Business

The outlook for debt and equity crowdfunding in 2014

This sponsored post is produced by Coastal Shows.  

Crowdfunding leaders converge at the industry’s main event: the Crowdfund Global Expo, Jan. 30-Jan. 31 at the San Diego Convention Center.

The securities crowdfunding industry is leading the charge for huge changes to capital formation, wealth building, and investing. In September, the Securities and Exchange Commission implemented rules governing Title II of the Jumpstart Our Business Startups (JOBS) Act, which permits companies to advertise their private securities offerings to accredited investors. Following that, the SEC announced two months later at its Forum on Small Business Capital Formation that more than 300 companies sent filings to the SEC and raised some $2.2 billion in capital via general solicitation.

Crowdfunding is no longer a trendy buzzword — it’s a movement with active participants, proven financial potential, and maturing seemingly by the month.

Equity-based crowdfunding is on the horizon as the next definitive step for investors hoping to secure a stake in both early-stage ventures and more established companies. On Oct. 23, the SEC released a 500-plus page document detailing the proposed rules and regulations for Title III of the JOBS Act, the piece of legislation that will legalize equity crowdfunding for unaccredited (aka everyday) investors.

The 90-day comment period for these proposed rules will end Feb. 3, and global professionals from traditional institutions such as banks and real estate development companies are poised to enter the sector. As the industry matures and offers cutting-edge user interfaces and access to higher-quality deal flow, online private securities offerings across the board will naturally increase.

The Crowdfund Global Expo presents the leaders of the investment and crowdfunding industries. Dr. Richard Swart, who heads the Crowdfunding Research Program at the University of California, Berkeley, has cited several experts who project that the size of the securities crowdfunding market will range from “$3.98 billion (Nest, Neiss, Stralser & Fleming 2013) to as much as $300 billion over the coming years depending on the level of enabling regulation adopted by governments.”

Finance, real estate, and legal professionals are not only working to disrupt the investment landscape but are also creating new methods for financing small-business loans, debt transactions, and even participating in high-end real estate buyouts.

“No one knows exactly what crowdfund investing performance numbers will look like a year from now. What we do know is that real estate as an asset class has enormous potential,” says Todd Lippiatt, the managing principal of Aristone Realty Capital and CEO of Propellr. “There’s $1 trillion in the 506 market of securities offerings alone. That’s the same size as last year’s entire IPO market. Accredited investors have already shown they’re ready. Our own investors have earned, on average, more than 22 percent return on an annual basis.”

Institutional and prominent angel investors are pouring substantial money into creating online private placement, consumer and small-business lending, and similar platforms. Tech giant Google led a $125 million investment round for Lending Club, increasing speculation that the peer-lending site may be the first to complete an IPO in its space.

“This will be a formative year for small-business crowdlending. The players, the products, and the true appetite of institutional crowd investors will be clearer,” says Ethan Senturia, the CEO of Dealstruck. “While other platforms are sure to enter, current players that have worked hard at maturing their platforms may begin to establish the upper hand. Small businesses will begin to see the real value of crowd-financing, and adoption will begin to take off.”

Securities-based crowdfunding is constantly evolving as major players in the finance, technology, and real estate industries continue to find ways to bring greater efficiency to the capital markets.

“These legislation changes expand how businesses can raise capital and the ways investors can earn, therefore creating new opportunities. At CFIRA, we believe it is critical to provide education for issuers, investors, and professionals who want to take part in this exciting new era of capital formation,” says Chris Tyrrell, the chairman of CFIRA’s executive committee and CEO of private placement platform OfferBoard.

In order to gain an in-depth understanding of these new funding channels and evolving securities law in a post-JOBS Act business environment, event producer Coastal Shows hosts the Crowdfund Global Expo in San Diego. This education-focused conference brings together leading experts in these industries and instruct attendees on how crowd-finance is creating brand-new funding mechanisms for promising entrepreneurs and established businesses alike. In order to provide first-hand knowledge and legislative insight, Coastal Shows has partnered with CFIRA, the leading crowdfund lobbying organization dedicated to working with the SEC.

Attendees registered for this event are on the forefront of developing trends and emerging knowledge throughout the crowdfunding industry. Visit www.coastalshows.com for a full list of speakers, partners, participants and updates.

About Coastal Shows:

Coastal Shows is a full-service media company providing top-tier tech-related educational experiences in the form of multifunctional events and tradeshows. The company operates several dynamic events, including the Crowdfund Global Expo, the premiere intensive event for aspiring debt, real estate, or equity crowdfunding professionals; The Crowdfund Real Estate Forum: Crowdfunding National Series; the AppShow, the largest application-focused trade show worldwide; and AppShow + CONNECT, the premier Funding, Discovery and Monetization conference.

About CFIRA:

Crowdfund Intermediary Regulatory Advocates (CFIRA), was established following the signing of the Jumpstart Our Business Startups (JOBS) Act. CFIRA is an organization formed by the crowdfunding industry’s leading platforms and experts. The group works with the Securities & Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and other affected governmental and quasi-governmental entities to help establish industry standards and best practices. For more information, click here.

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