U.S. Can Learn From the Netherlands Equity CrowdFunding

 

us-learn-from-netherlands-equilty-crowdfunding03

U.S. regulators are tied up in knots trying to figure out how to write laws for equity crowdfunding to prevent fraud.

Perhaps they ought to take a page from the Dutch.

In the Netherlands, equity crowdfunding from unaccredited investors has been legal for the better part of three years. “The Netherlands are really a frontrunner in equity-based crowdfunding,” Korstiaan Zandvliet, the co-founder of Symbid, said at the Massolution crowdsourcing conference in New York City last week.

What the U.S. Can Learn From the Netherlands About Equity Crowdfunding

Korstiaan Zandvliet is the co-founder of equity crowdfunding platform Symbid.com, which has funded 23 startups with more than 2 million euros.
Images credit: Symbid.com

Symbid is an equity-crowdfunding platform headquartered in the Netherlands that has been in existence since 2011. The platform has funded 23 startups that have raised a total of more than 2 million euros ($2.7 million) from over 15,000 unaccredited investors, according to Zandvliet. “We tend to have a bit of experience,” he says.

Equity crowdfunding is when a company raises capital by selling small pieces of equity to a large number of investors. This differs from donation-based crowdfunding – made popular by sites like Kickstarter and Indiegogo — whereby a company collects small donations from a large number of people and, in exchange, gives each donor some sort of non-monetary reward.

Related: What Entrepreneurs Need to Know About the Historic Change in General Solicitation Law That Goes Into Effect September 23

Currently, it’s legal for businesses to sell equity to the crowd, but they can only sell to accredited investors. An accredited investor is an individual who makes more than $200,000 a year or has more than $1 million in total assets, excluding primary residence.

But that’s all changing. The Jumpstart Our Business Startups Act, or JOBS Act, which was signed into law in April of last year, includes a provision to make it legal for entrepreneurs to sell pieces of their company to unaccredited investors, or “regular investors.” That means almost anyone can become a shareholder in a private company – a process that could leave many investors vulnerable to fraud.

The U.S. Securities and Exchange Commission has already blown past initial rule-setting deadlines and regulators have been in heated negotiations about how best to protect regular investors.

Meanwhile, Zandvliet at Symbid has had zero cases of fraud in three years. “What we have seen so far is that the crowd is a great due diligence tool. They actually find out basically everything,” he says. Of the 15,000 individuals who have made contributions to startups on Symbid, 10 percent are angel investors. Zandvliet says many of these professional investors consider the crowd as effective a tool as any to identify entrepreneurs and startups with the most potential.

Symbid does take precautions to protect investors. For example, it uses an online electronic money institution to convert investors’ money into a digital currency that can be spent on the portal. Furthermore, Symbid gives its investors the option to “disinvest” their money. “It is an ongoing process where the entrepreneur needs to wake up every day and put up his best game in order to secure new investments but also to make sure the older investments remain into that particular proposition,” says Zandvliet.
Read more: http://www.entrepreneur.com/article/228627#ixzz2gHHSjkRP

Tags:

HEADLINE NEWS

ForbesHow One Startup Raised 10 Times Its Original Crowdfunding GoalForbesRunning a successful crowdfunding campaign isn't easy. The odds are heavily stacked against you, as very few end up succeeding. "Statistically, up to 89% of campaigns fail. Kickstarter has the highest [...]

ForbesThe Ultimate Pre-Launch Crowdfunding ChecklistForbesCrowdfunding is not limited to the platform where you launch your campaign. Instead, it has become a valuable way to transform your idea into a mainstream business. In order to head in that direction, you must execute a number [...]

Wicked Local LexingtonKids' tech literacy crowdfunding campaign a successWicked Local LexingtonResponding to a crowdfunding campaign by the Cary Memorial Library Foundation to raise $5,000 in five weeks, 82 generous Lexington donors and others helped surpass the goal, giving more [...]

BOE addresses crowdfundingAtmore NewsYou may have seen the appeals for funds through GoFundMe or Donors Choose. The practice, known as online crowdfunding, has become a popular practice to raise money for schools or individual classrooms. Teachers may appeal for funds to purchase ... [...]

The MissoulianIndiana man allegedly used crowdfunding to visit 14-year-old ...The MissoulianA 29-year-old Indiana man who allegedly came to Missoula to meet up with a 14-year-old girl has been arrested and charged with a felony for sexual abuse of ...and more » [...]

WFAAMore Dallas teachers turn to crowdfunding for classroom suppliesWFAATight budgets mean more Dallas area teachers are seeking out crowdfunding options to obtain the supplies their students need. The site DonorsChoose.org featured 371 active projects marked "urgent" for Da [...]

Eater LondonFat Macy's Launch Crowdfunding Campaign to Open Restaurant in PeckhamEater LondonFat Macy's — a food social enterprise which aims to train young Londoners living in temporary housing — have launched a crowdfunding campaign. Their aim is to raise £55,141 to fund a [...]

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 [...]

Realnoe vremyaEveryone pools: Elvira Nabiullina to look closer at crowdfundingRealnoe vremyaIts Deputy Chairman of the Board of Directors Yulian Lazovsky told Realnoe Vremya that crowdfunding platforms will need to create a capital of at least 10 million rubles within the cooperation [...]

StepFeed'Save Linah' crowdfunding campaign to help girl flee Saudi Arabia goes viralStepFeedIn a bid to escape her abusive family, a Saudi woman, whose first name has been identified as 'Linah,' has turned to crowdfunding as a means to help pay for her trip. Linah, [...]

CFB Finance

Marketwired

  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |