prospectus is approved by the SEC (at which point it is said to be “effective”) the sponsor may sell the securities to both accredited and non-accredited investors.

Before the JOBS Act, offerings under Regulation A were limited to not more than $5 million.  Under the new provisions of Regulation A (sometimes called “Regulation A+”) an issuer of securities may raise up to $50 million in any 12-month period.

One of the advantages of a Regulation A offering is that the company will be able to solicit investments from both accredited and non-accredited investors, thereby widening the scope of interest in the project.  The SEC’s rules, implementing these changes to Regulation A, however, have only been effective since October 2015.  As a result, there have been relatively few offerings that have completed the new process and it is harder to tell how these new offerings will be accepted by investors.

Regulation CF

The third possible route for crowdfunding is often called “Title III” because it arises under Title III of the JOBS Act.  Although the JOBS Act became law in 2012, the SEC only released its rules implementing this new law in October 2015 and those rules didn’t take effect until May 2016.  Under those roles, a promoter may issue securities, in an amount up to $1 million in any 12-month period, to both accredited and non-accredited investors.  But, soliciting for investors may only take place through licensed crowdfunding portals that have received a license from the Financial Institutions Regulation Authority (“FINRA”).

Under Regulation CF (the name used for the SEC’s Title III regulations), issuers do not file a prospectus with the SEC but do need to include certain disclosures about the company in their offering memorandum.  The funding portal will also be liable for making sure that all of the prospective investors receive certain notices about the process and for ensuring that each investor does not invest more than a certain maximum that is derived from the investor’s taxable income.  While a Regulation CF offering can “go national” by accepting investments from people across the country (whether they are accredited or not) the $1 million limit and the requirement that all solicitations take place online through the licensed portal make this approach a challenge for many new ventures.

Because of the $1 million annual cap on fundraising under Regulation CF, however, this approach is usually not a good fit for real estate projects that often require more than this maximum amount.

Surveying the Landscape

The following websites have used one or more of these regulatory pathways to create a marketplace for crowdfunding real estate projects.  By surveying some of the more popular websites I have tried to provide an overview for how industry players are using these now crowdfunding regulations to make deal flow and investment opportunities possible.  This list is not an endorsement of any of these sites and a site’s omission from this list is not intended as a criticism or a suggestion that the site is not worthwhile or valuable.

Peer Street

PeerStreet specializes mostly in residential debt investments (with a smattering of multifamily and commercial). PeerStreet utilizes Rule 506(b) to solicit accredited investors to participate in loans that are secured by real estate.[4]  They have one of the lowest minimums in the top 10 ($1K versus $10K average), and a healthy volume of new transactions.

Virtually every site in the industry claims that they have superior due diligence. PeerStreet, however, supports its claim with concrete proof.  PeerStreet allows investors to review the performance of every past investment. PeerStreet’s site claims that, since 2014, the site has offered more than 200  notes but without any foreclosures or unremedied defaults.

Unlike many other real estate crowdfunding sites, however, PeerStreet does not originate its loans.  Rather, project sponsors introduce opportunities to the site and then earn a fee based on successfully closing the investments.  As a consequence, investors that participate in deals on PeerStreet pay slightly higher total fees than some other sites.  Because of the relatively high performance that PeerStreet’s deals have produced,[5] however, these fees so far have not kept investors away.

Real Crowd

Real Crowd acts as a syndication platform for real estate development companies and real estate funds.  The development companies and funds pay a fee to Real Crowd to have their offerings listed on the site.  Viewing the offerings is possible only for accredited investors who have created a free membership account on the site.  Most of the opportunities on Real Crowd involve commercial real properties or multi-family properties.  Some of the investments are funds in which the fund manager will be investing in the proceeds in a targeted type of property while others are syndicating take-out financing for existing properties.

From the investor’s point of view, Real Crowd has successfully recruited a large number of property developers and fund managers, so there are many investment opportunities to consider.  Most investments, however, require a minimum investment of at least $25 to $50,000, so the platform is not friendly to small retail investors who want to dip their toes in the water.   In addition, most of the investment opportunities are equity securities, so there is a higher risk of principal loss than is generally the case with debt-oriented platforms.

Realty Mogul

Realty Mogul is one of the largest real estate crowdfunding sites and it uses several different approaches based upon the needs of the project sponsor and the class of investor involved.  Accredited investors may invest in either debt or equity securities.  Accredited equity investors invest in syndicated private placements of special purpose limited liability companies that exist to finance equity investments in particular properties.  The equity investment has the higher potential return associated with equity as well as the potential downside risk of loss.

Accredited investors may also invest in debt securities called “Platform Notes”.  Each Platform Note is a debt security issued by a Realty Mogul special purpose vehicle which uses the proceeds of the Platform Notes to make a loan to particular sponsored investment.  By issuing the note from its special purpose vehicle, Realty Mogul is able to take on the management function of managing the underlying loan (reviewing financials, monitoring loan covenants, working out any defaults, and so on) without involving the passive investors who have purchased the Platform Notes.

For non-accredited investors, Realty Mogul has sponsored its own non-traded real estate investment trust.  Although the REIT (called Mogul REIT I) is not traded on any stock exchanges, its shares were qualified with the SEC through a Regulation A prospectus.[6]  According to the prospectus (which went effective in August, 2016) the REIT plans to hold:

“(1) at least 55% of the total value of our assets in commercial mortgage-related instruments that are closely tied to one or more underlying commercial real estate projects, such as mortgage loans, subordinated mortgage loans, mezzanine debt and participations (also referred to as B-Notes) that meet certain criteria set by the staff of the SEC; and (2) at least 80% of the total value of our assets in the types of assets described above plus in “real estate-related assets” that are related to one or more underlying commercial real estate projects, these “real estate-related assets” may include assets such as equity or preferred equity interests in companies whose primary business is to own and operate one or more specified commercial real estate projects, debt securities whose payments are tied to a pool of commercial real estate projects (such as commercial mortgage-backed securities, or CMBS, and collateralized debt obligations, or CDOs), or interests in publicly traded REITs.  We intend to qualify as a real estate investment trust, or REIT, for U.S. federal income tax purposes beginning with our taxable year ending December 31, 2016.”

Because Realty Mogul facilitates both equity and debt investments for accredited investors as well as equity investments for non-accredited investors through MogulREIT I, Realty Mogul is ideally-situated to generate substantial deal flow and relatively rapid underwriting for projects that apply for funding.  As a platform for providing funding for sponsored-projects as well as a platform for creating investment opportunities, Realty Mogul has one of the best head starts of all the available real estate websites.

Those advantages, however, come at a cost.  Realty Mogul has a large staff operation (which is required for its extensive underwriting duties) and that cost is borne by investors through the 1-2% fees they pay to participate in investments on the site.  While the site has tremendous deal flow, however, a student of the industry might ask, “is this really crowdfunding?”  Because Realty Mogul takes such an active role in performing due diligence on its projects and in structuring the investment opportunities on its site, the overall experience is more structured than most crowdfunding sites and there is less opportunity for the collectively give-and-take than crowdfunding was originally thought to represent.

Realty Shares

Realty Shares facilitates both debt and equity investments into both commercial and residential real estate.  The site claims that it has funded over $300 million to 550 projects that have returned more than $59 million to the site’s more than 92,000 registered accredited investors.[7]   Project sponsors must submit to underwriting through Realty Shares and only projects that have exceeded the site’s standards can be offered to the site’s members.  Fees range from 1 to 2% of the investment amount, but investment minimums are as low as $5,000.

As with most of the other real estate crowdfunding sites, investments are made through private placements under rule 506(b).

Residential Real Property Sites

There are several websites that focus primarily on residential real estate.  Because of the similarity of their focus and approach, they can be surveyed as a group:

LendingHome

Lending Home describes itself as the “largest hard money lender” [providing] “fix and flip loans up to 90% LTC and 80% LTV.”[8]  Unlike many of the other sites that aim their value proposition at investors, Lending Home addresses itself primarily to homeowners how are looking for loans and are willing to pay “hard money” rates of interest to get cash.  Accredited investors can participate in Lending Home in increments as low as $5,000.[9]

Roofstock

Roofstock’s tagline is “Property Investing Like the Pros.”[10]  Like Lending Home, Roofstock focuses only on single family residential properties.  Differently, however, Roofstock allows accredited investors to invest directly through loan participations as well as through small funds that focus on particular regions or particular rates of return.  Roofstock also emphasizes, through its underwriting and its messaging, the underlying quality of the properties and their surrounding communities, school systems and the like.  Browsing through loan opportunities on Roofstock feels more like browsing through listings on Zillow than looking for investments.

Patch of Land

Patch of Land is one of the largest and most heavily-trafficked real estate crowdfunding sites.  The site claims to have originated more than 400 loans for over $245 million in loans, returning over $61 million to investors.[11]  Although Patch of Land has made investments in multi-family and commercial real estate, more than 70% by value of its investments have been made in single family real estate.

Fund That Flip

Fund that Flip is a site that proudly advertises its role in financing single family residential rehab and resale projects.[12]  The site claims that the sponsors underwrite individual deals, requiring borrowers to put at least ten percent in the property’s value in equity.[13]  The site also tries to entice investors, claiming average returns between 10 and 14%.

The Future of Real Estate Crowdfunding

Real estate crowdfunding has definitely arrived.  Through the dozens of existing sites claiming to offer some kind of real estate crowdfunding, investors have invested more than a billion dollars through thousands of investments in just a few short years.  While this method of investing is still very small (in contrast to retail investments in mutual funds and the stock market) it fills a market need that shows no sign of disappearing.

For real estate crowdfunding to achieve a wider degree of acceptance, platform owners will need to continue to facilitate high quality investment opportunities while improving transparency.  Wider acceptance will require a level of information sharing that does not yet exist in the industry.  Even the most popular sites today have varying levels of information available to potential investors.  These inconsistent levels of disclosure can undermine the trust that is necessary to grow crowdfunding as a method of investing.  Real estate crowdfunding sites that facilitate exempt transactions under Rule 506(b) are not regulated, and that is probably a good thing.  But the lack of regulation also permits a wide diversity in style and approach that can make comparing the platforms difficult.

If the leading crowdfunding platforms could collaborate on a standardized “scorecard” that pulled together standard metrics on transactions, investment amounts and rates of return, the result would make it possible for both investors and project sponsors to compare platforms on a level playing field.  The investor confidence that might come from such a development would encourage new investors to come into the market.  Platforms that did not adopt the scorecard at first would experience market pressure to begin reporting results in the scorecard format.  Adopting a standardized scorecard for recording would, in a sense, demonstrate the power that crowdfunding was supposed to represent, by making it possible for the market to adjust itself to the information needs of the investing community.

[1]           http://www.jdsupra.com/legalnews/the-evolution-of-real-estate-15259/

 

[2]           Surowiecki, James, The Wisdom of Crowds, Anchor Books (2005).

 

[3]           Wilson, Jonathan B., Follow the Crowd: What the Future of Crowdfunding Holds for Startup Restaurant Owners, Restaurant Owner Startup & Growth Magazine, 18 (Feb. 2016).

 

[4]           www.peerstreet.com.

 

[5]           PeerStreet claims that its loans have generally yielded between 6 and 12%.  See PeerStreet FAQs, available at https://info.peerstreet.com/faqs/how-do-peerstreet-returns-compare-to-other-debt-investments/ (last visited January 29, 2017).

 

[6]           MogulREIT I, LLC SEC File, available at https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001669664&owner=exclude&count=40&hidefilings=0 (last visited January 29, 2017).

 

[7]           Realty Shares website available at https://www.realtyshares.com/  (last visited January 29, 2017)

 

[8]           Lending Home website available at www.lendinghome.com (last visited January 29, 2017).

 

[9]           https://www.lendinghome.com/how-it-works/#individual-investors.

 

[10]          Roofstock website available at www.roofstock.com (last visited January 29, 2017).

 

[11]          Path of Land website available at https://patchofland.com/statistics/ (last visited January 29, 2017).

 

[12]          Fund that Flip website available at www.fundthatflip.com (last visited January 29, 2017).

 

[13]          Fund that Flip website available at https://www.fundthatflip.com/lender (last visited January 29, 2017).

 

Setting Up an Efficient Crowdfunding Platform

BY Rachael Everly ,CrowdFund Beat Guest Post,

Crowdfunding platforms are a product of technological advancement. However at the end of the day they are a financial solution and their success is dependent on the economic situation at a given time. Many businesses prosper when the economy is booming and all is good. Crowdfunding on the other hand has always prospered when the economy is not doing well, and even during the worst recessions.

During the last recession of 2008, there was a great lack of confidence among banks. This led to a drying up of sources of finance for the small business owner and for individuals who were just starting out. Either their loan applications were outright rejected or they were given such high interest rate offers that they were forced to decline. But with the advent of digitalization came the much flexible option of crowdfunding that led smaller business achieving the necessary finances much cheaply and much easily.

crowdfunding concept. Chart with keywords and icons
crowdfunding concept. Chart with keywords and icons

 

Setting up a crowdfunding platform is an excellent business idea for it is something that the entrepreneurs need. However to be successful it has to meet the finance needs of people successfully.

 

 

  1. Initial set-up

Crowdfunding platforms are a place where investors and people looking for finance gather. So you need to be sure about how you are going to attract investors in your starting days. Your whole business is dependent on them.

You also have to ensure that you offer a “deal” that is both acceptable to investors and the people looking to borrow. The system has to be set up in a transparent way in order to induce trust from all the involved parties. In order to achieve this you will have to focus on a marketing strategy that delivers the maximum information. Information about how you operate, the charges for the borrowers and how are you going to handle the funds at your disposal. You will especially have to convince people that your platform is a secure place to invest. You will need to figure out your marketing channels. The most basic will be your own company blog and possibly even your own in-house developed app (which could be done via crowdfunding).

  1. Developing a brand

Once the crowdfunding concept was new and there were hardly any platforms on the scene. Now competition is arriving and the first mover advantage is long gone. You will have to differentiate yourself from your competition. In the simplest way, it could be by the way of focusing on the aesthetics on your website that is the logo and theme and the usability.

Secondly you should match the features being offered by the competition and where possible streamline your processes even more. You will have to communicate your “differences” via email marketing and company blog. The best way to do this is to provide content that is actually useful for the reader and yet brings your platform to attention.

  1. The technical expertise

At the end of the day customers prefer businesses that provide them with a superb quality service or product. Crowdfunding is essentially a fintech product and thus technology is its backbone. Your crowdfunding platform must not only be user friendly, but it also must be secure and have features that help you make better decisions. For example, Zopa has its own algorithm for deciding which borrowers are more likely to stick to repayment schedules.

In order to succeed it is very important that you analyze your existing competition and see what features you have to match in order to attract customers and what you can do better than them.

 

 

 

The Battle to Launch a Next-Generation Retirement Product & Control $14 Trillion in Investment Direction

By Dara Albright,CrowdFunding Beat Guest Editor, FinTechREVOLUTION.tv  , Dara Albright Media,

In the Fall of 2016, I penned an article entitled, “Modernizing the Self-direct IRA – The Trillion Dollar FinTech Opportunity” – the first in a new series of articles that focuses on next-generation retirement planning. The piece underscored how FinTech will mend America’s flawed retirement system and foster the growth of “digital” investing.

Retire1

This initial report drew attention to the growing necessity for a low-cost, high speed, autonomous retirement solution that would meet the demands of today’s alternative micro-investor. Most significantly, the piece summarized the two distinct individual retirement account prototypes – the Brokerage IRA and the Trust Company IRA – which are vying to become the self-directed IRA exemplar and dominate the $14 trillion retail retirement market.

Sometimes I feel like I am the only one sensing a war brewing in the retail retirement market. But then again, I am somewhat clairvoyant.

Perhaps the majority of America’s retail investors are too busy reluctantly allocating their retirement dollars to sanctioned bond funds – many of which yield more clout than performance – to even notice the race to create a next-generation retail retirement product that will economically custody coveted micro-sized alternative investment products and, in doing so, ensure that a greater number of Americans maintain more properly diversified retirement portfolios.

Maybe most old-school financial professionals are just too preoccupied chasing the “whale” to realize the imminent colossal impact of the rising micro-alternative investor.

No matter the rationale, the fact is that this battle to produce a next-generation retail retirement vehicle is likely to go down as the largest industry duel in the history of commerce – dwarfing the cola and software wars by trillions.

The victorious retirement product stands to inherit the power to redirect $14 trillion dollars of mutual fund assets and disrupt long-standing retirement asset monopolies – thus paving the way for a superior breed of investment products to emerge (download: http://www.slideshare.net/smox2011/the-trillion-dollar-fintech-opportunity).

Unlike previous corporate clashes, the winning IRA model is easy to predict. The frontrunner will be the one possessing the most optimum technological and regulatory framework to accommodate the needs of the modern retail investor. Today’s retail investor is not looking for another mutual fund. He is not begging for ETFs. Nor is he interested in day-trading stocks. Instead, he is craving yield, and he is demanding access to the same level of returns that institutions have been enjoying for years through alternative asset diversification. Simply put, modern investors are looking for a self-directed retirement vehicle that enables them to readily, easily and affordably spread tiny increments of retirement capital across a broad range of asset classes.

Except for the possibility of a sudden legislative change, hands down, the trust company based model will emerge as the clear victor. The Brokerage IRA is bound by too many compliance constraints to enable it to efficiently and cost-effectively facilitate micro investments into alternative asset classes such as P2P notes or crowdfinanced offerings.

The Trust Company IRA, by contrast, operates under a much more favorable regulatory scheme, and any technological shortcomings are presently being addressed and conquered (see: http://www.prnewswire.com/news-releases/ira-services-launches-p2p-lendings-first-cloud-based-api-driven-retirement-investment-solution-at-lendit-2016-300247413.html).

Because it is faster and easier to overcome a technological deficiency than it is to amend regulations, the Trust Company IRA will continue to amass a significant advantage. This is especially true as technology becomes less and less of a commodity and the political climate becomes more and more contentious

There are simply too many compliance-related obstacles that FINRA-regulated BDs would need to surmount in order to formidably compete with the trust company based model. Perhaps one of the most pressing is the Department of Labor’s fiduciary rule which is scheduled to take effect in April.

Under the new DOL rule – which expands the definition of a fiduciary to include commission-based brokers – brokerage firms that handle retail retirement accounts will find themselves facing additional and unwelcomed liability.

In the wake of the DOL rule, retail brokerages have already been seen scrambling to adjust their existing retail retirement product lines. Merrill Lynch has announced that it will be closing its commission-based retirement business altogether, and Edward Jones pronounced that it will simply stop offering mutual funds and ETFs as options in commission-based retirement accounts.

Yes, you read that correctly. Retail brokerages would prefer to limit access to investment products or exit the retail retirement business altogether than to deal with the regulatory headaches of helping small investors prepare for retirement.

Instead of being able to access “prepackaged” diversified investment products, Edward Jones’ retail clientele will either have to self-diversify across stocks, bonds, annuities and CDs, or move to a managed account that charges an asset-based management fee. Since the typical retail investor’s account is too small to properly self-diversify using individual investment products such as stocks and bonds, and since asset-based management fees tend to be much more expensive than one-time commissions, once again retail investors are getting the shaft.

According to CEI finance expert John Berlau, “The DOL fiduciary rule will restrict access to financial advice and reduce choices for lower and middle-income savers. The restrictions can deter companies from serving middle-class savers, creating a “guidance gap” that could cost an estimated $80 billion in lost savings.”

As the DOL Fiduciary Rule succeeds in eliminating both financial advisors and investment choices from the traditional retirement planning equation, smaller investors will be forced into taking a more autonomous stance to retirement prep – leading to a seismic shift in both retail assets and retirement vehicles.

This will have widespread implications on the financial services industry that will include a mass exodus from brokerage IRAs into Trust Company IRAs as well as a flock to robo-advisors, marketplace finance and well as P2P and digital investing – a trend in retail investing that is already well underway.

As the battle for the retail retirement account unfolds, I am going to be reveling in the irony of how once again needless regulatory oversight is helping fuel the FinTech revolution.

Originally published on Dara Albright Media.

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Dara Albright – President of Dara Albright Media, Co-founded the FinFair ConferenceFinTechREVOLUTION.tv

Recognized authority, thought provoker and frequent speaker on topics relating to market structure, private secondary transactions and crowdfinance. Welcome to my new personal blog where you can glean unique insight into the rapid transformation of global capital markets.

 

IPO Fintech Startup ClickIPO Will Bring Initial and Secondary Public Offerings to Main Street Investors 

By Jorge Sanchez, Crowdfund Beat Guest Editor,

 

The Initial Public Offering(IPO) has long been one of the most honored and revered business milestones. For entrepreneurs, early employees and investors IPOs are seen as the ideal liquidation event. But it is also seen by many as more, the IPO represents the ultimate validation of a business: a metamorphosis of a private company into one subjected to the democracy of the public equity market.

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As monumental as an IPO is, both for the company and members of the public which support the business, investing in an IPO is anything but public or democratic.

ClickIPO Securities, a FINRA registered broker dealer, is a financial technology startup that is changing the way underwriters allocate shares in public offerings by inviting individual investors into the IPO market with an easy to use app and creating the infrastructure to facilitate the process from the underwriter to the investor.

Based in Scottsdale, Arizona, Click IPO Securities is led by finance leaders Scott Coyle and James Farrelly, while development efforts are lead by tech startup veterans Jerrod Bailey and Vann Gutierrez.

To bring individual investors back into the IPO market, ClickIPO has created a technology pipeline that connects the underwriting investment bank to the retail investor. Underwriters are provided with a dashboard that makes the process transparent. The turnkey platform provides syndicate managers a single point of contact through which they can allocate shares through dozens of broker-dealers to thousands of investors with one simple allocation. A broker-dealer dashboard complete with compliance and regulatory automation technology allows online brokerage firms to integrate their clients into the IPO pipeline. To give retail investors access to IPOs and secondary offerings, ClickIPO has created a mobile app with a scoring system that minimizes the risk to issuers and underwriters of IPO flipping. The app allows a user to research available IPO and secondary offerings, choose a company they like, and place an order, all through the app. Once the shares are purchased, they will be placed in the customer’s existing brokerage account.

The significant account minimums at large investment banks that underwrite public offerings have limited the investment in IPOs to institutional investors and the wealthy. The only way for an individual investor to gain access to an IPO is through a broker-dealer or a relationship with the investment bank underwriting the offering, this route is limited, based on connections, and suffers from difficulties that arise due to compliance and technology issues.

There is also another risk inhibiting the entry of individual investors into the IPO market; All too often when a syndicate manager allocates shares of an IPO, some of those shares end up in the hands of an IPO flipper disguised as an individual investor. A flipper is someone who through a broker-dealer is allocated shares of an IPO and quickly sells them (any time in the first 30 days is considered flipping) once the shares start trading on an exchange. With the intent to sell early regardless of the price, the IPO flipper creates downward pressure on the share price. The IPO flipper does not add any value in this process but instead diminishes value for everyone else. Once a syndicate manager allocates the shares of an IPO, they don’t have an effective way to track which investors held shares and which investors flipped(sold) shares . They can only minimize flipper risk by limiting IPO flippers from getting shares in the first place, which has proven to be difficult in the current model for syndicate managers.

The team at ClickIPO has developed a solution to mitigate the risk of IPO flipping. At one end of the ClickIPO pipeline is a mobile app that is incredibly frictionless: the ClickIPO app is connected directly to an investor’s existing brokerage account. This mobile app may likely partner with every major brokerage firm and create a pure network of buy-and-hold IPO and secondary offering investors.

At the core of the mobile app is the ClickIPO Investor Score. Something akin to a credit score for IPO and secondary offering investors, the ClickIPO Investor Score takes into account the investor’s behavior and generates a metric representative of the desirability of that investor to an underwriting firm. The allocation algorithm awards priority to those on the platform who have proven they do not engage in IPO flipping behavior through the development of an attractive ClickIPO Investor Score. While the proprietary algorithm takes into account many factors that make an investor desirable to an underwriting firm, the most highly weighted factor is the average duration that an investor holds shares. Holding shares for more than 30 days will reward the investor with a higher score, the longer an investor holds his shares, the more significant the positive impact will be; Those that exit their position prior to the 30 day mark will receive a negative impact on their score, however, if the price of the offering has a significant increase, the negative impact of selling shares in the first 30 days will be less.

ClickIPO also provides value for broker-dealers offering their customers access to IPOs. The burden and risk associated with regulatory and compliance issues has diminished the broker-dealer benefits of offering IPOs to investors until now. The ClickIPO broker-dealer dashboard comes complete with regulation and compliance automation technology, allowing the broker-dealer to provide access to IPOs to their customers while mitigating the risks associated with regulation and compliance. There is also a monetary incentive for broker-dealers to join the network; When ClickIPO places shares into the accounts of broker-dealers, they receive a commission from the underwriter. ClickIPO allots a portion of this commission to the broker-dealer, often making it a more profitable transaction for the broker-dealer than a traditional marketplace transaction.

The deal flow provided by underwriters (major investment banks) is critical to the ClickIPO business model, ClickIPO has developed a powerfully simple process on top of a sophisticated technology infrastructure to assist underwriters. Where the ClickIPO Investor Score eliminates most of the risk of IPO flippers to an underwriter, ClickIPO delivers additional value with an automated, compliant, and secure process with their syndicate manager platform. Because ClickIPO aggregates thousands of investors onto a single platform, syndicate managers will  have a single interface through which they can allocate millions of shares efficiently to these individual investors. After determining how many shares will be allocated to ClickIPO Securities, the ClickIPO allocation algorithm automatically distributes the shares throughout the broker-dealer network and directly into the accounts of the end users based on their priority set by the ClickIPO Investor Score. Additionally, the ClickIPO pipeline generates a great deal of data that is not available today. These data points are presented on the platform and give underwriters insight into the behavior of investors.

The waitlist for the app is live and can be found on ClickIPO’s website where interested investors can sign up to access IPOs and secondary offerings when the app goes live during the second quarter of 2017.

ClickIPO has integrated a series of complementary tools that allows individual investors to access IPOs. With such a deeply integrated and efficient distribution system, it seems ClickIPO may have an infrastructure capable of conducting all non-institutional IPO allocations for any offering and any underwriter. Non-institutional allocations represent approximately 20% of most offerings. I spoke with Scott Coyle, CEO of Click IPO Securities and asked about the ambitions of the company, he said, “we intend to become the premiere retail aggregation pipe by providing access to hundreds of IPO and Secondary offerings every year, to millions of individual investors”.

 

2017 Who’s Who of CrowdFunding Industry Professionals

Who

2017 who’s who in CrowdFunding World

As you know CrowdfundBeat.com continues to grow as the preeminent  go-to source for all news and trends Crowdfunding related.  Our conferences are expanding  as part of our “World Tour” for 2017.

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Crowdfunding Beat Media Group, Conference & Expo 2017 USA Tour

New York City Jan 24th   –  Silicon Valley Feb 9th & 10th – 

Washington DC May 4th & 5th Denver October 2nd & 3rd.

 

For sponsorship opportunity contact: CFB@CrowdFundBeat.com  or call 1 888 580 6610
Name Last Name Comapany/Title Contact
Jay Abraham Business Growth Strategist
Dara Albright Dara Albright Media & FinTechREVOLUTION.tv @tothestoics
Kendall Almerico Crowdfunding and JOBS Act Expert @FundhubBiz
Antonio Arias CEO and Co-Founder Healthy Crowdfunder Corp -@alamidas – @healthvcfunder
Sydney Armani CEO Crowdfunding USA & Publisher of CrowdFund Beat Media Group armani@crowdfundbeat.com
Nav Athwal Realtyshares.Com nav@realtyshares.com
Douglas Atkin Guggenheim Partners
Joseph Barisonzi Leader Community Turnkey Crowdfunding
Chance Barnett CEO Crowdfunder
James Beshara CEO And Co-Founder Crowdtilt
Jason Best Co-Founder And Principal Crowdfund Capital Advisors @CrowdCapA
Nick Bhargava Co-Founder GROUNDFLOOR
 Bruce  Blankenhorn  COO Realty XE .com Real Estate CrowdFunding
Jim Borzilleri CEO, Crowdengine @crowdengines
Amanda Boyle CEO And Founder Bloom VC – @nowaffle
Salvador Briggman CEO Crowdcrux.Com
Ryan Caldbeck CEO Circleup, A Crowdfunding Platform For Accredited Investors
Patrick Calderon Founder Crowdco.co
Johanna Calderon-Dakin Co-Founder Crowdco.co
Chris Camillo Author Laughing At Wall Street: How I Beat The Prosinvesting @ChrisCamillo
 Aubrey  Chernick  Founder,  NextGen Crowdfunding  @AubreyChernick
Steve Cinelli   Financier, economist, author, artist. @stevecinelli
Dan Ciporin CEO And Venture Capitalist
Susan Cooney Founder & CEO At Givelocity
Trish Costello CEO & Founder Portfolia
Luan Cox CEO Crowdnetic @crowdnetic.com
Christopher.j Crippen Certified Crowd Funding Professional,
Daniel Daboczy CEO Fundedbyme @fundedbymeceo
Brian Dally Co-Founder & CEO, GROUNDFLOOR
Mat Dellorso CEO Of Wealthforge
Kathryn Diamond SVP Boston Private Bank, Wealth Management
Andrew Dix Co-Founder Crowdfund Insider
Tommaso D’Onofrio CEO Assiteca Crowd S.R.L.
David Drake LDJ Capital Soho Loft Capital Creation
Timothy C. Draper Draper Founder Partner Of DFJ
Peter Einstein Crowdfunding4all (CF4ALL) – Search Engine
Douglas Ellenoff  

EGS  Leading CrowdFunidng Firm

http://www.egsllp.com/attorneys/douglas-ellenoff

ellenoff@egsllp.com
Alex Fair Co-Founder And CEO Medstartr.Com @alexbfair
Michael Faulkner CEO Seedups @seedups
Ryan Feit CEO And Co-Founder Seedinvest @ryanfeit
Brad Feld Managing Director Foundry Group
Jonathan Frutkin Co-Founder Cricca Funding , Author Equity Crowdfunding
Samuel Guzik  

the JOBS Act Expert Guzik & Associates,

sguzik@guziklaw.com

Oliver Gajda Co-Founder And Chairman Eurcrowdfunding @olivergajda
Dr. Michael Gebert German Crowdfunding Network
Sandi Gilbert Founder & CEO Crowdcapital &Seedups Canada
Julia Groves UK’s    Http://Www.Ukcfa.Org.Uk/
Alfredo Guilbert COO Of Digital Film Cloud Network
Sara Hanks CEO And Founder Crowd Check @SaraCrowdCheck
Kevin Harrington Chairman Of As Seen On TV
Daphne Habets Crowdfunding Pro @ geldvoorelkaar.nl
Daryl Hatton CEO Fundrazr.Com
Jillian Helman Realty Mogul Jilliene@Realtymogul.Com
Adam Hooper Founder/CEO Of Realcrowd
Jessica Jackley Investor And Advisor, Collaborative Fund Co-Founder, Kiva @jessicajackley
 Barry E.    James  Author of New Router to Funding, Founder/CEO TheCrowdDataCenter/TheCrowdfundingCenter    @BarryEJames
Oscar A Jofre Founder/CEO KoreConX Corp. @oscarjofre
Paul Keating Founder And CEO Of Crowdcando; A Crowdfunding Platform For Events.
Karen Kerrigan President Small Business & Entrepreneurship Council @karenkerrigan
David Khorram Crowdfunding Evangelist Dkhorram@Crowdfundingplanning.Com
Candace Klein Founding Member Of Crowdfund Intermediary Regulatory Advocates (CIFRA)
Ronald Kleverlaan Senior Crowdfunding Strategist & Vice Chairman European Crowdfunding Network
Brian Korn Crowdfunding Attorney @BKorn@manatt.com
Luke Lang o-Founder Crowdcube @lukelang
Mark Lancaster CEO    CrowdKey, Inc. White Label CrowdFunding solution  markl@crowdkey.com @mtlancaster
Sang H. Lee Lee CEO & Founder At Return On Change
Howard Leonhardt Founder, Chairman And CEO Leonhardt Ventures @howardleonhardt
Alessandro M. Lerro Lerro Crowdfunding Italy
Jeff Lynn CEO And Co-Founder Seedrs @jeffseedrs
Peter Mackness UK Crowdfunding, Sponsorship, Brand Activation,
David Manshoory CEO, Assetavenue
Michael Markowski Crowdclassifieds.Com, Inc.
Jonathan May CEO and Founder,Hubbub, Director of UKCA
Matteo Masserdotti Founder@Tip.Ventures
Gene Massey CEO Of Mediashares Gene@Mediashares.Com
Blaine McLaughlin COO- VIA FOLIO mclaughlinb@viafolio.com
Matthew Mcgrath President And CEO Of Optimize Capital Markets
Congressman Patrick Mchenry One Of The Investment Crowdfunding Industry’s Most Resolute Champions
Scott E. McIntyre Secy. Board Of Directors CFPA , Director Phabriq Devp.; @scot_mcintyre
Jonathan Medved CEO At Ourcrowd
Brian Meece Rockethub Rewards Platform
Klaus-Martin Meyer Crowdfunding Blogger In Europe
Eric Migicovsky Founder Pebble Technology @ericmigi
Benjamin Miller Co-Founder, Fundrise Fundrise – Direct Public Offering Platform
Alexander Mittal Co-Founder And CEO Fundersclub@Mittal
Vincent Molinari Founder-CEO Gate Global Impact,Inc
Roy Morejon President Of Digital Marketing Agency Command Partners
Bill Morrow Co-Founder & Director Angels Den
Andrew Moss President Of Booster, LLC
Brock Murray CEO Of Joi Media, Makers Of The Katipult White Label
Paul Niederer Venture Capital & Private  Australian paul@raiseworth.com @paulniederer
Rodrigo Niño Prodigy Network’s Founder And CEO
Perry Niro Montreal, Canada Perry@Groupeavea.Com
Howard Orloff Crowdfunding-Website-Reviews
Jeremiah Owyang Web Strategy Www.Crowdcompanies.Com
DJ Paul Co-Chair CFIRA
Humphrey Polanen Managing Director Of I-Bankers Direct
Darren Powderly Co-Founder Crowdstreet, Inc.
Tanya Prive Founder And COO Rockthepost @tanyapri
Scott Purcell CEO Fund America   scott@fundamerica.com
Sam  Quawasmi  MD Eureeca
Georgia Quinn   CEO @ disclose.com  gquinn@idisclose.com
Mark Roderick mark.roderick@flastergreenberg.com  WWW.CrowdfundAttny.com  @CrowdfundAttny
Naval Ravikant Founder And CEO Angellist
Danae Ringelman Co-Founder And Chief Customer Officer Indiegogo @GoGoDanae
David S. Rose Founder And CEO Of Crowdfunding Site Gust
Slava Rubin CEO Indiegogo @gogoslava
Bishop Rodney Sampson Kingonomics
 Jillian  Sidoti  jillian@syndicationlawyers.com
Joy Schoffler Principal Joy.S@Leverage-Pr.Com
Eric Schreyer Journalist And Editor Crowdfundbeat Germany
Wil Schroter Founder And CEO Fundable @wilschroter
Marlon Schulman Founder & CEO Horror Equity Fund, Inc
Joanna Schwartz CEO Of Earlyshares
Barry Sheerman Member Of Parliament For Huddersfield UK Parliament @BarrySheerman
Barry Silbert Founder And CEO Secondmarket @barrysilbert
Rose Spinelli Coach, Trainer, Pitch Video Creator Thecrowdfundamentals.Com @TCFrose
Paul Spinrad Crowdfunding Advocate Investian
Duncan Stewart Director Of TMT Research Deloitte Canada @dunstewart
Yancey Strickler Co-Founder And CEO Kickstarter @ystrickler
Ron Suber President At Prosper Marketplace
Bryan Smith Co-Founder- Realty Wealth.com
Richard Swart  Chief Strategy Officer NextGen Crowdfunding @richardswart
Kevin Swill COO Of The Carlton Group
William Skelley CEO and founder of iFunding.  @SkelleyWilliam
Chris Thomas CEO Eureeca
Devin D. Thorpe Journalist, Author, Philanthropist @devindthorpe
Nadav Trenter Moser: Http://Www.Mimoona.Com/ Medugam@Gmail.Com
John Trigonis Indiegogo Author Of Crowdfunding For Filmmakers
Chris Tyrrell CEO At Offer Board @christyrrell
Andres Trujillo Founder-CEO Global GroupFund inc.
Katharine Voyles Mobley Chief Marketing Officer Wecarecard
Sam Vogel Co-Founder-Realty Wealth.com
Sonny Vu Misfit Wearables
Kim Wales  founder and CEO of Wales Capital @kimwales1
Mathew Walker Technology Enthusiast | Domain Name Broker | Ebook Author
David Weild Chairman & CEO At Issuworks
Noreen Weiss Adler, A New York–Based Attorney Who Has Written Extensively On Crowdfunding.
Darren Westlake CEO Crowdcube @DazWest
Joanne Wilson Co-Founder Gotham Gal Ventures @thegothamgal
Jonathan Wilson  Attorney Jwilson@Taylorenglish.Com
Sherwood Woodie Neiss Partner, Crowdfund Capital Advisors
Dr. Letitia Wright Wright Place TV Show
Diana Yazidjian Crowdfunding Strategist Canada
Korstiaan Zandvliet Symbid – Global Equity Platform
Anthony   Zeoli  

Professional Problem Solver; Partner at Freeborn & Peters LLP

anthony.zeoli@gmail.com

Bryan Zhang Phd Researcher Bryan Zhang @BryanZhangZ
 Tony  Zerucha
Managing Editor
Bankless Times

Sponsored by 2017 SV CrowdFunding Conference 
tags:

crowdfundbeat, Crowdfunding, equity crowdfunding, indiegogo, Kickstarter, Real Estate, Realty Mogul, SEC, sv crowdfund, UK, Who’s Who, Who’s Who? of CrowdFunding

HR 3784 – SEC Office of Small Business Advocate – Is Now the Law of the Land

By Samuel S. Guzik, CrowdFundBeat special guest editor,  Guzik & Associate

On December 16, 2016, President Barack Obama Signed into Law HR 3784 – SEC Office of Small Business Advocate, creating an independent Office of Small Business Advocate at the SEC, reporting directly to the full Commission and Congress. This legislation was first introduced into Congress in October 2015, where it was originally co-sponsored by former House Representative John Carney (D-Del) (now Governor-Elect of the State of Delaware) and Congressman Sean Duffy (R-Wisc) and was passed unanimously by the House of Representatives in 2016. It was passed unanimously by the U.S. Senate on December 9, 2016, as part of a flurry of year-end bills passed by the Senate before it recessed for the year.

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The bill had broad industry support upon its introduction in October 2015, including the U.S. Chamber of Commerce, the National Venture Capital Association, National Small Business Association, Small Business Investor Alliance, SBEC, and the Crowdfunding Professional Association (CfPA), of which I served as its Chair and President at the time.

Remarkably, this Bill passed Congress unanimously without the support of the SEC. In testimony from SEC Chair Mary Jo White before the Senate Banking Committee in June 2016 she was asked by the Senate bill co-sponsor, Heidi Heitkamp (D-ND), whether she supported this legislation. Her response:

 “We currently have the Office of Small Business Policy within the Division of Corporate Finance. I am an advocate for small business.” 

A roundabout way of saying “no” – it seems to me.

In the past I have referred to this bill as the missing title of the JOBS Act of 2012. Though it parallels to a large extent to the SEC Office of Investor Advocate – part of the Dodd Frank Act of 2010 – the need for this legislation goes back decades.

The successful passage of this law was the result of the participation and support of many individual and groups. However, I am proud to have had a major role in initiating this legislation, among other things:

  • I was the first person to publicly advocate for this legislation, in Feb 2014, in an article published on Crowdfund Insider.
  • I met with former SEC Commissioner Daniel M. Gallagher in June 2014 to advocate for this bill.
  • I was cited by Commissioner Gallagher in a public address (Note 36) by Commissioner Gallagher given at the Heritage Foundation in September 2014 where he advocated for the need for a permanent Office of Small Business Advocate.
  • I worked with the original sponsor, Rep. John Carney (D-Del) (now Governor-elect of Delaware) in drafting this legislation prior to its introduction in Congress.
  • I assisted in procuring the initial Republican co-sponsor – Rep. Sean Duffy (R-Wis).

A special thank you is in order for SEC Commissioner Gallagher. Without his public and vocal support for this legislation it might have taken many more years for this historic legislation to become a reality.

A copy of the Bill can be found here.

For those of you who want to dig deeper on this subject, here is some background material on the Bill and my role in its journey:

http://www.crowdfundinsider.com/2016/12/93592-sec-small-business-advocate-moves-closer-reality-senate-passes-bill/

http://www.crowdfundinsider.com/2016/11/92607-unstacking-deck-smes-washington-call-sec-small-business-advocate/

This entry was posted in Capital Raising, Corporate Governance, Corporate Law, Crowdfunding, General, Regulation A+ Resource Center, SEC Developments and tagged , , , . Bookmark the permalink.

Crowdfunding- The Good, The Bad & The (really) Ugly Part II –The Bad

By Shane Liddell is the CEO and chief Crowdfundologist at Smart Crowdfunding LLC,. Crowdfund Beat Guest post,

Introduction

In Part 1 I covered all of the good things that we have seen as crowdfunding continuously gathers momentum across the world. The future looks bright indeed!

However, as with any new industry forging ahead and desperate for acceptance, the surrounding hype that comes with it often blurs reality, with any form of negativity simply  ‘brushed under the carpet’ so to speak. Naturally, those fully vested in the industry (including yours truly) have a lot on the line, as everyone charges ahead in full promotion mode. The ‘painted picture’ is a rosy one and for a very good reason, but there is a dark and sometimes sinister side to the industry as well.

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Part 2-The Bad

 The Industry Evolves

 

 

Let’s rewind a little. In an interview with Film Threat back in October 2010, Indiegogo co-founder, Slava Rubin said “… what we are now and what we are for the future is we’re all about allowing anybody to raise money for any idea” Although this may have been true at the time, it’s certainly not applicable today. Reality is that not ‘anybody ’can raise money through crowdfunding unless they are a) extremely lucky, or b) have a substantial amount of money to begin with. Let me explain a little further.

My own entry into the crowdfunding space happened by default during June of 2012 when confronted with a desperate plea for funding from a lady by the name of Louise Joubert of the Sanwild Wildlife Sanctuary. Louise put out a post on the Sanwild Facebook page saying that sponsors had pulled up to 70% of the funding for Sanwild due to the recession, so she was unable to feed the 16 lions she rescued from the ‘canned hunting’ industry, and she was getting to the point of desperation and was seriously considering euthanizing them. Louise saw this as the kind way to put an end to any potential suffering. This sad story really pulled at my heartstrings and after a phone call or two to South Africa, I volunteered to see if I could help by using this new fundraising method called Crowdfunding. To cut a long story short, we did manage to raise over $20,000 through an Indiegogo campaign and in turn bring a happy ending to this story with the 16 lions being saved. It was an exhausting process, especially with little to no budget to market the campaign; but through teamwork, perseverance and leveraging off of our social contacts, we made it. The point here is that with almost no campaign budget (but instead 100’s of hours invested) we were able to do what we set out to achieve – Save Our Lions.

During 2012 we saw on average 30-50 campaigns launching on the Indiegogo platform each week and probably around 60-70 per week on Kickstarter. These low numbers made things much easier for anyone crowdfunding their ideas, as competition for ‘eyeballs’ was almost non-existent, the media was receptive to any crowdfunding news at all, and the public was in a state of confusion as to what they were really doing when contributing to these campaigns, with many thinking they were simply making an online purchase just as they would do on Amazon.

How things have changed.

Fast forward to 2016 and with approximately 300-400 campaigns launching per week on the Indiegogo platform and up to 600 per week launching on Kickstarter, the competition is fierce. Add to this that there are now well over 1000 (and counting) crowdfunding platforms globally and you’ll begin to see the real picture.

The corporate world is now waking up to this new, low cost way of validating and funding projects and products. Big names such as Sony and GE’s entry into crowdfunding gives the small guy very little chance of competing with them.

In a recent article published by The Verge earlier this year titled “Indiegogo wants huge companies to crowdfund their next big products” and a sub heading which reads “Indiegogo wants big brands to start crowdfunding” we see how they have changed for the worse. Their “Enterprise Crowdfunding” clearly showing that they are not in any way ‘democratizing access to funding’ but instead are an entity solely in the business of making a profit at all costs (more on this particular story in Part 3 –The Ugly).

I guess the most disturbing words I read in that article are these:

“Large companies can also pay for special placement on Indiegogo’s site, making them more discoverable than other campaigns.”

So, Indiegogo now earns revenue from advertising placements only available to corporates? Shocking to say the least!

This whole scenario stinks and reminds me of a certain politician, who now as president elect, has already made several ‘about turns’, continuously going against the words he used to gain popularity.

I hope you all now realize why the small guy has little to no chance of success, especially now that the heavyweights enter with the resources to squeeze them out. In fact, a well know marketing agency recommends a campaign budget today of a whopping $40,000. I don’t know too many ‘little guys’ with that kind of cash to spend on an upcoming crowdfunding attempt, do you? Wasn’t the whole point of crowdfunding to raise money and not spend it?

Although crowdfunding was originally pitched as democratizing access to funding for the small guys, this is no longer true. Without a good chunk of capital to start with, their campaigns are doomed before they begin.

 

Equity Crowdfunding – The SEC (Securities and Exchange Commission)

Background

On April 5th 2012 president Obama signed the Jump Start Our Business Act (commonly referred to as “The JOBS Act”) giving the SEC 274 days to write up the necessary rules and regulations. The main purpose in the implementation of the JOBS Act was to stimulate the creation of jobs through small business access to capital.

The JOBS Act substantially changed a number of laws and regulations making it easier for companies to both go public and to raise capital privately and stay private longer. Changes include exemptions for crowdfunding, a more useful version of Regulation A, generally solicited Regulation D Rule 506 offerings, and an easier path to registration of an initial public offering (IPO) for emerging growth companies.

The titles of the bill that make equity crowdfunding work are:

  • TITLE II – Access to capital for job creators (REG D)
  • TITLE III – Crowdfunding (REG CF)
  • TITLE IV – Small company capital formation (REG A+ or mini IPO)

What’s with all this jargon you may ask? Good question, and the answer is one which I hope many academics will learn to answer in their writings. Effective communication is always better crafted to suit a broader audience. Within crowdfunding, I feel it is important for all – lawyers, accountants, broker dealers etc. – to understand that in our attempt to educate the market, we need to simplify the language used so as to be better understood by the majority.

Back in the 70’s the KISS acronym and methodology – “Keep It Simple Stupid” was very popular for good reason. The simplicity of this methodology should be more applicable today than it ever has been.

For clarification:
REG D allows the issuer to raise funds from accredited investors only meaning in essence from a select few rich people.

REG CF allows issuers to raise funds from both accredited investors and non-accredited investors (the general public) but is subject to limitations.

REG A+ allows the raising of up to $20M through Tier 1 and up to $50M through Tier 2.

Titles I, V, and VI of the JOBS Act became effective immediately upon enactment. Understanding these within the context of this article is not really important so I won’t bother explaining.

The SEC approved the lifting of the general solicitation ban on July 10, 2013, paving the way for the adoption of REG D which went into effect in September 2013. Following this was REG A+ which went live during June 2014 – 2 years after the signing of the Jobs Act – and finally the long anticipated (and most beneficial to small business) REG CF on May 16th 2016 – more than 4 years since the signing of the Jobs Act!

Yes, you read that right – 4 years later. A whole 4 years of lost opportunity. Why 4 years you may ask? Well, through a series of meetings, mountains of paperwork, a change of chair, commenting periods, rewriting this and rewriting that and a whole heap of other hurdles to jump through in between, a whopping 685 pages of regulations was created. Certainly no KISS methodology involved there!

During this period, how many small businesses have folded because they had no access to much needed capital? How many could have been saved from collapse? How many precious jobs were lost during this lengthy and tedious process? The answers should be fairly obvious to fathom.

Based on current information from successfully funded campaigns, we see that so far around $175M has been raised under REG A+ crowdfunding and about $15M over the past 6 months through REG CF. Imagine what these numbers would look like had the SEC been more efficient in the role they played during the entire rulemaking process.

On the other hand, the United Kingdom took a fairly relaxed approach to rulemaking which has led to the creation of the most dynamic alternative finance market in the world. In real terms they are 5 years ahead in the game and are seen as the leaders in this space. The United States is seen as a failure.

Were the SEC attempting to break records as the slowest crowdfunding rulemakers in the world? Maybe not, but it appears they are well positioned to claim this shameful accolade!

 

The Pretenders – Self –Promoters and the Charlatans

Before I begin, let me just say that there are many among us who have ‘earned their stripes’ in this industry. I hold these people in the highest regard for their dedication and commitment to the cause. Far too many to mention of course, but you know who you are, so thank you for doing what you do! Through the many long days of hard work, dedication, countless hours of research, and in some cases, hands on experience with crowdfunding projects of all shapes and sizes, they stay true to their objectives of making the crowdfunding industry one to admire. These people gain respect naturally through their words and actions alone. They generally keep a fairly low profile too, with little need to go on the self-promotion bandwagon, as people naturally migrate to them anyway.

Let’s briefly return back to 2012, when crowdfunding was really still in its infancy and there were very few players involved. To put things into perspective, at the time of launching my own crowdfunding marketing agency Smart Crowdfunding under the crowdfunders.us domain, there were only four other active crowdfunding marketing agencies globally. The industry was tiny and it was very easy to know who was who.

This leads me to a telephone conversation I had one day during early 2013 with one of the other agency founders who had taken issue with the fact that I was now actively competing with him. After listening to his concerns, I politely brushed them aside and ended the call saying “If you are concerned about competition now, then wait to see what’s coming over the next few years”. He grumped and the call ended. Move on to 2016 and we see a whole load of entrants into this space.

Back to the point:
There are those who clearly try to take shortcuts in an attempt to get to the top, with integrity thrown right out the window in their pursuit of money and stardom. Many of these types have little care for the health of the industry as a whole, but instead their own greed drives them forward. They are quite easy to spot though. Lies are abundant and a little due diligence goes a long way in discovering the truth about them. The wonderful world of the Whois lookup is a great tool to confirm some claims of “we’ve been doing this for the past 5 years” as domain registration dates tell the truth. Some have woken up to hiding these details and hide behind a proxy registration service. In fact, a little while ago I had discovered exactly this with a crowdfunding marketing agency who made such claims (and still do) of having been around for the past 6 years. I did a Whois search many months ago to only find that their domain was registered in 2013 – and not 6 years ago as claimed. Further investigation confirmed this. Today their domain registration information is now hidden via a proxy.

One of the most common things I see today is those with very little industry experience becoming self-proclaimed “Experts”. Let’s elaborate on this for a moment.

During 2014 I attended a crowdfunding industry conference, and as I sat in the audience while the proceeding began, the moderator allowed the panel give a brief introduction of themselves. There were 4 on this particular panel, 3 of whom I knew of. To my amazement, one particular character was introduced as a crowdfunding marketing expert. I listened intently to this persons ‘pitch’ and also the advice they gave to the audience when confronted with questions such as “What’s the single most important tool to use when crowdfunding? Their answer? PPC (Pay per click). Wrong! In disbelief, there were a few shaking heads in the audience, mine included. Had this person’s earlier claim of “I’ve worked on 80 Kickstarter and Indiegogo campaigns” during their introductory pitch been true, they would clearly know this was incorrect information. Following up from this and after checking out the real facts it turns out that today, this person has run a single Indiegogo campaign of which struggled to get to $10,000 funded. I suspect a fair share of self-funding activity there too. This example is one of many we see as the industry powers forward. Being able to spot these “experts” is fairly easy when you know what to look for.

You see, I have followed Indiegogo campaigns in particular like a hawk. My early career in crowdfunding was built around this platform so it’s rare that even a single campaign that’s raised more than $5,000 gets by me without notice.

The biggest telltale sign of those who attempt to take shortcuts to stardom is the lack of consistency in their pitch. Many appear to have short memories! The character I reference above has since spoken at numerous industry events and their pitch varies from “I have 8 staff and have worked on over 100 Kickstarter and Indiegogo campaigns” to “I have 25 staff and have worked on 80 Kickstarter and Indiegogo campaigns” In reality, as of today they’ve worked on a handful at most and only 1 on the Indiegogo platform can be confirmed under deeper investigation.

I have major concerns! Besides ‘the blind leading the blind”, the entire industry is at stake here, and addressing the real issues now can only bode well for a healthy and prosperous industry for all.

As a colleague recently said “….the integrity of the entire industry is on the line, and if the charlatans are allowed to run roughshod it’ll soon turn into a house of cards.” No truer words have ever been spoken.

Scampaigns – Yes and No

Now this section will be fairly short.

Let me start by saying that intentional scams are really very rare. During my time in the industry I have seen no more than 3 or 4 which were clearly scams from the very beginning ( I’ll elaborate more on this in Part 3 – The Ugly).

What I have seen, however, even from some of my earlier clients may surprise you. They begin the crowdfunding process with good intentions but unrealistic expectations (a common trait among those crowdfunding today).This is their real downfall.

Many are young, inexperienced men and women whose entire focus is on how great their product is. They are emotionally invested and in some cases spend lengthy periods developing their concept or prototype. When the time comes to go crowdfunding, in many cases they lay everything on the line. Some win. Some lose.

Even after running a successful campaign, for many the process of handling large amounts of cash and developing their idea into a real manufactured product, leads to failure due to lack of experience. A weak team adds to their woes and they burn through cash at an alarming rate. In time, they sit in disbelief that they no longer have enough cash to actually finish the product. At other times their concept was flawed from the very beginning but they only discover this when attempting to go to the prototype stage. Facing the inevitable truth is hard for them, and with the angry abuse from their supporters awaiting, they are stuck between a rock and a hard place. Many come to the conclusion that their only route of escape is a disappearing act.

What do the backers, journalist and millions of other disgruntled people call these people? Scammers. Many of their backers didn’t know at the time they were backing a concept in the first place and shout to the high heavens in disgust when they don’t get what they thought they “ordered’ a year prior.

A very recent case of the scam label being attached to something that was not a crowdfunding scam from the very beginning is Healbe GoBe – “the first and only wearable device that automatically measures the calories you consume and burn, through your skin” which raised over $1M. Despite being slammed by all and sundry – including backers, engineers, scientists, and journalists – they eventually brought their product to market, albeit with many ‘teething problems’ still to be ironed out.

Conclusion

My biggest challenge when writing  part 2 of my article, was in trying to condense as much as possible, but to still get the message(s) across. I hope I have achieved this even though we still ended up with over 3,000 words.  I promise a much shorter part 3. Thank you for reading and I hope this has been helpful.

Look out for Part 3 – The (really) Ugly, where I delve deeper into the real scams of the crowdfunding world, as well as extortion and blackmail attempts and the platforms that seemingly turn a blind eye to it all.

About The Author

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Shane Liddell is the CEO and chief Crowdfundologist at Smart Crowdfunding LLC, the crowdfunding marketing agency. He became active within the crowdfunding industry early in 2012, seizing the opportunity to offer help to crowdfunders from all corners of the world. He has delivered successful campaigns for entrepreneurs, startups, corporations and filmmakers and has assisted over 500 crowdfunders with campaign development, consulting, marketing and promotion services, some of whom have raised millions of dollars in the process. He has attended numerous equity crowdfunding industry events, including the SEC Small Business Forum and the CfPA Summit in Washington DC. Shane holds the position of Executive Director of the Crowdfunding Professional Association (CfPA).

Crowdfunding- The Good, The Bad & The (really) Ugly

By Shane Liddell is the CEO and chief Crowdfundologist , CrowdfundBeat guest post.

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Introduction

Crowdfunding is by definition, “the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.” The earliest recorded use of the word was by Michael Sullivan in Fundavlog during August 2006. The term crowdfunding was used for the first time in the year 2006 when Michael Sullivan launched Fundavlog. This, however, was a failed attempt to fund events and projects related to a video blog.

With the signing of the JOBS Act on April 5th 2012, the word of the day became “crowdfunding” and publicity from this historic event generated interest from all corners of the world and helped push crowdfunding into mainstream news.

The first instance of online crowdfunding took place during 1997, when fans funded the entire U.S. tour for the British rock group Marillion, raising just over US$60,000 in donations through a fan-based Internet campaign.

If the crowd and the web are considered to be two essential elements of crowdfunding, its very first examples came into being in the 1990s with the emergence of platforms for charity fundraising and projects funded by Internet-based campaigns. The UK-based charity fundraising platform JustGiving was founded in the year 2000.

The modern crowdfunding model is generally based on three types of actors: the project creator who proposes the idea or project to be funded, individuals or groups who support the idea, and a platform that brings the parties together and facilitates the transactions.

Part 1-The Good

The crowdfunding industry is doubling or more every year, and is spread across several types of funding models including rewards, donation, equity, and debt/lending.

Just five years ago there was a relatively small market of early adopters within online crowdfunding, helping raise $880 million during 2010. Things changed fast with $6.1 billion raised in 2013, $16.2 billion in 2014, and a whopping $34.4 billion in funds raised during 2015. In comparison, the Venture Capital industry invests an average of $30 billion each year. By 2016 the crowdfunding industry is on track to account for more funding than venture capital, according to a 2015 report by Massolution.

 

The highest reported funding by a crowdfunded project to date is Star Citizen, an online space trading and combat video game being developed by Chris Roberts and Cloud Imperium Games, which – as of 21 November 2016 – claims to have raised over $133,000,000 USD using a combination of crowdfunding platforms including its own.

One of the most influential factors behind the rapid growth of crowdfunding over the past 10 years was due to the global recession of the late 2000’s and early 2010’s. This highly turbulent time saw many small and established businesses struggling to survive.  Crowdfunding saved some of these businesses from crumbling into nonexistence by facilitating the raising of much needed capital. Traditional sources of funding – bank loans, overdrafts, credit cards – were all but drying up as the financial industry strained under the immense pressure the recession brought, with several household brand names suddenly put out of business too!

There are many success stories around, some of which I have personally been involved in helping reach way beyond their initial funding goals. FOBO TIRE, the tire pressure monitoring system (TPMS) managed to raise a total of $186,105 USD through their Indiegogo campaign back in 2014 but then went on to even greater things. Their products entry into retail happened through UK retailer Maplin and since then they have picked up a few awards along the way too.

Just last week, Phazon CEO, Chris Houle was chosen to appear on the CBC show Dragons Den, securing a great deal from the Dragons. His Indiegogo campaign, having raised over $2M earlier this year.

Many have heard of the highly successful Occulus Rift Kickstarter campaign launched during Q3 of 2012, raising a total of $2,437,429 and with Mark Zuckerberg of Facebook announcing the purchase of the company for a huge $2B USD on March 25th, 2014

There are many other similar successes out there including the renowned Pebble Watch who managed to raise a total of over $30M through 2 crowdfunding campaigns on the Kickstarter platform.
Conclusion

Startups rarely survive without funding and crowdfunding has enabled entrepreneurs to bring their ideas to the crowd for validation, and through engagement with potential customers, gain valuable feedback too.

Crowdfunding is here to stay!

Look out for Part 2 – The Bad, where I delve into the aspects of crowdfunding that are rarely spoken of, including the use of the dreaded word “scampaigns”.

About The Author

Shane Liddell is the CEO and chief Crowdfundologist at Smart Crowdfunding LLC, the crowdfunding marketing agency. He became active within the crowdfunding industry early in 2012, seizing the opportunity to offer help to crowdfunders from all corners of the world. He has delivered successful campaigns for entrepreneurs, startups, corporations and filmmakers and has assisted over 500 crowdfunders with campaign development, consulting, marketing and promotion services, some of which have raised millions of dollars in the process. He has attended numerous equity crowdfunding industry events, including the SEC Small Business Forum and the CfPA Summit in Washington DC. Shane holds the position of Executive Director of the Crowdfunding Professional Association (CfPA)

Special Report: Kickstarter and Silicon Valley VCs Blockchains

CrowdFund Beat Special Report,

Move Aside Kickstarter and Silicon Valley VCs Blockchains Disrupt Project Financing

As online crowdfunding leaped in recent years, taking a cut from the expansive activities of venture capitals which peaked at US$148 bln  as invested through 8,381 deals in 2015 according to EY, Blockchain technology has been making inroads into the world of project financing with a prospect that could take it to another level.

EY, the global transaction and advisory firm, says in Back to reality that 2015 saw the highest venture capital (VC) activity in nearly two decades globally with a projection that the move will continue through 2016 as the focus shifts to companies’ proven ability to execute. It also notes that the US dominated global VC activity by deals and value.

This corresponds with the PricewaterhouseCoopers LLP (PwC) and the National Venture Capital Association (NVCA)’s MoneyTree Report which cites that VCs in the US deployed $58.8 bln within the same period. Based on data from Thomson Reuters, the report says the deployed amount made 2015 the second second highest full year total in the last two decades.

Online crowdfunding, on the other hand, climbed from a reported $880 mln in 2010 to $16 bln by 2014 and was estimated to grow to over $34 billion by 2015.

The Massolution Crowdfunding Industry 2015 Report confirmed the target with a break down that estimated the total global crowdfunding volume of $34 bln in 2015 as mainly going to P2P lending ($25 bln), reward and donation crowdfunding ($5.5 bln) and equity crowdfunding $2.5 bln.

The report points out that North America has the lionshare of the total sum with $17 bln followed by Asia $10.54 bln and Europe $6.48 bln.

Types of online crowdfunding

Though key among the platforms that dominated the online crowdfunding landscape are KickStarter and Indiegogo – the world’s first crowdfunding platform, the advent of the Blockchain technology has opened up new grounds for startups seeking to raise capital.

Examples are Ethereum’s TheDAO and WINGS DAO, which recently took in about $1 million in donations, that have given the world a glimpse of what blockchains can achieve in the organization of scattered strangers to share a common purpose. With its smart contract features, which uses a programming language to make legal binding between parties, the concept of the crypto-enabled DAO – or Decentralized Autonomous Organization – has gained popularity particularly in 2016 after it was used to raise over $150 mln on the Ethereum platform though it later had a flaw.

One thing is clear about the crypto-enabled platform, together with the donation-based and equity-based crowdfunding platforms such as Kickstarter and Indiegogo (which recently launched equity crowdfunding that allows anyone to invest in startups and growing companies): they have all established the level of believability that people of all differences could share when they are inspired by a good idea.

Donations, Coins & Equity: The Differences

However, despite their commonality, the three types of crowdfunding platforms operate based on different models – with differing results.

Everyone is familiar with the donation based models pioneers by companies like Kickstarter that depends on charity, but where donors take a hands-off role.

Unlike donation-based crowdfunding like Kickstarter in which backers get perks in exchange for their investment, interested investors using the equity crowdfunding model receive shares or other forms of financial stakes in the company they back.

The introduction of cryptocurrency-backed crowdfunding as a new innovation brought about much differences. It can use a DAO,  an organizational model that implements self-determining and independent governance, management and operations using immutable blockchains and smart contracts execution, to allow a large group of people to function as contributors and decision-makers for a project with or without any form of central leadership.

Blockchain in project financing
In the wake of Ethereum’s recent inactivity, the new DAO-powered crowdfunding platform, WINGS, emerged as an embodiment of what TheDAO represented with added features that protect and reward donors or project supporters. This is in addition to its enabling donation crowdfunding like Kickstarter and Indiegogo but in a crypto-enabled format.


The platform creates an incentive-based system that encourages participation by rewarding participants submitting new proposals and those who forecast a DAO project’s ability to raise funds or meet certain milestones.

This will allows the interests of project supporters and startups to be clearly aligned to ensure the success of their business and the satisfaction of its donors through a governance structure and a milestones control that make it a dependable decentralized platform for DAOs which are embodied by smart contracts running on various blockchains supporting the Ethereum Virtual Machine.

One of the platform’s benefits for startups seeking to raise capital for their decentralized app ideas in a new era of organizational collaboration and governance is the transparency of its funding system based on regulatory requirements.


Like KickStarter and Indiegogo give people and creative projects the opportunity to raise money via online donations or pre-purchasing of products or experiences, WINGS could be used for project-based endeavors that are on a one-off basis like an art or film project, a new product or the funding of a life event.

WINGS will be the first project governance and backing social platform to use new technologies including swarm intelligence through decentralized forecasting markets, smart contracts generators, DAO contracts accessibility and engagement solutions, and flexible governance and participation models which presents an open opportunity for all to pursue ideas of interests and values without any restriction like, for example, Kickstarter on whose platform donors can only choose from given categories and only users from the United States, Canada or the United Kingdom are allowed to create projects though anyone may donate.

Outlook

The Blockchain has been touted to be the greatest innovation that would revolutionize our existence as the web did in the 90s. Its future outlook – as well as for cryptocurrencies – looks promising. This forward-looking prospect blends with the World Bank’s projection that crowdfunding would reach $90 billion by 2020 – or $90 billion by 2017 if the trend of doubling year over year continues.

Coupled with the plethora of ideas that are springing forth every day, seeking supporters that would bring their conception into reality, the Blockchain seems the go-to technology that would transform various sectors including project financing.