A Historic Week in Crowdinvesting – July 13, 2013
Jul 13, 2013 12:33 pm | Jonathan Sandlund |View Original Post|
As you’ve undoubtedly heard, the SEC voted 4-1 on Wednesday to lift the ban on general solicitation of private security offerings to accredited investors. The rules will effectuate in 60 days or so. I’ve aggregated commentary and analysis on the new rules which I highly recommend reading through.
The changes aren’t without caveats. Particularly the proposed amendment to Form D filing requirements, which will create additional burden for companies that choose to advertise. I personally worry that overly onerous requirements for advertised offerings will dangerously foster adverse selection. Specifically for early-stage startups which, with a few exceptions, already have ample access to capital.
If the most promising startups choose not to advertise, the “Crowd” will be left with skimmed deal flow. I’m penning my thoughts on this later this week, but, by and large, I believe the ability to advertise will create the greatest value in marketplaces which have an existing, and structural, shortage of capital, i.e. the capital markets for emerging growth companies too small for private equity funds and not “sexy” enough for venture capital.
The crowdfund investing industry, if only for accredited investors at first, is set to rapidly accelerate from here. While exciting, and welcomed, we must remember: if this isn’t a stepping to true crowdfunding, it’s a failure. All deserve the opportunity to participate. Onward and upward 🙂
On 506(c) & General Solicitation
From the Cafe
- Crowdinvesting Ecosystems – Technology may create competitive advantages in transactional marketplaces, i.e. debt, but it will not differentiate in equity marketplaces. Equity crowdfunding will remain a service business, and I believe the platforms that design and implement the strongest service ecosystems (relevant, actionable) will have the most success. Because just as technology will be commoditized, as to will access to capital, as information becomes ever more symmetric. The only thing remaining: service.
- I’m launching our community platform this week. It’ll be an iterative experiment, to be sure, but my hope is it becomes a place where anyone in the world can come to discover, learn about, and discuss the industry. I’ve worked hard on tinkering with different solutions, and I think I found the right one. I can’t wait to show you and give it a try 🙂
Selected Articles
Lift Off
- ProSeeder – A new crowdfunding infrastructure play. Similar to many others, it’s targeting angel groups, broker dealers, incubators and funds
- Secondmarket announces new accredited crowdfunding products (no surprise here!)
- Co-Funder, a crowdlending platform for SMEs in Ireland
- CrowdHound Announces Launch of Email Marketing Services for Crowdfunding Projects
- Daric, a new P2P player in the U.S., files an S-1 Registration
Industry Chatter
International
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