Introducing the Securities Crowdfunding Market Matrix



Nothing is as powerful as an idea whose time has come” Victor Hugo

When analysing the crowdfunding market it is typically broken down into four main categories such as donation, reward, debt and equity. Securities crowdfunding, which is the generic clause for debt and equity crowdfunding, is sometimes also called crowdfund investing or crowdfinance. As argued in a previous post,crowdfunding is not a new asset class; it is rather a new conduit for financial flows which dis-intermediates the supply chain of capital allocation, and provides efficiency and transparency in the investment process, enabling investor and issuer to interact in better and more productive ways. In addition it reduces the search cost for the investor and allows for a high degree of risk diversification.

So it is no surprise that crowdfunding is rapidly dispersing into many sectors of the financial services industry. A wide range of institutional investors are suddenly beginning to show an interest in crowdfunding as it allows them directly to invest small amounts (for them) into projects or companies that offer higher yields compared to traditional bond or equities markets. The key obstacles that normally block institutional investors from making investments in smaller businesses or projects are the excessive “due diligence” requirements in proportion to the size of the investment. This obstacle can be removed by crowdfunding platforms as they provide for standardized and transparent due diligences practises whose results can be shared by many investors. In addition it enhances the liquidity of such assets and gives the investor the ability to optimize and rebalance their portfolio. The advantages for the issuer are equally compelling as they have access to a deeper investor pool and a lower cost of capital. A good example is B2B lending which works in the same way as peer-to-peer lending but with a different type of ‘peers’ and larger amounts.

In order to understand better in which directions crowdfunding is evolving, we attempted to map out the landscape of emerging business models across the spectrum of securities crowdfunding portals. As with most categorisations it simplifies the reality and doesn’t consider distinctive features of each jurisdiction around the globe. For example, equity crowdfunding in the US is so far only allowed for accredited investors while in the UK and other parts of Europe there are different restrictions.

Securities Crowdfunding Market Matrix





FortuneUncensored Social Network Gab Raises $1 Million in Crowdfunding CampaignFortuneA crowdfunding campaign for Gab, a Twitter-like social network that touts its commitment to freedom of speech, surpassed $1 million yesterday. The company claims it is politically neutral and committ [...]

U.S. News & World ReportNo Cash for Hate, Say Mainstream Crowdfunding FirmsU.S. News & World ReportThe block on mainstream crowdfunding is just the latest blow to far-right activists operating online. In the last 24 hours, neo-Nazi website the Daily Stormer had its domain regi [...]

Baltimore SunHarford still opposes crowdfunding sites for school donationsBaltimore SunRaising money through online crowdfunding sites is an ideal way for teachers to find the funds to purchase classroom materials and should be restored, the head of the Harford County teachers' u [...]

FortuneDreamHost Sets Up Crowdfunding Page to Aid Trump Government FightFortuneThe Los Angeles-based web host DreamHost, which is fighting the Department of Justice over its attempt to seize records of visitors to an anti-Donald Trump website, has launched a crowdfunding campaign to a [...]

DualShockersBounty Battle Rolls out the White Carpet with Successful Crowdfunding CampaignDualShockersWhen we last checked in with the indie-obsessed fighting game, Bounty Battle, it was halfway through its $30,000 crowdfunding goal. Now with 3 days left to go, it's surpassed thi [...]

Crain's Cleveland Business'Smaller' gifts can go long way for Clinic's crowdfunding platformCrain's Cleveland BusinessFor an institution accustomed to securing multimillion-dollar donations, Cleveland Clinic's latest fundraising effort has some relatively [...]

GeekZing Smart Light Passes Crowdfunding Goal With Flying Colors ...GeekAt age 31, I still prefer to keep a light on in the hallway, illuminating my way to the bathroom in the middle of the night. (God forbid I step on the creeping cat—or ...and more » [...]

Business.comYou Oversold Your Crowdfunding Campaign – Now What?Business.comIf you've oversold, there's no way to go back in time and prevent it. Your next step should be to streamline what you can control. Crowdfunding can be an unpredictable, exciting experience. But reachi [...]

LITTLE GUIDANCE FROM IRS ON TAXING CROWDFUNDING CONTRIBUTIONSBloomberg BNAWhether it's a musician raising money to produce an album, an inventor with a great idea, or a family in distress that needs help, crowdfunding through platforms such as Indiegogo and Kickstarter has become [...]

ForbesWhat Works In Equity Crowdfunding -- Insights From ResearchForbesAs we have recently celebrated the fourth anniversary of the signing of the JOBS Act into law, it is a good time to take stock of the effect that the legislature had on equity crowdfunding in the United States. It [...]

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