While the regulators in the United States and Canada continue to doddle along in coming up with a simple and workable regulatory framework for equity crowd funding (it’s been over 2 years now), it is apparent that both the population and the market are more than ready for it.
Earlier this year, Kickstarter, the popular reward based crowdfunding site announced that it had passed the $1 billion dollar mark in terms of funded projects, all of which are for rewards only. Of this amount, over $660,000,000.00 came from Continue reading
In marketing we talk about setting short-term goals and long-term goals, the basic concept of a step-by-step approach to achieving your objectives. While a great concept on paper, when human nature takes over we often end up celebrating after the success of a short-term goal and letting the long-term goals slip.
This is something I call the ‘High Five Syndrome’. You often see it displayed at Continue reading
There has been some debate amongst the North American investment community about whether the legalization of equity crowdfunding would unleash a new wave of clever fraudsters on an unsuspecting public. Recently, the Ontario Securities Commission (OSC) published newly proposed exemptions to become available to certain investors, including a proposed crowdfunding exemption. The proposed framework, which is likely to become law after a 90 day consultation period, seeks to strike a balance between protecting the public and embracing the inevitable investment paradigm shift to crowdfunding. The OSC has found a convenient middleman on which to place the burden of ensuring that offerings are in fact Continue reading
The Dynamics of Rewards v. Equity and Their Impact on Future Crowdfunding Campaigns
As we move towards the allowance of equity crowdfunding in North America and elsewhere, parties seeking to crowdfund ventures will want to give serious consideration to the dynamics and impact of offering rewards or an equity stake in the venture being funded. Going forward, for the reasons outlined herein, one expects that more and more, future campaigns will have a creative blend of both, depending on the project being funded.
Rewards of course can be Continue reading
Have you ever heard the saying “bet on the jockey, not the horse”? It means savvy investors will invest in an “A” team (the jockey) and a “B” technology (the horse) but not the other way around.
It’s not unusual to not have the “A” team in place when you start your company, but here are three things you can do tohelp mitigate that shortfall.
(1) Strong background: When marketing your product in advance of your crowdfunding launch, make sure to highlight the experience and background of your team. If your management team experience is weak, that’s okay if your product Continue reading
The last decade has seen the advent, rise, and dominance of social media. It is pervasive in our work and personal lives and it has revolutionized the way many approach business and investment. Facebook, which started in 2004, now has over 1.23 billion active monthly users, while Twitter has over 218 million users. The success of social media platforms such as these has resulted in the proliferation of new technologies and indeed, whole industries.
Crowdfunding, which has only recently begun to gain popularity, owes much of its success to traditional social media platforms such as
Equity crowdfunding to mainstreet will result in a new challenge for private companies, namely effective shareholder relations. Admittedly, crowdfunded privately held companies will not bear the same continuous disclosure burden as is imposed on publicly traded corporations. However, a larger constituent of arm’s length investors will inevitably make greater demands for information on management than was otherwise the case with such closely-held companies. So as part of the crowdfunding preparations, management would be wise to consider how to effectively communicate with an onslaught of new investors.
While the regulators in North America doddle along trying to come up with ways to protect investors from themselves (it’s now been almost two years since the JOBS Act became law), here, in a nutshell, are 10 reasons why equity crowdfunding will become very popular among businesses and investors alike.
- Less expensive – Small and medium size enterprises will have access to a much greater pool of funding at a fraction of the cost of the traditional and the often time and expense consuming prospectus requirements Continue reading
Raising capital for a business venture, no matter how you approach it, can be a challenging endeavor. Crowdfunding is a relatively new medium for attracting investors but although only in its infancy, it is fast becoming the way to raise capital for new or growing business ventures. The perception has been however, that pitching your campaign to the market through a crowdfunding portal is a foolproof way of raising the funds you need to move forward. And since you suddenly have access to millions of potential investors, why wouldn’t you think that?
Placing all your trust in a crowdfunding portal is not a recommended strategy. In fact, it’s not a strategy at all. To make the most of crowdfunding as an avenue to raising the capital you need, avoid these common mistakes: