May 16th, 2016 marked the launch of equity crowdfunding. Like any new opportunity, Title III saw its fair share of critics and promoters. Instead of arguing about something that hadn't actually started, we decided to wait and look at what the numbers said.
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Franchising has been coined as “An American success story”. IFA president Steven Caldiera said “Independent, locally owned small-business men and women, including more veterans and minorities, who own and operate establishments...are growing faster than other businesses. They are creating more jobs at a faster pace than other businesses and they are also producing more sales growth than other businesses."
If you’re a tech enthusiast interested in options for supporting startups, you might be trying to discern the difference between Kickstarter or Indiegogo and equity crowdfunding. Traditional equity crowdfunding sites facilitate the ability for “backers” to donate money to campaigns in exchange for perks, like sample products or tee shirts. Platforms using Regulation CF facilitate the sale of a form of equity in private companies to investors.
May was an exciting month for startups and investors! The thirty-two largest funding rounds reported by CrunchBase totaled over nine billion dollars in investments.
The biggest concerns about equity crowdfunding revolve around cap table management, red tape, and perception.
With Reg CF, companies will be able to raise up to $1 million from the crowd within a 12 month period, and they will be required to follow certain regulations dealing with transparency and reporting. FlashFunders has streamlined the process to make compliance easy and simple.
For the first time, in almost a century, anyone can invest in private companies. With the public stock market prices at an all-time high and bond yields historically low, startups offer an exciting new way to diversify your investment portfolio.
- Companies used to create much of their value after selling shares on the public stock market.
- Because of technology and new regulations, companies can now raise most of the capital they need from private investors. They don’t have as immediate of a need as they once did.
- New rules in effect May 16, 2016 allow anyone over the age of 18 to purchase shares in private companies.
The 2012 JOBS Act and upcoming Title III enactment has and will further impact the early-stage startup capital raising process, as well as broaden investor access to early-stage investment opportunities. In Vincent Bradley's article "The Dangers (and Rewards) of Investing in a Startup" published by The Street, he examines the various risks and benefits that come with these new regulations.
Team FlashFunders believes successful investors are made, not born. Whether you’re considering making your first early stage investment, or you’re a seasoned tech investor, ongoing education is crucial to staying relevant.
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