For Regulation Crowdfunding, a Glass Half Full

Two years ago today, Regulation Crowdfunding went into effect with a promise to transform the investment landscape for entrepreneurs as well as investors. So how’s it working out?

In the first two years, 910 businesses have used the Regulation Crowdfunding exemption (aka Title III of the JOBS Act) which allows them to raise up to $1.07 million from the general public. Before the JOBS Act, such investment was generally limited to wealthy investors, with a few exceptions.

Tens of thousands of individuals have answered the call, investing more than $120 million to date. That pales compared to angel and venture capital funding, not to mention the $5.6 billion raised through Initial Coin Offerings (ICOs) in 2017 before regulators cracked down on those deals.

For comparison sake, in the UK, where investment crowdfunding has flourished for more than five years now, 17% of all seed stage funding in 2017 came from investment crowdfunding.

Still, we see the glass as half full. More than 100,000 individuals have become crowdfunding investors, not far behind the 300,000 active angel investors in the U.S. Angel investors—wealthy individuals who professionally invest in early stage ventures—can put up bigger sums than regular investors can typically afford or are allowed under the Regulation Crowdfunding rules. But the small investments from everyday Americans can add up.

From Doughnuts to Bionic Organs, Entrepreneurs Start Raising Under Regulation Crowdfunding

Collectively, Americans have $50 trillion in stocks, bonds and other investments that was mostly unavailable to entrepreneurs until the JOBS Act went into effect. Even if just a tiny sliver of that were to be invested in crowdfunding campaigns, it would represent a vast new pool of capital.

Here are some of the more notable observations after two years of “Reg CF”: […]

The post For Regulation Crowdfunding, a Glass Half Full appeared first on Locavesting.

About Locavesting