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.



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: , , , , , ,


This RSS feed URL is deprecated, please update. New URLs can be found in the footers at [...]

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 [...]

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 [...]

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 [...]

Aberdeen Evening ExpressFierce Beer smash crowdfunding target in bid to open first bar in AberdeenAberdeen Evening ExpressAn Aberdeen brewery has hailed the “incredible” response to a crowdfunding campaign after it smashed the original £60,000 target in just 24 hours. The Evening Expr [...]

EntrepreneurWhy Some Small Business Owners Are Turning to Crowdfunding to Save Their CompanyEntrepreneurMany owners of beloved local businesses, especially in pricier cities, have been forced to swallow their pride and appeal to their customers in times of crisis -- a process streamli [...]

Japan TodayZoo starts crowdfunding campaign to protect endangered birdJapan TodayA Toyama zoo has launched a crowdfunding campaign to collect funds to protect an endangered Japanese bird designated as one the nation's special natural treasures. To supplement funding from the stat [...]

Crowdfunding For French CastlesNPRYou too can own a French chateau, in part, anyway. Romain Delaume, CEO of Dartagnans, tells NPR's Scott Simon about a crowdfunding effort underway to preserve La Mothe-Chandeniers. SCOTT SIMON, HOST: What if I told you that for about $60, you cou [...]

Born2InvestHere are the latest updates on the crowdfunding industryBorn2InvestWhen pressed for the reason behind the move, the company pointed to their charter which states that Kickstarter is committed to the arts and creative projects. Another provision in the charter shows that the [...]

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


  • 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 |