Wefunder Ranked #1 Online Investment Platform – Results Come out of 2022 Industry Report

Wefunder secures the top spot among online investment platforms. The platform leads in deals funded; capital raised, and the number of investors.

DENVER, CO, UNITED STATES, February 9, 2023 /– Last week, Crowdfund Capital Advisors (CCA) released its 2022 Investment Crowdfunding Annual Report. This report is the most comprehensive market analysis of Investment Crowdfunding. Investment Crowdfunding (aka Regulation Crowdfunding) allows any startup or small business to raise up to $5 million online from their customers, family, friends, or followers. Issuers must file certain company and financial disclosures, and the offer must take place on crowdfunding platforms (aka online investment platforms) registered with the Securities and Exchange Commission and overseen by FINRA. The industry was born out of the 2012 JOBS Act and launched in 2016. The report spans 91 months of activity and covers 6,500 deals from 5,600 Pre-IPO startups and small businesses.

In 2022 over 320,000 investors deployed nearly half a billion dollars into 1,100 deals. Deal volume hit record levels within Investment Crowdfunding, and while overall capital was down from 2021 due to geopolitical and macroeconomic events, investors’ check size hit a record level. There were 78 active online investment platforms in 2022.

“Wefunder was the online investment platform leader by deals, number of investments made, and capital,” said Sherwood Neiss, Principal at CCA. “They helped deliver $164.1 million by 88,000 investors to one out of every three funded deals. An impressive feat.”

Deals like Hemp insulation manufacturer, Hempitecture out of Ketchum, Idaho, real estate crowdfunding platform Equity Multiple, and cyber security company Atakama out of New York catapulted Wefunder to the top. The syndication of Venture-led deals on the platform also made an impact.

“2022 was an exciting year for Wefunder,” said Jonny Price, VP of Fundraising at Wefunder. “With the roll-out of the “Community Round” concept — epitomized by Replit allocating $5 million of their Series B to let their customers invest alongside VCs like Andreessen Horowitz.”

Wefunder was one of the first online investment platforms to register with the Securities and Exchange Commission. StartEngine came in second for investments, $73.9M, and deals, 298, but was in third for the number of investors, 42.2K. Republic had the second highest number of investments at 71.5K and was third for investments, $63.1M, and deals, 126.

Wefunder also leads the industry in total investments, deals funded, and the number of investors since the industry launched in 2016.

When asked what 2023 would hold, Price said, “As the availability and flexibility of venture capital for founders continue to be constrained in 2023, we expect to see a growing number of founders open up ownership to their users and fans.”

A full list of platform rankings is available on crowdfundcapitaladvisors.com. The 105-page report, including 100 charts, tables, graphs, and images, is available here. Scholarships and special discounts are available by emailing sales@theccagroup.com

Seven Charts that Summarize Investment Crowdfunding in 2022

2022 was a challenging year for venture-back companies. Supply chain issues, soaring inflation, skyrocketing gas prices, geopolitical crises, and market volatility sent us on a wild ride. But there were many silver linings for Investment Crowdfunding. Last week we released our 7th annual Year in Review report. This 105-page report (our longest yet) contains 100 charts, tables, images, and maps.

Here are seven charts that sum up key findings:

Pitchbook Angel/Seed Deals are Trending Down. Investment Crowdfunding Deals are Trending Up and Hit Record Highs

Pitchbook released the “Q4 Venture Monitor First Look” that breaks down its data. While they show Angel and Seed deals declining in 2022, Investment Crowdfunding saw the most deals funded in history. Also, this trendline continues to show an increase in funded deals. As more issuers find it challenging to access capital in 2023, we expect to see them turn online for capital.

The Valley of Death is Dead Thanks to Investment Crowdfunding

Much has been written about the Valley of Death. It refers to a crucial early phase of a new venture when work has begun, but a company hasn’t generated sufficient revenue to support its growth. In this case, outside capital is a necessity that either comes from an entrepreneur’s savings or access to credit. After seven years of Investment Crowdfunding experience and the growth in average raises, we can officially announce that the ‘Valley of Death’ is dead. The average raise since the industry launched has grown to $365K, expanding beyond where the Valley existed previously; $25K to $250K. With the maximum issuers can raise now at $5 million, there is much room for successful issuers to perform follow-on raises to not only get them through the Valley of Death but beyond it.

Naysayers be Damned. Investment Crowdfunding Issuers Appear Less Risky

The profile of the average successful investment crowdfunding issuer is changing. The data finds that most of them can be seen as less risky. They tend to be older, are post-revenue, and have average revenues over $1 million. Investors see the logic. The more established issuers raised more money and had more investors than their startup counterparts. As larger, more established issuers come online, this will further derisk investment in this space.

Investment Crowdfunding has Proven its Ability to Democratize Access to Capital

It used to be that if you wanted to access Venture capital, you needed to reside in or near Silicon Valley, New York, or Boston. However, thanks to Investment Crowdfunding, we see that it has successfully been able to democratize access to capital across the country. Even more importantly, the data shows that women and minority entrepreneurs (that routinely struggle to access capital) have had greater success within Investment Crowdfunding and are raising up to 50% of the capital. Show us where else the private capital markets have been able to accomplish that!

Investment Crowdfunding is the Economic Engine we Envisioned

Issuers successful with Investment Crowdfunding are scaling startups and small businesses. They create products and services. Pay business, sales, and payroll taxes. And are massive consumers of local and regional products and services. Investment Crowdfunding issuers are responsible for pumping more than $4 billion into our economy since the industry launched in 2016. All of this capital is going into over 1,600 communities across the USA. This is a local economic stimulus unlike we’ve ever seen. If our government officials are looking for ways to promote economic development, they should focus their attention on Investment Crowdfunding issuers.

Investment Crowdfunding Makes its Namesake, “The JOBS Act,” Proud

Since Investment Crowdfunding began, Issuers successful with Investment Crowdfunding are responsible for supporting over 226,000 jobs. We believe this is an underestimate because it doesn’t take into account issuers that reported no full-time employees but either have grown to support them or outsource jobs altogether. Either way, we went to Washington, DC, and promised jobs. And one can see the industry is delivering on it! Whoever came up with the acronym “The JOBS Act” deserves an award!

Investment Crowdfunding Will Make Some Average American Investors Millionaires

Liquidity is the Holy Grail for private company investors. Why would investors pour billions of dollars into Private Equity or Venture funds if not? Investment Crowdfunding allowed the average American to play the role of mini-VC and invest in pre-IPO startups that they believe in for the first time in history. A small percentage of these will most likely go on to phenomenal exits. If and when that happens, many millionaires will be made, and they will be your next-door neighbor. Over $54B of value is currently sitting inside successful Investment Crowdfunding issuers. Only $1.6 billion has been invested to date by Investment Crowdfunding investors. You do the math. Someone is going to get rich …

And this scratches the surface. In the report, we list all million-dollar-plus raises from 2022. We analyze what would have happened if someone had just invested in all million-dollar-plus deals. And much more! Don’t wait; download your copy now!

Crowdfund Capital Advisors Announces ‘Valley of Death’ is Dead in 7th Annual Investment Crowdfunding Report

With a $5 million max, Regulation Crowdfunding can fill a void that existed in the market before

DENVER, CO, UNITED STATES, February 7, 2023 /EINPresswire.com/ — Last week, Crowdfund Capital Advisors (CCA) released its 2022 Investment Crowdfunding Annual Report. This report is the most comprehensive analysis of Investment Crowdfunding to date. Investment Crowdfunding allows any startup or small business to raise up to $5 million online from their customers, family, friends, or followers. The industry was born out of the 2012 JOBS Act and launched in 2016. The report spans 91 months of activity and covers 6,500 deals from 5,600 Pre-IPO startups and small businesses.

After seven years of experience and the growth in average raises, we can officially announce that the ‘Valley of Death’ is dead. ” Sherwood Neiss In 2022 over 320,000 investors deployed nearly half a billion dollars into 1,100 deals. Deal volume hit record levels within Investment Crowdfunding, with women and minority entrepreneurs receiving up to 50% of all the capital committed. Deals were distributed across the United States and into 687 cities including many at-risk and distressed communities.

Unlike data collected by Pitchbook that tracks Angel/Seed declining deals in 2022, Investment Crowdfunding not only saw a spike in funded deals but saw the trend increase. “This may signal that issuers are going online to raise capital from their customers, friends, family, or followers for capital versus going to Angels or VCs,” says Jason Best, Principal at CCA. “Market dynamics shifted in 2022. Angels and VCs began to pull back and focus on their portfolio investments. This forced more sophisticated issuers online for capital. We expect this trend to continue through 2022 saw the highest number of Regulation Crowdfunding funded deals while Pitchbook saw declines 2023.”

2022 saw the highest number of Regulation Crowdfunding funded deals while Pitchbook saw declines

The data shows that the profile of issuers seeking Investment Crowdfunding capital is shifting as well. The average age of successfully funded issuers expanded past three years, with the vast majority of them being post-revenue. Established companies raised 45% more capital than their startup counterparts and had 20.5% more investors. Average check sizes rose, with the average raise trending higher.

The Valley of Death refers to a crucial early phase of a new venture when work has begun, but a company hasn’t generated sufficient revenue to support its growth. “In this case, outside capital is a necessity that either comes from an entrepreneur’s savings or access to credit,” says Sherwood Neiss, Principal at CCA. “After seven years of experience and the growth in average raises, we can officially announce that the ‘Valley of Death’ is dead. The average raise since the industry launched has grown to $365K, expanding beyond where the Valley existed previously; $25 to $250K. There has always been this talking point about the Valley of Death and doom and gloom. It should be nice to talk about opportunity and capital now that Investment Crowdfunding has proven itself.”

The 105-page report, including 100 charts, tables, graphs, and images, is available here. Scholarships and special discounts are available by emailing sales@theccagroup.com

The 2022 Investment Crowdfunding Annual Report: What a Wild Ride

Crowdfund Capital Advisors is pleased to announce the release of its 2022 Investment Crowdfunding Annual Report.

 

If you were an investor in 2022, it was quite the ride. From supply chain shortages to hyperinflation, soaring gas prices, to market volatility, rocketing interest rates, and the war in Ukraine. It was one twist after another. With the lingering effects of the pandemic still present, it is no surprise that investors pulled back.

This was equally felt in Investment Crowdfunding, where the industry saw its first down year for capital commitments. While investors showed up less, they wrote larger checks than ever. Issuers’ demand for capital shrunk as they postponed offerings, and valuations that rose to record highs earlier in the year began to crack and settled down to more normal seed round levels.

In 2022, over 320,000 Americans poured half a billion dollars into more than 1,500 offerings on Regulation Crowdfunding websites. Women and minorities were some of the biggest beneficiaries, and at-risk and distressed communities all across the United States saw deals. Over $4 billion was pumped into local economies thanks to Investment Crowdfunding and hundreds of thousands of jobs supported. Investment Crowdfunding is definitely living up to its namesake, the JOBS Act.

We share with the reader a list of all companies that raised over $1 million this year and have a case study that digs into what $1,000 invested into all deals that raised $1 million would be worth today. With $54 billion in enterprise value pent up and exits forthcoming, these average American crowdfund investors stand to gain.

We expect another volatile year in 2023 as the Fed struggles with the economy and markets react to inflation, jobs, and a pending recession. All this and much more in our 105-page report with 100 tables, charts, and images.

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Our annual report is a comprehensive review of the online investment industry with a comparison to prior years and predictions for 2023. The data in the report is aggregated from all online investment platforms that are registered with the Securities and Exchange Commission (SEC) and overseen by FINRA. Each day, data is collected, normalized, aggregated, and reported to Bloomberg for industry analysis and coverage.

Order the full report for $2,498.00**

Order the digital data download of report charts for $4,998.00

Click here to Pre-order both report and digital data download for $7,496.00

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* The above prices are for single-license use. For a Team/Corporate license, contact: sales@theccagroup.com
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Investment Crowdfunding Stumbled in 2022 – Investors Pull Back as more Sophisticated Companies Seek Capital Online

DENVER, CO, UNITED STATES, January 4, 2023 /EINPresswire.com/ — In its upcoming report “What a Wild Ride,” Crowdfund Capital Advisors (CCA) releases findings from its annual industry survey. Since launching in 2016, over $1.6B has been committed to more than 5,600 startups and small businesses by 1.6M online investors. Issuers were present in over 1,600 cities across the USA, including all 50 states, with women and minority founders benefitting greatly.

“The economic, social, and geopolitical turmoil of 2022 spilled over to Investment Crowdfunding,” says Sherwood Neiss, Principal at Crowdfund Capital Advisors. “This led to a bumpy road for the industry. While demand for capital remained strong among startups and small businesses, overall investments dropped for the first time, yet average check sizes rose. Despite this, we are seeing stronger companies come online as indicated by their age and the balance sheets.”

Investment Crowdfunding allows startups and small businesses to raise up to $5M online from non-traditional (both accredited and unaccredited) investors. It was one of the most fundamental changes to the securities law as it reversed the decades-old ban on general solicitation and allowed retail investors to access early-stage investment opportunities for the first time.

Investment Crowdfunding Headlines for 2022:

1. Demand for capital among startups and small businesses was up 1.2%, with 1,529 companies running offerings. Q4, which is historically strong, saw the first quarterly drop in demand despite 2022 having the highest percentage of post-revenue issuers seeking capital.
2. Investments into startups and small businesses dropped 12.8% from last year’s record of $578.8M, causing CCA’s Online Investment Index to fall.
3. More than 320,000 investors participated in over 1,580 offerings. Investors were down from a record 543,000 in 2021. However, their average check deployed rose from $1,065 in 2021 to $1,578 in 2022, a record high.
4. The average raise fell from $450K to $365K as issuers faced 2022 headwinds. More established companies were able to raise $1.36 for every dollar their startup counterpart raised.
5. The number of jobs supported/created among these issuers tops 250,000. Continuing to prove that Investment Crowdfunding can be a jobs engine.
6. Follow-on rounds continue to grow as issuers return to their customers/community for funding versus alternative forms of capital.
7. Average and median valuations peaked at $29.6M and $12.9M, respectively, in 2022, driven by 30 offerings with $100M+ valuations.
8. The total market value of crowdfunded companies jumped from $33B to $54.2B, increasing the opportunity for market exits via acquisitions and IPOs.
9. 71.3% of offerings were successful and closed within five months. Offerings closed two months faster in 2022 than the prior year, indicating that issuers were eager to close faster.
10. California, New York, and Texas remained the top 3 states for Investment Crowdfunding by dollars invested, successful offerings, and the number of investors.
11. The number of $1M+ offerings jumped to record highs, with 21 issuers (twice as many as in 2021) raising the maximum of $5M+, continuing to prove Investment Crowdfunding a viable “Silicon Valley-sized Seed round.”
12. Issuers used 52 intermediaries to raise crowdfunding-facilitated capital, up 21% over 2021. Wefunder, StartEngine, Republic, SeedInvest, and Equifund were the top five leaders, accounting for over 83.7% of all the funding.

“It is clear that as this industry grows, the application for its use expands,” says Jason Best, Principal at Crowdfund Capital Advisors. “This is signaled by the issuers with greater revenues coming online to raise capital from their customers and communities. The capital markets face a potential recession in 2023, which will drive more of these types of issuers online.”

“Investment Crowdfunding has found its footing,” comments Neiss. “Now that we’ve experienced a year of volatility and seen how the industry adapts and responds, we can feel confident of the role Investment Crowdfunding will play in 2023. We also predict that as we pull out of this next recession and grow into the future, Investment Crowdfunding will scale to a $2.5B annual industry in 2030.”

The principals of Crowdfund Capital Advisors co-authored the framework for Regulation Crowdfunding and were invited to the White House by President Obama for their work on the legislation. They created the industry’s first data aggregator that collects information on all Investment Crowdfunding offerings. This data is currently available via the Bloomberg terminal. They serve institutional clients, nongovernment organizations, multilateral organizations, investors, and entrepreneurs in the understanding and expansion of Investment Crowdfunding. Click here to order.

BREAKING NEWS – Investment Crowdfunding Surges as Industry Exceeds $1.1B in Financing – 2022 to Double 2021 Investment Volume in Upcoming Report

Investment Crowdfunding Surges as Industry Exceeds $1.1B in Financing – 2022 to Double 2021 Investment Volume DENVER, COLORADO, January 4, 2022 — In its upcoming report “Time to Celebrate Success,” Crowdfund Capital Advisors (CCA) releases findings from its annual industry survey. Since launching in 2016 over $1.1B has been invested into 4,850 startups and small businesses by 1.3M investors. Issuers were present in over 1,300 cities across the USA and in all 50 states. It is particularly important to note that 50% of all crowdfund investments made in the last 5 years occurred in 2021. “2021 was the tipping point for Investment Crowdfunding,” says Sherwood Neiss Principal at Crowdfund Capital Advisors “Investors poured capital into next-gen startups at a record rate, entrepreneurs launched offerings at a record pace, and Venture Capital which once ignored these issuers, are now actively seeking early deal flow in the space.” Investment Crowdfunding allows startups and small businesses to raise up to $5M online from non-traditional (both accredited and unaccredited) investors. It was one of the most fundamental changes to the securities laws as it reversed decades old ban on general solicitation and allowed retail investors for the first time to access early-stage investment opportunities. Investment Crowdfunding Headlines for 2021: Investments into startups and small businesses up 140% over 2020, shattering last year’s record, exceeding the projection of $500M invested, and leading CCA’s Online Investment Index to record highs. Total financing in 2021 exceeds all investments from 2016 through 2020. More than 540,000 investors participated in over 1,500 offerings. More than 2019 and 2020 combined. Average raise across the industry jumps to all time high of $450K from a low of $200K in 2018 as the number of jobs supported/created among these issuers exceeds 180,000. In March, SEC updated the maximum issuers can raise from $1M to $5M, the industry then surpasses $1B in funded capital in October. Follow-on crowdfunding rounds were raised by over 500 issuers. The market value of crowdfunded companies jumped to $33B as median valuations rose in tandem to the broader early-stage market. 68.4% offerings were successful and closed within 7 months, which is higher and faster than “traditional” VC round timelines. VCs & Y-Combinators jump into the space both co-investing and syndicating offerings providing further validation. The number of $1M+ offerings jump to record highs with several $5M+ rounds proving Investment Crowdfunding a viable “Silicon Valley-sized Seed round.” Issuers used 43 intermediaries to raise crowdfunding facilitated capital, up 10% over 2020. Wefunder, StartEngine, Republic and SeedInvest, the top leaders, accounted for over 80% of all the funding. Trends that will shape Investment Crowdfunding in 2022: Expect a rally as the Fed reacts to high inflation by raising interest rates, investors taking chips off the public markets and diversifying into Investment Crowdfunding. Expect over $1B expected to be invested in 2022 by more than 1M investors into 2,500 new issuers. Software companies which saw a 4x increase in online funding in 2021 will leverage Investment Crowdfunding as the de facto area for primary funding. The success and ease of remote working coupled with employer dissatisfaction will lead to more entrepreneurs starting local businesses and seeking capital from their communities. 76% of investors believe it is important to fund Woman and Minority entrepreneurs. Investment crowdfunding has proven itself as a scalable way to do that. As investors seek higher potential returns, we expect further that diversification into Investment Crowdfunding will increase. Investment Crowdfunding delivers dollars, customers, and brand advocates to business owners. This will continue to be a powerful combination of benefits for entrepreneurs. Investors will expand their activity from local to nationwide into industries they follow as well as into businesses that have raised significant capital online. Existing Investment Crowdfunding issuers return online, expect deal activity to increase, fundraising conditions to improve and jobs to follow. With most successful issuers expanding their workforce and expecting revenues and earnings to increase, Venture Capital will be combing for potential winners. “Regardless of where the market cycle takes you in 2022, private equity and venture capital investors are all looking to earlier stage companies to deliver future alpha. Companies that have raised a round of crowdfunding and are in venture-investable businesses, with demonstrated product-market fit, may benefit from this trend” says Jason Best, Principal at Crowdfund Capital Advisors. “I believe that 2022 will be a great year for entrepreneurs.” For more information, please visit CrowdfundCapitalAdvisors.com. To pre-order the 2021 Annual Report click here.

Wefunder to Launch 40 Regulation Crowdfunding Offerings Today!

We have spent a lot of time recently talking about the tipping point for Regulation Crowdfunding. To illustrate what is happening, 2 weeks ago we launched the industry’s first Online Investment Index that tracks that daily Top 50 offerings. The index shows how things started to pick up in 2020 despite the pandemic with local investors stepping up to support local businesses. It also shows the momentum behind the industry. Source: Crowdfund Capital Advisors The peak at the end of the index reflects the changes made by the SEC on March 15th that increased the amounts issuers can raise from $1M to $5M. This is not only bringing more issuers to the table but investors as well. To further demonstrate this, Wefunder is launching a record 40 new offerings in a single day! What also makes this exciting is the fact that these are Y Combinator companies that have been through an accelerator and may be poised for substantial growth. In a call with Wefunder they explained why March 15th was such a big day for the industry. One of the reasons they quote is the rules now allow investors to be pooled into a Special Purpose Vehicles (SPV) and founders can more easily communicate with them. They note that conventional wisdom is starting to change, more VCs are open to syndicating deals to the crowd and companies are allocating 10 to 15% of their round to the crowd. This opens up these offerings to employees, friends, family and customers but the bulk to the risk is still on the shoulders of these more professional investors. Wefunder, a former Y Combinator company itself says, “Now anyone can investment as little as $100 in any of these startups. The beauty is that they are investing on the same terms and valuation as professional investors in the deal.” These professional investors are performing a level of diligence on these deals which may mitigate risk on these offerings. Issuers that are raising money on Wefunder are using the new “testing the waters” provision that allows them to see if there is enough interest in their offering before spending the time and money to complete all the disclosure requirements.  Once a company hits their target, they formally file, open their offering and collect their commitments. They still must hit their disclosed minimum funding target, or the money collected in escrow is returned to investors. If you look at the offering page you will notice many industries represented from software application to biotechnology to personal services and more. The wide variety of offerings proves that there is investor appetite from both retail and professional investors and also counters the argument that online offerings only apply to companies that could not find capital elsewhere. Interestingly, several of these offerings are being run parallel with Venture Capital. Make sure to check out their offering page for more information. Also make sure to subscribe to our new YouTube Channel, TheCrowd.

New Index Tracks Online Investment Offerings and Investor Sentiment – 50 Largest Equity Crowdfunding Offerings by Private US Companies

DENVER — The CCA Online Investment Index is a new tool created to gain better insight into the blossoming securities-based crowdfunding market. The index measures the online capital-raising activity of private U.S. companies. This index, which is calculated daily, is based on the capital investments received by the 50 daily highest-raising private issuers that meet certain criteria and are listed on Crowdfund Capital Advisors’ data platform.  This data can uniquely inform investment decisions, economic analysis, forecasting and government policy.

Unlike other SME indices that emphasize optimism or policy, this index ranks the top performing issuers by capital commitments. The index is a barometer of investor sentiment across industries and geographies. Since the index launched $3.2B in economic activity has been monitored.

Securities-based crowdfunding was legalized with bi-partisan support as part of the 2012 JOBS Act. It allows startups and SMEs to raise money online from retail and accredited investors. Almost 4,000 securities offerings are included in the dataset (more securities than are tracked by the New York Stock Exchange) which represent over 3,250 issuers and approximately $17.3B in Market Value in over 460 industries across 1,100 cities in the United States. The dataset is growing about 3% per month. On March 15, 2021, new rules by the Securities and Exchange Commission increased the amounts issuers can raise online leading to a spike in the most current week of activity.

CCA collates real-time offerings from over 50 securities-based crowdfunding platforms, including Amplifyx, Buy the Block, Crowdfund Main Street, CrowdsourceFunded, Equifund CFP, FundersUSA, FundMe, Fundopolis, HoneyComb, Infrashares, IPO Wallet, Mainvest, Microventures, Miventure, Mr. Crowd, Net Capital Funding, Nextseed, Nvsted, Raise Green, Republic, SeedInvest, Silicon Prairie Online, Small Change, Stampede, StartEngine, The SMBX, Title 3 Funds, TruCrowd, Fundanna, Cryptolaunch, Musicfy, VidAngel Studios, Vincinity Capital, Wefunder, and Wunderfund. As new platforms are registered with the SEC, data from qualifying companies on these platforms will be added to the index.

Companies represented on the index are operating companies raising money, not equity funds. They represent twenty sectors: Agriculture, Forestry, Fishing and Hunting; Mining Quarrying, and Oil and Gas Extraction; Utilities; Construction; Manufacturing; Wholesale Trade; Retail Trade; Transportation and Warehousing; Information; Finance and Insurance; Real Estate and Rental and Leasing; Professional, Scientific, and Technical Services; Management of Companies and Enterprises; Administrative and Support and Waste Management and Remediation Services; Educational Services; Health Care and Social Assistance; Arts, Entertainment, and Recreation; Accommodation and Food Services; Other Services; Public Administration. These companies are conducting offerings pursuant to Title II [Rule 506(c)], Title III (Regulation Crowdfunding) of the JOBS Act or both. 

Figure 2: Percent of Capital Commitments by Industry

“By looking at the index we’re able to gain a better understanding of just how much money is being raised every day through crowdfunding by the top companies in the industry,” says Sophie Dessart, CCA Analyst.  “Over time, we can see whether investors are putting more or less money into the market, giving us an idea of investor sentiment and the perceived potential of the companies currently raising funds.”

“The CCA Online Investment Index has grown year after year, but the increases seen from FY 2020 to FY 2021 have been remarkable,” says Alex Nagel, CCA Analyst. “We are almost consistently seeing index values during FY 2021 that are twice as high as the year prior. This is a strong indicator of the growth of the crowdfunding industry including accessibility, availability, and investors bullish on getting involved with some great companies.”

Each day, the leader of the index and the company with the highest capital raise can change and come from a different industry. “It’s fascinating to see the wide range of companies that can lead the index, and it really illustrates the diversity of campaigns that everyday investors are supporting through crowdfunding,” says Dessart. “For example, the leader with the highest raise on March 15, 2021 , was Immersed, a Techstars company that helps remote teams work together in a virtual workspace. They were looking to raise funding build out their platform. Three days later, on March 18, 2021, the top investment was in the media industry with the company Angel Studios, a film studio that helps creators come together with viewers to create high-quality TV and film.”

“The index can also be used to measure real-time economic recovery,” says Sherwood Neiss, Principal at Crowdfund Capital Advisors. “This index is one way to monitor local and regional economic recovery by tracking investor sentiment. We can see peaks and troughs that correlate to unique offerings, seasonality and even the impact of COVID. For instance, in the 12 months leading up to the pandemic the index average was 127.2, since the onset of the pandemic the average rose 215% or 146 points indicating greater investor interest in support SMEs across the country. The low point for the index was 23 on March 15, 2020 when our economy shut down. And the high point was exactly one year later on March 15, 2021 when it hit 3,986 after the new rules went into effect”

“We are excited about the application of this new index,” says Jason Best, Principal at Crowdfund Capital Advisors. “Not only will users be able to gauge economic impact and job creation, but we also believe the next unicorn may be one of companies represented in the index.”

Quick Facts on New Regulation Crowdfunding Rules that launch March 15, 2021

Regulation Crowdfunding from May, 2016 – Feb. 2021

• Over 3,600 securities offerings have been filed with the SEC by over 3,100 issuers (more issuers than are on the New York Stock Exchange)
• These issuers have
  • Had over $900M in commitments
    • 5% of offerings have been successful. Campaigns that were not only accounted for 4.6% of capital commitments
  • Supported over 110,000 jobs
  • Represent $17.3B in market value
  • Represent over 450 industries, from 1,100 towns in the United States.

Regulation Changes  on March 15, 2021

Expectations for the Next 12 Months

• Over $1.2B will be invested
• The number of offerings to increase 40% to 1,700
• The number of investors to double to 800,000

Sherwood Neiss to Ivy Family Office Meeting – Securities Crowdfunding Shows Much Promise with New Avenues for Liquidity

Last week, Sherwood Neiss, one of our Principals, had the opportunity to speak to the Ivy Family Office Meeting about the state of the online investment industry. Sherwood gave an overview of the different exemptions under which companies are raising money online, dug into some of the Bloomberg data coming from the online investment platforms and provided 2 case studies: one on debt offerings that shows attractive average yields and the other on the positive impact coronavirus has had on capital formation

You can watch the replay by clicking the video image below. You can download the presentation by clicking the image right below this.

For more information, please contact: sherwood@theccagroup.com

Federal Reserve Needs to Pivot to Get Capital to Main Street Businesses

NEWS For Immediate Release Washington, D.C. –  The Federal Reserve’s Main Street Lending Program has been a bust for small businesses, and billions of additional dollars are sitting idle in the Paycheck Protection Program (PPP) due to its expiration. Still, Main Street businesses across America are in desperate need of capital to readapt, operate effectively, or simply survive the COVID-19 economy. That is why Small Business & Entrepreneurship Council (SBE Council) president & CEO Karen Kerrigan, and the principals of Crowdfund Capital Advisors (CCA), Jason Best and Sherwood Neiss, are urging the Federal Reserve to leverage a proven solution to broadly deliver capital to small businesses in need. “Small business owners and entrepreneurs cannot afford for Washington to get stuck, but it seems our elected officials and policy leaders have reached that point. They need to fully explore innovative ideas to fuel capital formation and access, and a co-investment fund is one that will leverage local capital through federal support. It utilizes the power and security of regulated crowdfunding to drive capital to local businesses and startups, providing a turn-key solution that can be implemented quickly and with existing regulatory guardrails,” said Kerrigan. The latest report from the Federal Reserve reveals that the Main Street Lending program has lent approximately $4 billion of the $600 billion available with just 420 loans made. And these are bigger loans with an average loan size of $9.6 million.  The results are an extremely poor showing for a program that was supposed to focus on boosting Main Street businesses by providing a bridge to economic recovery. The program was established with $75 billion in equity provided by the Treasury Department from the CARES Act, and with approval from the Treasury Secretary. “The bottom line is that the Main Street Lending Program is a bust for Main Street. It’s time for the Fed to pivot like so many small businesses are doing. Members of Congress have urged Chairman Jerome Powell to think innovatively about how the Fed can deliver some of the massive amount of capital it is sitting on to Main Street businesses. A co-investment fund is a simple, safe and transparent way of doing that,” added Kerrigan. A Main Street Recovery Co-Investment Fund would utilize the power and protection of regulated crowdfunding to supercharge local investment. The model that has been successfully utilized in the U.K., and offers a turn-key approach for the Federal Reserve to put to use some of the billions of dollars in capital that is currently sitting idle. SBE Council and CCA are asking the Fed to set aside $20 billion of that unused capital – a tiny fraction of what is available – to launch a co-investment fund. “It would appear under procedures for emergency lending under Section 13(3) of the Federal Reserve Act that the Fed has the power to allocate such funds,” says Neiss. “The fund would be ‘broad-based,’ tied to debt-type instruments, and used to aid Main Street businesses to fund the gap until restrictions are lifted on consumer behavior. Given the unusual and exigent circumstance we are in, this appears to be the emergency time to create this fund,” he added. Despite the pandemic, interest among Main Street businesses to raise money from their customers and community has increased dramatically. The number of offerings has increased 47.5% since February alone, according to data from Crowdfund Capital Advisors. Investments over the same period are up 300% and the number of local investors is up 99%. “This is just over the past 9 months,” says Neiss. “Clearly the data is showing that despite the pandemic, both Main Street business and Main Street investors are eager to keep their local businesses alive. This co-investment fund will only further the positive results we are seeing in the data.” “If the Fed would direct just 3% of the $600 billion already allocated to support SMEs it could deliver up to $250,000 to at least 80,000 businesses.  This is a 200x greater impact than has been achieved to date by the Main Street Lending Program.  This can be done using existing technology, existing regulation and existing industry data standards that provide for real-time transparency and oversight of every dollar.  This data is already being used by Bloomberg clients to track SME sentiment and activities,” added Best. Recently, SBE Council and CCA released the report “Regulation Crowdfunding by Congressional District: A Report Card,” which reviews the progress of investment crowdfunding since 2016.  The Jumpstart Our Businesses Startup Act (JOBS Act) of 2012 enacted changes that ushered in investment crowdfunding, which officially launched following the finalization of Securities and Exchange Commission (SEC) rules in 2016. As noted in the report, there have been no cases of fraud with investment crowdfunding. And the democratization of capital is truly taking hold through investment crowdfunding, which allows small business owners to more easily identify investors and raise capital using SEC regulated platforms. Ninety percent of U.S. House Congressional districts (393) have had a regulated crowdfunding offering, and woman and minority entrepreneurs are finding significant success accessing capital via investment crowdfunding. You can learn more about the co-investment fund by watching SBE Council’s recent webinar on how it works here, or watch Kerrigan’s appearance on FinTech television here. Related Content: Q&A: CCA and SBE Council on the Main Street Co-Investment Fund Idea, Start Us Up. Crowdfunding Success Indicates Small Businesses and Startups Worthy of Government Matching Fund, Forbes. ABOUT CCA Crowdfund Capital Advisors (CCA) is a consulting and advisory firm. Its principals created the framework that became the basis for Regulation Crowdfunding. They have testified in front of 5 US House and Senate Committee Hearings on the subject and authored a book and World Bank report on the topic. They created the CCLEAR database that collects, cleans, normalizes and reports on offerings available under the JOBS Act. This data is transmitted to Bloomberg on a daily basis. They have worked in 43 countries helping governments and regulators create policy to enable startup and small business finance and job creation. Visit CCA’s website for additional information. CONTACT: Sherwood Neiss  sherwood@theccagroup.com Jason Best, jason@theccagroup.com ABOUT SBE COUNCIL SBE Council is nonpartisan advocacy, research and education organization dedicated to protecting small business and promoting entrepreneurship. For 25 years, SBE Council has worked on and advanced a range of private sector and public policy initiatives to strengthen the ecosystem for strong startup activity and small business growth. Visit www.sbecouncil.org for additional information. Twitter: @SBECouncil CONTACT: Karen Kerrigan, kkerrigan@sbecouncil.org # # #

Monthly Funding Recap October 2020: Highest Amount Ever for Investments as SEC Increases Maximum Raise to $5M