What is the opportunity with Title III crowdfunding?

There have been a couple threads on equity crowdfunding here, but with Title III funding portals getting much closer to launching, I’m trying to puzzle out what those first portals are going to look like… and will these be filled with the dregs of the investment world as most existing equity portals believe.

The basic argument is that there is a vast over-abundance of capital from both institutional and accredited individual investors, and the better companies will get access to that through venture firms, professional angel investors/syndicates and 506(c) type funding portals. What’s left over gets dumped into Title III portals where less affluent investors have to pick through to find the decent stuff… kind of the inner city 99 cent store of finance.
What is the counter-argument?
paulSOM-300x300
Co Founder at The CrowdHub Group
Physically the portals wont look much different. However the investors and the operational methodology will be different for the successful Title III operators than the Title II ones. In saying that some Title II operators will gain say 5 to 20% of their raise from a Title III crowd due to people following Accredited investors they admire.

Offerings in Title III end up there because they are ordinarily not ready for accredited investors. They are often too early and simply do not have the numbers to get traction in the more professional sectors. For this reason they have to gather people 1, 2 and 3 degrees out from the entity. These people are a hybrid of traditional friends and families. To achieve this they need to have a platform built on “investor aggregation” techniques. Meaning through a process of communication, connecting, nurturing and enthusing, people are gathered during pre-raise activity, until the offering goes live and at least 40% of the investment has been identified. The reason they need to do this is that people will be making the decision to invest emotionally rather than analytically.
I’ve written a few articles on this based on my experience running a platform that has had around 300 Title III like raises. http://www.paulniederer.com/2015/10/investor-aggregation-for-capital-raising-and-the-campaign-approach/
Your sentence “What’s left over gets dumped into Title III portals where less affluent investors have to pick through to find the decent stuff”could bereadas true depending on your viewpoint. How I view this is that there are thousands of businesses not headed for IPO or trade sale butsimplylocal or neighbourhood or niche businessesthatneed funding to get to thenext level. They are not “left over” as they are never assessed by accredited investors as they are not yet ready for them. There will be some decent stuff there but not necessary with the analytics more experienced investors require.

Tags: , , , , , , , , ,

HEADLINE NEWS

The VergeDonald Trump's terrible crowdfunding site was a microcosm of his political careerThe VergeAnd from the beginning, the site had Trump's populist edge. Zanker boasted that “the reign of Kickstarter's Brooklyn hipsters is over,” referring to Kickstarter's New [...]

FortuneCrowdfunding: Women Better at Raising Money Than Men Are ...FortuneA new study has found that women are generally better than men at crowdfunding.Women are better at crowdfunding than men, shows study | The ...The IndependentWhy women join the crowd: Gender gap in bank lending, [...]

Wired.co.ukAfter budget cuts, Museums are crowdfunding to preserve historyWired.co.ukIn 2015, the Smithsonian National Air and Space Museum in Washington, D.C. launched its very first crowdfunding campaign to 'Reboot the Suit'. The idea was to raise much-need funds to conser [...]

Yahoo SportsCan crowdfunding save women's college hockey?Yahoo SportsOn Thursday, Million and the WCHA announced a crowdfunding initiative through RallyMe.com that allows supporters to make tax-deductible donations to the League. RallyMe is a crowdfunding site that's been ut [...]

ForbesCrowdfunding's Death Has Been Greatly Exaggerated - Creators Ship, Especially In ChinaForbesBased on recent media reports, it looks like crowdfunding is now in the "disillusionment" phase of the famous Gartner hype cycle, after peaking a few years back. I will arg [...]

How Women Trounce Men When Raising Seed Crowdfunding CapitalForbesMale entrepreneurs may account for the majority of business owners raising finance on crowdfunding platforms in the UK, but their female counterparts are far more likely to get the support they seek, new research shows. [...]

Grand Forks HeraldWomen's WCHA launches crowdfunding campaign to improve leagueGrand Forks HeraldThat mindset led the WCHA to announce a crowdfunding campaign Thursday, July 20, to help fund the league's expenses and lessen the financial burden of the seven remaining schools [...]

Gamasutra (blog)Gamasutra: Anti Danilevski's Blog - The problems of crowdfunding ...Gamasutra (blog)The Art & Business of Making Games. Video game industry news, developer blogs, and features delivered daily.and more » [...]

Woman turns to crowdfunding to publish cookbookOntario Argus ObserverVALE — While she was growing up in Vale, Allison Brewer says she learned how to cook for family and harvesting crews. Receiving many requests for written recipes combined with her passion for old-style cooking and ba [...]

CNBCAfrica.comCrowdfunding changing people's livesCNBCAfrica.comCNBC Africa's Tshepho Modiba is joined by Mosa Nyamande, Head of Operations and Technology at Khonology for a look at Crowdfunding, a method used to collect many small financial contributions by tapping into the [...]

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 |