Venture Crowdfunding: European & Australian Investors Are Cashing In
While we await the final crowdfunding guidelines from the Securities and Exchange Commission, it’s important to note that equity and debt crowdfunding platforms already exist around the world, and have become a source of practical wisdom that could inform U.S. regulators.
Crowdcube, which operates in United Kingdom, has architected a well-oiled equity infrastructure raising more than $5.8 million. Additional equity platforms include Symbid in the Netherlands, the Australian Small Business Offerings Board, and Seedrs in the UK.
On the debt side, Funding Circle, in the UK, has raised over $112 million. Its success illustrates a clear message – that in certain cases debt may be a better fit with crowdfunding than equity.
Jonathan Sandlund, Founder, TheCrowdCafe, has compiled the following data:
|Australian Small Business Offerings Board||FundingCircle||Crowdcube|
|Last Updated||10/7/2012||Last Updated||1/13/2013||Last Updated||1/7/2013|
|Total Crowdfund Raises||176||Total Crowdfund Raises||1,404||Total Crowdfun Raises||26|
|Total Funds Raised||$129,205,578||Total Funds Raised||$112,870,336||Total Funds Raised||$5,755,120|
|Avg. Company Fundraise||$734,123||Avg. Company Fundraise||$80,392||Avg. Company Fundraise||$88,000|
|Avg. Individual Investment||N/A||Avg. Individual Investment||N/A||Avg. Individual Investment||$2,124|
|Incidences of Fraud||0||Incidences of Fraud||0||Incidences of Fraud||0|
|www.seedrs.com||www.symbid.com||Coming in 2013: A US Platform|
|Last Updated||1/13/2013||Last Updated||12/15/2012|
|Total Crowdfund Raises||9||Total Crowdfund Raises||9|
|Total Funds Raised||$524,000||Total Funds Raised||$748,200|
|Avg. Company Fundraise||$48,000||Avg. Company Fundraise||$83,850|
|Avg. Individual Investment||$1,013||Avg. Individual Investment||$352|
|Incidences of Fraud||0||Incidences of Fraud||0|
|* Only includes fundraise data publicly available on each website|
|* Avg. = Median* TheCrowdCafe is an education and advocacy platform for the investment crowdfunding industry.|
Chris Brummer and Daniel Gorfine, attorney’s at the Milken Institute, cite the success of WiSEED, the French crowdfunding portal, and the Antabio seed funding round: “WiSEED recently completed the first equity offering that allowed for the complete and profitable exit of crowdfunding investors.”
All things that weren’t immediately transparent have begun to rise to the surface. The crowdfunding industry overseas has been operating fraud free for years, lending support to the argument that the platforms, regulations, and a discerning crowd are highly capable of protecting and positively affecting the ecosystem.
Once implemented in the U.S., venture crowdfunding has the capacity to take a giant leap toward the democratization of small business finance.
Smart investment structures here in the U.S., such as the equity and debt based platform at Smart Money Entrepreneurs can significantly reduce investor-protection concerns and potential pitfalls; while making a substantial contribution toward economic prosperity.
“The crowd is efficient. Be careful not to underestimate its power,” said Richard Salute of the accounting, tax and advisory firm of Cohn Reznick.
Global investment crowdfunding database (retrieved Jan. 11, 2013):
The Milken Institute