Pebble’s record breaking $16,500,000 (and counting) fundraising campaign on Kickstarter gives a glimpse of the potential for Equity Crowdfunding.
Title III of the Jumpstart Our Business Startups Act is potentially nearing the finish line by the end of 2015. It is estimated that final rules could be issued as early as October, 2015. These proposed rules will generate a new class of investors to allow non-accredited investors to invest in equity crowdfunding. Title III will democratize the investing landscape, as everyday Americans, with risk capital, will now be able to invest in private, primarily startup companies.
This adds another element in entrepreneurship. Gaining fans, followers, and future investors on crowdfunding websites will soon become a new wave of business development that will be essential for new companies to maintain and expand growth.
Before Title III, investing was only for wealthy accredited investors, and now the landscape is heading towards benefiting anyone with the Internet available risk capital. Technology is creating an environment of easy accessibility for all, and businesses are most definitely included. The road is being paved for equity crowdfunding, as we expect to see big leaps in the industry in 2015.
Seed Equity Ventures, is one broker that is planning on expanding its investor base beyond accredited investors to include the new wave of equity crowdfunding investors. Seed Equity, a registered broker dealer with the U.S. Securities and Exchange Commission and is a member of FINRA/SIPC, and provides investment banking services to early and growth stage technology companies. Equity crowdfunding is expected to take big leaps in the industry as they prepare for the installation of Title III of the JOBS act. Moving forward, the equity crowdfunding community expects to see significant attrition as the importance of becoming a regulated entity with the Financial Industry Regulatory Authority (FINRA) as a self-regulatory organization (SRO) increases tremendously. Many funding portals are expected to abandon Title III strategies, as they will not have the capital to wait around for SEC and FINRA approval. We also expect funding portals to partner with broker dealers to act as an additional revenue stream.
JOBS act Title III aims to change the venture capital industry from an industry of a couple thousand wealthy investors to billions of people from around the world. With these regulations nearing final approval, the voice of what becomes popular belongs to everyday people from all over the world.
What company will be the future equity crowdfunding success like the Pebble smartwatch? Whoever it is, the masses will have an opinion and a stake in that venture.
