Regulation Crowdfunding is a Different Ball Game

By  Crowdfunding Strategy, Personal Cloud Technology, CrowdFund Beat Guest post,

For the last six months or so I have been working with both portal owners and offering issuers to prepare for Regulation Crowdfunding (Title III). Having been in the trenches on multiple sides I have been able to observe some of the shortcomings and successes of the new crowdfunding law and those taking advantage of it. I want to focus on one area of observation (and frustration) we have come across.

Just because you were successful with Reg D or even Reg A+ doesn’t mean you know what you’re doing with Reg CF. Similarly, having been successful in the investing space for the last 20 years may not translate into crowdfunding success.
The first and most apparent reason for the above statement is that with a new regulation comes new requirements and nuances. This is something that everyone has to deal with, but will be resolved in time as regulators, portal owners, and issuers alike work out the kinks. In this case however, new regulation makes it harder by taking away some of the crowning features in previous crowdfunding laws such as open solicitation and the ability to test the waters. This means you can’t openly target and advertise the offering to potential investors out there or spend time testing the market with indications of interest from the crowd before going all in. Couple that with a new class of investor who thinks very differently and has a basic level of understanding when it comes to securities investments.

 

Given this landscape, even those who have run a successful portal targeting accredited investors are struggling to garner interest and action from new investors for offerings under Reg CF (Title III). One major reason for this is that the way you target and work with the general public to get them to invest is a lot different than your traditional investor. The strategy needs to change, and addressing the bullet points below may help:

Most people aren’t actively looking for an investment opportunity like an accredited investor might. This means it will take a very deliberate strategy and knowledge of marketing to the general consumer to drum up interest. Focus on the product, the company from an outside view, and target emotion or support for a greater cause.
“The Crowd” wants it simple. They don’t understand and therefore won’t care much about sophisticated asset classifications, rights, options, etc… They want to support a small business and have ownership in that company. Focusing on educating the market could be key in time to come.
There is a stronger component of wanting to be a part of something bigger as well as make a return on the investment. Reg CF is the next natural step for those participating in rewards based crowdfunding. These new investors will need to be sold on vision of the company/investment to fill the void of not receiving a product or something of value right away.
As new amendments are presented and passed to fix regulation crowdfunding things will get easier for all the parties involved, but regardless of those factors we as an industry need to hone in our marketing and services to better serve the millions of potential investors who are beginning to enter the investment crowdfunding arena.

 

Again, this was just one observation I’ve had thus far working with Title III offerings. Feel free to share your observations in the comments section!

Tags: , , , , , , , , , , , ,

Leave a Reply

Your email address will not be published.

HEADLINE NEWS

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

ForbesSix Tips To Boost Your Next Crowdfunding CampaignForbesBefore we were able to do our first project as a nonprofit, we had this pesky problem of actually having the funds to do the work. We knew we needed a fundraiser, and we knew we needed to get creative since we had no money t [...]

BloombergOnline Real Estate Platforms Bring Crowdfunding to the Wealthy ...BloombergReal estate fund managers Michael Episcope and David Scherer had Georgia on their minds—specifically, Atlanta. The city, part of the third-largest-gaining metro area in the U.S. last year, according to [...]

Christian Science MonitorCrowdfunding helps Britain's homeless transition to stable housing and workChristian Science MonitorA coffee, a sandwich, money?" "I want homeless people who have passions and ambitions and talents to have some of the same opportunities that I h [...]

Irish TimesSurfer brothers catch crowdfunding waveIrish TimesTwo surfing brothers from Portrush who set up Northern Ireland's first surfboard company have caught a wave of new investment from a popular crowdfunding platform and raised more than £405,000 (€462,500) in just one wee [...]

Reuters'I feel lucky every day': crowdfunding Britain's homeless into work ...ReutersBy Lee MannionLONDON (Thomson Reuters Foundation) - After a decade spent waking up on the street, in police cells or in hospital due to drinking, Joe - who is now 37 - knew he had to ch [...]

Crowdfund InsiderNext Generation UK Rental Platform Movebubble Nears Halfway Crowdfunding Goal on SeedrsCrowdfund Insider“Movebubble distinguishes itself from the competition by having a fanatic focus on putting the renters' needs first. To the best of our knowledge, we're t [...]

National Real Estate InvestorRich Turn to Crowdfunding for Properties From Offices to HotelsNational Real Estate Investor(Bloomberg Markets)—Real estate fund managers Michael Episcope and David Scherer had Georgia on their minds—specifically, Atlanta. The city, part of the third-large [...]

ForbesNeed To Fund Your Health Idea? How About Crowdfunding?ForbesGot an idea that you think will change the face of health or public health? Don't know where to go to get funding to launch the idea? Worried that you won't be able to convince one person or one organization t [...]

MinnPostWith Take 12, crowdfunding meets maternity leaveMinnPostIn March 2016, Margi Scott found herself in a scary situation. About seven months into her third pregnancy, she learned that she was suffering from liver failure and underwent an emergency C-section. Her twins were delive [...]

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 |