Regulation Crowdfunding Finishes its Fourth Year with Impressive Results - Crowdfund Capital Advisors says Industry Poised for Significant Growth

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Regulation Crowdfunding allows startups and small businesses to raise up to $1.07 million online from their customers, family, friends and followers. After 4 years, more than 500,000 Americans have invested almost $400 million into over 1,500 pre-IPO startups and small businesses across 80 industries in 850 cities across the United States. With zero fraud and pending changes by the Securities and Exchange Commission that may increase the maximum raise up to $5 million, the industry is poised to take off.

Regulation Crowdfunding allows startups and small businesses to raise up to $1,070,000 online per year from both retail and accredited investors using registered websites (funding portals or broker-dealers). Issuers are required to file a Form C with the Securities and Exchange Commission (SEC) and post online disclosures about a company’s operations, team, financials, and other material information for investors to review. 2020 marks the fourth fiscal year for the industry, and data from the past four years show the industry is at a tipping point.

A new report released today by Crowdfund Capital Advisors summarizes the 4 years of data since Regulation Crowdfunding started. Key findings include:

  • Almost 1,500 companies in 49 states plus Washington, D.C. and Puerto Rico have raised over $367 million online.
  • Average success rate for companies seeking money online was 60%; much higher than the average success rate for Venture Capital (~2%).
  • During this past year almost $700 was invested every minute into startups and small businesses.
  • Over half a million Americans have shown their interest in funding businesses they believe in by investing on average $716 per offering.
  • 80% of the investors are retail and 20% are accredited, however 80% of the capital invested comes from the accredited investors.
  • In the very first year of Regulation Crowdfunding there were only 61,000 investors that deployed $56 million. This past year those figures jumped to 265,000 and $138 million respectively.
  • No fraud according to a SEC report.
  • Companies that were successful with a Regulation Crowdfunding offering saw year over year revenues increase on average 23%.
  • With the proposed SEC changes to Regulation Crowdfunding that include increasing the maximum raise from $1 million to $5 million, the industry is poised to take off.
  • CCA estimates that in the next year over 400,000 Americans will invest more than $250 million into startups and small businesses all across the United States.

Sherwood Neiss, Principal of Crowdfund Capital Advisors said, “Regulation Crowdfunding is here to stay. It will continue to play an important role in the funding lifecycle between an entrepreneur’s personal access to capital and VC/Private Equity funds. It won’t replace those important sources of capital but rather act as a gating mechanism so that VCs/Private Equity and Asset Managers have a better understanding as to where they should be deploying capital. The tipping point is here, and the ‘Year of the Crowd’ is upon us. With the offering cap moving to $5 million, the traditional capital markets seizing up and the appetite for crowd investments increasing, more companies will start to use crowdfunding to raise funds.”

A summary of the report is available for $4.95 and is available here:

Crowdfund Capital Advisors (CCA), a leader in real time private capital markets data in the United States and headquartered in Denver, Colorado. Crowdfund Capital Advisors has been collecting, databasing and normalizing pre-ipo/startup and small business data for online offerings done under the JOBS Act. These offerings include 506c (accredited investor online offerings), Regulation A, select 506b and Regulation Crowdfunding since 2016.

Crowdfund Capital Advisors is now updating over 2,500 private offerings from over 850 jurisdictions across the United States on a daily basis. This frequency, along with millions of records databased each year, provides an invaluable data resource for clients in the financial sector.

Pre-IPO, startup and small business offering data can be a primary indicator of the strength of both the startup funding market and local economies across the United States. Many investors and analysts find data on private companies difficult if not almost impossible to source. This dataset provides insights into almost 400 NAICS code industries, current and historic valuations, earnings and daily investments into open offerings.

Crowdfund Capital Advisors normalizes data from thousands of offerings into a single, easily digestible format. Each offering exemption can have different laws, formats and varying levels of difficulty to obtain data. There are over 100 different metrics within the dataset that include: offering date, company description, location, incorporation date, price per share, valuation, capital raised, naics code classification, summary income statement and balance sheets, number of employees and more.

Companies that raise money under some of these exemptions file annual reports that contain updated information on their financial wellbeing which can track performance over time. Others leverage these exemptions over time to raise capital and hence valuations can be tracked over time as well.

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Sherwood Neiss
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Crowdfund Capital Advisors
since: 05/2012
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