Data Services are Key to Equity Crowdfunding Growth

By Hector Botero  CrowdFundBeat Sr. Contributing  Editor, President & CEO at iCrowdNewswire, LLC

This is Part 6 of a 6 part series on why Crowdfunding platforms are the new stock exchanges and why they will need to learn from exchanges like NASDAQ, NYSE and LSE to self-regulate and provide a wide range of ancillary services that help campaigns succeed and at the same time, create revenues for the platforms.

 Thanks to the JOBS Act of 2012, investing in startups is changing in big ways. Two years ago today, Title II of the Jobs Act went into effect, allowing early stage startups the legal authorization they needed to publicly solicit funding, even though they can only accept equity trades from accredited investors. It was a huge rule change.

As a result of this change, investors interested in funding early stage startups needed a way to keep track of information that helps them become better investors. That’s where companies like Crowdnetic and DealIndex come in.

“There’s not a lot of secondary funding going on with crowdfunding platforms,” said Janet Rosenblum, director of research and special counsel at Crowdnetic, “but we provide data and the basic infrastructure investors need covering 18 different platforms.” These platforms include Wefunder, AngelList, MicroVentures, OneVest, Patch of Land, Seed Equity, and SeedInvest, just to name a few.

 

AAEAAQAAAAAAAAYfAAAAJDVlZWUxNGZmLTk3MjAtNGNhNi1hNjliLWRhMjkyOWYxMDRiZA (1)

Why Investors Need Market Data

 Successful investors thrive on information. They need to know when markets open and close. They need access to real-time information about companies they want to invest in so that they can assess stock valuations and investment threats and opportunities. Investors on the traditional stock exchanges have access to that kind of information, usually in real-time.

DealIndex Co-founder and CEO Neha Manaktala said crowdfunding still needs to mature, but crowdfunders are democratizing the finance industry.

“Market data and research is where traditional finance and new finance are coming together,” she said. “There needs to be more diligence, better processes in place, and more liquidity in private markets.”

Nevertheless, she does see a movement toward more collaboration between crowdfunding platforms and platforms like DealIndex, which provides standardized analytics and insight reports that allow investors to track opportunities across multiple business sectors and geographic locations, including valuation analyses.

While these services are not as deep and rich as those provided by the stock exchanges, they are similar.

NASDAQ provides investors with a Global Index Watch. Investors can read reports on corporate actions, daily summaries of price and dividend market values, as well as breakdowns on industry sectors and historical analyses. The stock exchange also provides last sale data, market data RSS feeds, and tick-by-tick transaction details. Third-party services like DealIndex and Crowdnetic are providing similar services for the crowdfunding and alternative finance sectors.

“Instead of investors going to each individual platform and registering to use the site, they can come to CrowdWatch (Crowdnetic’s subscription-based market data aggregator) and it’s all in one place,” Rosenblum said. “Clearly, it’s only public data.”

Security and Exchange Commission rules prevent the distribution of non-public information, but the aggregation of public data is still important.

Market Data Available for Crowdfunders

 So what kind of information are crowdfunders looking for?

“We have information on new offers going out,” Rosenblum said. “We have information on the target amount, what type of security an investment is, updates on how much money a startup has acquired, and a lot more.”

Crowdnetic publishes information on eight different sectors and 200 industries. They list the city and state of the company seeking funding, a company description, market valuation, and other information stock exchange investors have been privy to for a long time. Much of the information is free and can be gained at MarketWatch. A more beefed up version of Crowdnetic’s market data is available by subscription.

DealIndex does something similar, though Manaktala said the information investors need depends on the offering.

“The more established a company is,” she said, “the more data investors are going to ask for. I suspect that as more sophisticated investors get involved they will ask for more and more data.”

Manaktala said companies needing funding also have a need for market data. They need to analyze the various platforms to see which one is most appropriate for their funding needs. Third-party services like hers can provide that information too.

Tags: , , , , , ,

HEADLINE NEWS

Marketplace.orgCrowdfunding for your lifeMarketplace.org"When I took that phone call, and I learned that this was just going to completely uproot my whole life, I'd say I spent maybe 10 seconds or so only freaking out about myself and whether or not I would die. And then imm [...]

The HinduYoung Moroccans change lives with crowdfunding - The HinduThe HinduAccess to funding is vital for young Moroccan companies. Two young men have recently developed an application that enables projects to get financed by ...and more » [...]

TIMEA Crowdfunding Effort Launches to Commemorate Khadija Saye, Artist Killed in London InfernoHyperallergicOn Saturday, friends and supporters of the artist Khadija Saye — who died in the devastating Grenfell Tower fire in west London last week — launched a crowdfunding campaign to c [...]

Santa Ynez Valley NewsTrikke Tech consolidates operations in Buellton, launches ...Santa Ynez Valley NewsTrikke Tech Inc. has consolidated all its operations at a new location in Buellton and launched a crowdfunding campaign to help the company expand and ...and more » [...]

CBS NewsNow you can crowdfund a 529 college savings plan - CBS NewsCBS NewsIt's getting easier to have friends and family add their contributions to these accounts for college savings.and more » [...]

ForbesThis $130 Million Fund Is Leading The Way In Real Estate CrowdfundingForbesWhen people think of crowdfunding, the first word that jumps to mind is Kickstarter. But crowdfunding is not limited to supporting the next card game or independent film. Crowdfunding is becoming a viable [...]

Forbes"Make Yourself Available" - An Audio Entrepreneur's Tips For Successful CrowdfundingForbesIt takes a brave individual to launch Bluetooth speakers and headphones into a crowded audio market. Take a stroll around your local consumer electronics stores and you' [...]

WMFD.comLegislation Permitting Intrastate Equity Crowdfunding PassesWMFD.comCOLUMBUS, OH - State Representative Mark Romanchuk (R-Ontario) Thursday applauded the Ohio House for approving legislation that permits, in certain circumstances, intrastate equity crowdfunding, with the goal [...]

Business InsiderCrowdfunding for medical expenses - Business InsiderBusiness InsiderAlmost half of the money raised on crowdfunding sites like GoFundMe and YouCaring is going toward medical expenses. Medical campaigns make up $930 ...Americans Losing Health Insurance Turn To Crowdfund [...]

PC GamerAshes of Creation launches 'Summer Crowdfunding Extension ...PC GamerThe ambitious MMO Ashes of Creation was successfully crowdfunded in just one day last month, before ultimately accumulating a staggering $3271809—this ...and more » [...]

CFB Finance

Syml
Lst Val
+/- Val
+/- %

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 |