Issues: New asset class profoundly alters funding landscape
Fred Wilson, Managing Partner of Union Square Ventures has said that the growth of crowdfunding (made possible by the JOBS Act) ‘...will flood the startup market with new capital. If every American family gave just one percent of their investable assets to crowdfunding, he said, $300 billion - or ten times the current amount invested in the sector will come barreling into venture capital.
While Crowdfund Capital Advisors’ is more conservative in estimating the size of the crowdfunding market, the fact remains that professional investors will have to contend with this new asset class. The funding landscape has remained virtually unchanged for decades - until now. The changes taking place will fundamentally alter seed and early-stage investment.
Starting in 2013, Startups will raise funds in the private capital market through Crowdfund Investing websites and in addition to capital will benefit from proven concepts, customer validation and investor-advocates helping to build their brands and revenue. Only a small percent will pass the muster of the crowd. However those that do will lead to significantly more capital flowing into startups and many more entrepreneurs trying their hand at seed and early stage financing than ever before. A percentage of those companies will be growth companies that go on to professional investment. This will provide dealflow of significantly de-risked investment to professional investors, because customer validation via crowdfund investing will be a leading indicator of future potential success. But the challenges of moving from rounds of CFI to more traditional forms of private capital are not trivial. What will be the impact on ‘due diligence’ processes? How will those firms that went through rounds of Crowdfund Investing move on to professional investment? What will be the structure of the initial deal terms? What about the ‘messy’ cap tables? We have answers to these questions.
Our Services for Professional Investors
- Our CCA Engagement MethodologyTM (CEM) for Professional Investors provides a systematic approach to helping Professional Investment firms navigate and profit from this new asset class in the private capital markets. Our methodology uses a unique discovery, analysis and roadmapping process to align your organizational goals and objectives to an executable Crowdfund Investing strategy for maximum impact. We work with Professional Investors to develop executable tools and roadmaps to unleash the power of Crowdfund Investing for for their firms.
- Crowdfund Capital Advisors provides consulting and advisory services to professional investment firms seeking to understand this new asset class and build strategies for success around it.
- Help clients navigate this new environment and define strategies and tactics for a new era in early stage venture finance.
- CCA works with clients to redesign business processes associated with new models in deal flow.