How Does Equity Crowdfunding Resemble the Discount Brokerage Revolution?

May 28, 2014 By Scott Jordan,

Schwab’s commitment to disrupting: Correlation to Crowdfunding, Moderate to Strong

Schwab was among the very first companies to launch discount stock trading in 1975. Schwab’s willingness to disrupt the status quo changed the rules for the entire brokerage industry, making it more consumer-friendly by lowering the costs to trade stocks. Before laws changed in 1975 to allow discount commissions, brokers were a necessity for buying stocks. Schwab’s corporate mission statement of “you can do it yourself,” ultimately undercut the competition’s trading costs (traditional broker-dealers)by 30% or more.

Similar to the legislation reshaping trading stocks in the 1970’s, the JOBS Act was also a watershed piece of legislation for investors seeking to invest in private equity at lower costs. Title’s II and V of the JOBS Act will increase the amounts of capital available to companies from non-traditional sources (~accredited investors) given the ability to generally solicit while remaining private up to 2,000 investors. Regardless of the outcome of Title III of the JOBS Act (Crowdfunding, non-accredited investors), the dam has been cracked impacting the establishment who have leveraged financial regulations to amass huge fees from investors and companies for over the past 70 years.

Most would agree equity Crowdfunding, as postulated by the JOBS Act, is a platform that could positively impact private equity investing by lowering fees and increasing access to premium deal flow (i.e. why couldn’t I have invested in Google when they were private?). For market sectors with low-moderate capital requirements (~technology), real assets and yields (~real estate and energy), established fee structures are in the cross-hairs as evidenced by the proliferation of crowdfunding portals like Realty Mogul and FundersClub.

For market sectors more capital-intensive (~Healthcare, Consumer Goods), Crowdfunding will be more additive than disruptive to ecosystem participants (Angel Groups, VC’s) placing a premium on partnering with incumbents (i.e. topping off VC rounds and introducing investors to Angel groups without geographical or participation limitations). In these sectors, the “continuum of capital” will be essential for bringing drugs and consumer goods to market. For example, It is doubtful in the near-term that Crowdfunding will be able to raise capital required of drug companies; average successful pharma company raises upwards of $50M in capital over six years.

Source :

http://www.healthiosxchange.com/documents/2/180/how-does-equity-crowdfunding-resemble-the-discount-brokerage-revolution

Scott Jordan is with S. Jordan Associates – Healthcare Consulting, CrowdFundConnect, HealthiosXchange – Investment Banking, Crowdfunding26e362c

HEADLINE NEWS

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news [...]

NPRAfter Outcry, Crowdfunding Site Patreon Backs Off Plan To Raise ...NPRThe popular crowdfunding service Patreon has backed off plans to change its payment structure, after widespread, vocal and passionate opposition from creators and their fans. Last week, the site announced it woul [...]

TechCrunchHow hate speech crowdfunding outfit Hatreon crept back online ...TechCrunchIf you want to make a living creating white supremacist content, you're probably not going to do it via sites like Kickstarter and Patreon, which prohibit hate speech. Fortunately there's Ha [...]

CoinDeskKickstarter ICO? Don't Count On It Says Crowdfunding Leader ...CoinDeskThe company most widely associated with crowdfunding, Brooklyn-based Kickstarter, has no plans to get into the initial coin offering (ICO) business. Coming in response to the news yesterday that compet [...]

CryptoCoinsNewsCrowdfunding Giant Indiegogo Looks to Make ICOs Mainstream ...CryptoCoinsNewsOne of the world's most popular crowdfunding platforms is getting in on the ICO game. Josiah Wilmoth on 14/12/2017. ------------------Advertisement------------------. Advertisement · Reddi [...]

ForbesCrowdfunding Do's And Dont's From iFundWomen's Karen CahnForbesDuring our conversation, she was transparent in sharing that her first software company, VProud, failed because she “did everything backwards” and spent too much time trying to perfect the product. “Pe [...]

Crowdfunding via Customers: Is This The New Startup Capital?Customer ThinkWith more and more companies in a variety of sectors developing new crowdfunding campaigns, it makes sense to ask whether crowdfunding is likely to replace startup capital in the near future. Crowdfunding is qui [...]

VentureBeatAtaribox hits the pause button on its crowdfunding campaignVentureBeatAtari was supposed to start taking preorders along with launching its crowdfunding campaign on Indiegogo today for its new Ataribox console. However, it seems to have hit an unspecified snag and in an ema [...]

Coindesk (press release) (blog)Crowdfunding Giant Indiegogo Opens to ICOs - CoinDeskCoindesk (press release) (blog)The startup revealed today that, through an existing partnership with MicroVentures, it will begin offering services to projects seek to use the blockchain funding model. [...]

TechCrunchFormer Gawker employees are crowdfunding an effort to buy Gawker.comTechCrunchWhile Univision acquired most of Gawker Media's sites last year (and renamed them as the Gizmodo Media Group), the deal didn't include Gawker itself. In fact, BuzzFeed reported last month [...]

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 |