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

Where Does Crowdfunding Data Come From And Why Is It Important?

Regulation A+ and Reg.CF crowdfunding is allowing millions of average Americans to invest in their favorite companies. How do we know this? From crowdfunding data! In this podcast, listen to Sydney Armani from FinTech World and Woodie Neiss from Crowdfund Capital Advisors explain why we may be at a tipping point in the crowdfunding industry as they explain how crowdfund data is being accumulated, curated, and being used to guide investors and issuers on crowdfund investing – direct from the experts who wrote the framework.

Crowdfund Capital Advisors delivers strategic insights to government agencies, financial institutions, regulators and multilateral organizations seeking to both create and implement innovative strategies to utilize crowdfund investing technologies to drive innovation, job creation and entrepreneurship.

As you’ll learn from listening to this podcast, Mr. Neiss (who Mr. Armani referred to as “The Godfather of Reg.A Crowdfunding”) is at the forefront of the data being accumulated with respect to crowdfunding investing. His company compiles data on a variety of Regulation A+ and Reg.CF deals across many SEC-registered crowdfunding portals across a number of sectors and specific industries. Where is the investment capital going? How much is being invested? What are the trends? Data answers so many of these questions, and it’s all driven by artificial intelligence algorithms.

With their “CCLEAR” Dataset, you get the most comprehensive Regulation Crowdfunding database that collects information on every offering. In addition, learn how Crowdfund Capital Advisors studies and invests in the emerging ecosystem of crowdfunding and the new solutions being created that will impact the broader private capital markets through advising, speaking, and research.

Questions? Comments? Besides his Fintech World website, Sydney Armani has recently launched CrowdfundingUSA.com as a resource for those seeking more information on how issuers can raise capital via crowdfunding. Likewise, you can get more information on what Crowdfund Capital Advisors does at their website at CrowdfundCapitalAdvisors.com.

ABOUT OUR GUEST: Sherwood “Woodie” Neiss

Sherwood Neiss, is a Principal at Crowdfund Capital Advisors and a Partner at Crowd Capital Ventures. He is an expert at building successful businesses. As a 3-time INC500 winner whose former company won E&Y’s Entrepreneur of the Year, Sherwood understands the keys to entrepreneurial success from concept to company to sale.

As a serial entrepreneur and investor during the credit crunch, Sherwood saw a need for a change in outdated securities laws and did something about it—as a co-founding member of Startup Exemption, Sherwood co-authored the Crowdfunding Framework used in the JOBS Act that was signed into law by President Obama on April 5, 2012.

Within Crowdfund Capital Advisors (CCA), Sherwood works with clients ranging from governments and banks that are looking for ways to boost economic development in their countries to investment firms looking for access to increased deal flow that crowdfunding creates. At Crowd Capital Ventures (CCVF), Sherwood researches, analyses and invests in promising FinTech companies focusing on all sectors of the crowdfunding market. Sherwood serves as an advisor to several crowdfunding platforms and crowdfunding technologies giving him a unique understanding and view of the industry and market. As an industry leader, Sherwood contributes to several publications including VentureBeat and TechCrunch. He additionally co-authored Crowdfund Investing for Dummies through Wiley & Son’s as well as the World Bank Report Crowdfunding’s Potential for the Developing World.

Sherwood co-founded Crowdfund Intermediary Regulatory Advocates (CFIRA) and the Crowdfunding Professional Association (CPA), and served as Governing Board Member and co-chair where he led the fight to ensure investors are protected while entrepreneurs have access to the capital they need to start and grow promising companies.

An avid public speaker, Sherwood speaks at universities and seminars around the world discussing crowdfund investing, what it takes to be an entrepreneur and how to build winning companies. He also does a large amount of work presenting to government bodies, speaking in front of the U.S. Congress, leading SEC and FINRA meetings, as well as, addressing foreign governments—testifying about how they can bring economic benefits to their citizenry through implementing their CCA’s Crowdfund Investment Framework.

Sherwood started his post-MBA career on Wall Street and moved to Silicon Valley where he completed personal and financial goals in his late 20’s he hoped to obtain in his 30’s. Wondering what to do next and also left struggling with a debilitating family dilemma, he used his entrepreneurial drive to help turn his family adversity into a multi-million-dollar company that today is helping millions of sick children, animals and adults get better by being more compliant with their medicines.

As the co-founder of FLAVORx (www.flavorx.com), Sherwood structured an approach and built a business model that threw off millions of dollars in cash while growing the business from one pharmacy to over 80% of the pharmacies in the United States. He raised millions of dollars in capital and saw the culmination of his endeavors with the sale of the company in 2007.

When not working, Sherwood is an avid traveler. He lived in Japan for a year and post-sale of FLAVORx took his second backpacking trip around the world. In addition to speaking at universities and businesses around the country he invests in real estate in the U.S. and Brazil, is part of a private equity group in Los Angeles, is working on a clean tech project in Puerto Rico and is involved with several other start-up ventures.

ABOUT OUR GUEST: Sydney Armani

Sydney Armani has more than twenty-five years’ experience in Silicon Valley, active in the community as an entrepreneur as well as an investor.

Sydney’s vision and expertise for starting and managing innovative companies have sparked and nurtured the great success of Hello Net (a mobile telephony appliance service), Minitel, and Videotex (an online first-generation of touchscreen tablets).

He has been an active keynote speaker and moderator at conferences and plenary sessions on Blockchain, Technology, Real Estate crowd finance, Cryptocurrency capital, and digital markets, secondary liquidity, disruption in banking and a host of other topics. He has lectured at major universities such as Georgetown, NYU, Hult International Business School, “Běiwài” University, Beijing, VIA Technologies, PARIS. while authoring articles for or being interviewed by INC Magazine, Housing Wire, Forbes, Fortune, The Economist, CNBC, Bloomberg and others.

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

Q&A: CCA & SBE Council on the Main Street Co-Investment Fund

SEC Increases Regulation Crowdfunding Maximum Raise to $5 Million as October Reaches Record Breaking Investment Level

Just a few minutes ago, at a Securities and Exchange Commission Hearing, the SEC approved amendments to facilitate capital formation and increase opportunities for investors by expanding access to capital for small and medium-sized businesses and entrepreneurs across the United States. The vote was 3 to 2. SEC Chair Clayton said, “He’s extremely pleased with the work done by the Commission. That the changes will modernize the exempt offering framework and have a lasting impact on our capital markets without detriment to investor protection.” Some of the key Regulation Crowdfunding (aka Reg CF) changes include: Increasing the maximum a company can raise from $1.07 million to $5 million Amending the investment limits for investors in Regulation Crowdfunding offerings by: not applying any investment limits to accredited investors; and revising the calculation method for investment limits for non-accredited investors to allow them to rely on the greater of their annual income or net worth when calculating the limit on how much they can invest. Permitting issuers to “test-the-waters” prior to filing an offering document with the Commission. Permitting “demo day” communications that would not be deemed general solicitation or general advertising. Permitting the use of Special Purpose Vehicles to facilitate investing in Regulation Crowdfunding issuers “We are thrilled that the Commission has finally increased the maximum issuers can raise under Regulation Crowdfunding,” say Sherwood Neiss, principal at Crowdfund Capital Advisors. “When we began lobbying for Reg CF, we artificially set a low maximum target of $1 million so that we could test the model and make sure there was no fraud. Under those limits, more than 2,800 companies in 430 industries, across 50 states have raised over $500 million dollars in just 4 years, with no fraud.  The model is working incredibly well.” “A $5 million limit and other substantial regulatory changes will expand crowdfunding’s use rapidly.  At $5 million, a tech startup can raise a seed round or a traditional small or mid-sized company can raise expansion capital.  This will open significant new opportunities for businesses to use this capital to recover from the current economic crisis or launch innovative new products and services.” says Jason Best, Principal at Crowdfund Capital Advisors. “For the first, time we have easily accessible, real time data on the economic health and sentiment of startups and small and medium enterprises (SMEs) and of the communities where they are based.  This enables policymakers to understand immediately, how the SEC’s action today is positively impacting Americans’ lives.  We are grateful to the Small Business and Entrepreneurship Council for its tireless efforts on behalf of these changes and for their ongoing education of their members about how to use crowdfunding to enhance their businesses.  Every community across the country should immediately educate themselves about this new opportunity to support their local businesses.” The vote comes at a time when local businesses and local economies across the USA are facing the most challenging economic crisis since the Great Recession. The third wave appears to be worse than the first two with many Americans bracing for another shut down like in other parts of the world. If this happens, millions of small businesses that were just scrapping by might permanently shut their doors leading to a housing crisis as unemployed people cannot pay their rent or mortgages. There is a way to supercharge Regulation Crowdfunding and provide immediate, impactful stimulus to Main Street businesses that may not survive the pandemic. That is for the Federal Reserve to take $20 billion of the $596.3 billion they have remaining from the Main Street lending, PPP and EIDL programs and put it into the Main Street Recovery Co-Investment Fund. This fund would match dollar for dollar, up to $250,000, into businesses that are struggling to survive the pandemic but have customers that wish to see these businesses survive. By turning these customers into investors (what we are calling investomers), the businesses access capital from customers who are now stakeholders in the business and the government can successfully deploy capital at the most micro level into communities all across the USA. The good news is, many small business have already begun to see the potential in turning to their customers for capital to bridge the divide. The data shows that more companies are turning online to raise funds from investors, more investors are pouring in capital and more money is being raised. Take a look at the following charts: Broad Appeal Among Industries Across the USA It is important to show the wide range of industries that are represented. There are over 430 industries represented by issuers using Regulation Crowdfunding. The chart to the right looks at the top 15. It shows is that there is broad appeal by both issuers in a variety of industries and investors interested in backing these enterprises. The two things we expect to change over the next year, given the SEC changes, is more real estate offerings and more medium sized issuers entering the market. The $1 million cap limited many developers/issuers from leveraging money from Reg CF investors, increasing the cap to $5 million means more small/medium sized developers/issuers and more investors will be leveraging Reg CF for funds and diversified investment opportunities. It also means that firms with Revenues between $10M and $50M will find Reg CF more appealing as a mechanism for raising funds. It will be a cheaper alternative than hiring an investment bank and a faster method as the time to raise funds averages around 90 days. Continuous, Fraud Free Growth Coupled with Pandemic/Amendments Equals Tipping Point The next chart demonstrates how investments and investors have been increasing since the launch of Regulation Crowdfunding began in May 2016. As one can see, the industry began to see record numbers starting in July 2020 (Note Since Regulation Crowdfunding began in May 2016 we use May as the beginning of the fiscal year and hence Q1 begins in May each year). One can also see that when COVID hit and the economy shut down so did investments. Investments went from $12.3 million in January down 35% to $8 million in February. From there, the numbers increased month to month with October seeing a record amount committed at $32 million. This represents at 300% increase in commitments in just 6 months. So, while the pandemic raged, investors did not appear to be discouraged about investing in their community businesses. What is also interesting in the chart above is that you can see the dollars increasing even though the number of investments has fluctuated. This means that the average check size investors are writing is increasing. In February, when the markets shut down, the average check size was $436. In October that amount doubled to $879. Because they are writing larger checks, this bodes well for Main Street businesses that will need to turn to their customers for capital over the next year. But it should also be a point of relief for concerned regulators that might fear investors are putting too much into risky enterprises. The fact is, investors are being rationale with their check sizes, only writing as much as they can afford to risk and an amount that appears to represent just a fraction of their overall savings. Steady Growth in Offerings Over Time This next chart shows the growth in monthly offerings over time. As you can see the number of offerings also increased after a brief downturn in February and March. July saw the highest number of offerings at 128 since Regulation Crowdfunding began and October saw the second highest number of offerings at 115. With the changes made by the SEC, this means that issuers that need to raise in excess of $1 million but less than $5 million will be turning online for funding. Seasonal Growth Also Points to Tipping Point If we compare same period growth (chart right), we see the following year over year results. While the number of offerings between 2018 and 2019 was down year over year for the majority of the year, despite COVID, the number of offerings is up from 2019 to 2020, with June and July seeing the highest percent increase. We expect that the number of issuers leveraging Regulation Crowdfunding will easily double in this next year alone. “The data has been positive for Regulation Crowdfunding. The industry has proved the naysayers wrong and the opportunity for issuers and investors affirming,” says Neiss. “This truly represents the democratization of access to capital we promised and a way to engage investors at the most local level. If we can just get the government to focusing on investing alongside community investors, I believe we can get through this pandemic with minimal scars.”

How to help 80,000 small businesses recover from the pandemic

How Could the Federal Reserve Immediately Help Small Businesses?

WHAT IS NOT WORKING FOR SMALL BUSINESSES TODAY:   The Federal Reserve has allocated $600B to help small and medium businesses to survive the pandemic. So far, they have only spent $2B of that money because they are trying to lend via banks…this is not working. WHAT THE FED CAN DO TODAY TO IMMEDIATELY HELP SMALL BUSINESS:   Allocate just $20B of the remaining $598B to lend to the businesses that local investors are lending to, via securities-based crowdfunding platforms. The Fed co-invests with communities to help support businesses. This could enable at least 80,000 businesses across the country to receive up to $500,000 in funding ($250,000 raised from local investors + up to $250,000 in matching funds from The Fed). OUR PLAN USES TECHNOLOGY THAT IS ALREADY WORKING TODAY:   SEC regulated crowdfunding platforms have already raised $712M from over 710,000 Americans in all 50 states. The process is SIMPLE: The Federal Reserve allocates $20B to this program. Securities-based crowdfunding platforms register with the Fed (they are already regulated by the SEC). When a company raises their target amount, the crowdfunding platform notifies the Fed and matching funds are transferred. All the data is reported daily to The Fed for real time transparency on the program. WHAT CAN YOU DO TO HELP?  Contact your representative in Congress and demand they support the Main Street Recovery Co-Investment Fund Watch the video below to learn the details of the program and post it on all of your social channels. Share this email with people you think can help and post it on your social media channels. Click the image below to watch a replay of the Main Street Co-Investment Recovery Fund Webinar! Click the image above to watch the replay How Would it Work? Government tells the Federal Reserve to move $20 billion of the $598 billion remaining into the Main Street Recovery Co-Investment Fund. The Federal Reserve would oversee the Fund. Online Investment Platforms apply to have access to the Fund for small businesses that raise money on their websites. Small businesses will create campaigns, disclose information about the business, how much money they need and how it will be used. Investors (mainly customers of these businesses) decide whether or not to fund the business and help the business hit a minimum funding target. If a campaign hits the target, the platform would let the Fed know and the Fed would disperse, dollar for dollar, what the investors deployed up to $250,000 per company. Investors would be paid back principal and interest on the money that they loaned. We suggest that small businesses either borrow the money or offer revenue share notes. The Government would be paid back after the investors were made whole. Data about the investments, how the money was used and the impact of the funds would be made available to the Government on a real-time basis. Where did the Main Street Recovery Co-Investment Fund Come From? During the last recession, in 2010, we went to Washington with the idea for Regulation Crowdfunding. It was meant to help struggling small businesses access capital. Since then, an entire industry has emerged. More than 2,700 companies across the USA have raised over $712 million from 710,000 local investors in communities all across the USA. This is happening on online investment platforms that are overseen and regulated by the Securities and Exchange Commission. And there has been no fraud. Now we find our local economies back on the brink due to COVID. Our government carved out $600 billion to help but because of deficiencies with the Main Street Lending Program, PPP and EDIL only $2 billion has been deployed. Rather than sit on that money, the government should take $20 billion (only 3% of what they have in reserve) and put it into the Main Street Recovery Co-Investment Fund. It has the ability to help over 80,000 struggling Main Street businesses in the next 90 days and it is a turnkey solution! Download the Presentation Here. If you think our government and the Federal Reserve should take $20 billion of the $598 billion that is sitting on the sidelines but meant to support Main Street USA businesses and put it into a co-invest fund that will invest alongside millions of local investors in supporting local businesses, contact us or contact your representatives and let them know!

Forbes Reprint – Crowdfunding Success Indicates Small Businesses And Startups Worthy Of Government Matching Program

Forbes REPRINT: Crowdfunding Success Indicates Small Businesses And Startups Worthy Of Government Matching Program The following is a reprint of a story that ran in Forbes this morning. You can find the original here. By: Geri Stengel Community-focused investing has funded local small businesses and startups across the US. Since 2016, half a billion dollars has been raised from investment crowdfunding, generating $2 billion in economic activity and supporting 100,000 jobs. According to Regulation Crowdfunding by Congressional District: A Report Card by Crowdfund Capital Advisors, Congress can encourage this more by creating the Main Street Recovery Co-Investment Fund. The United Kingdom has already done this to great success. It worked so well that Fund was re-upped twice, including to support small businesses impacted by the coronavirus pandemic. A critical lesson from the 2007-2009 financial crisis was that access to capital for small businesses matters. Small businesses were hit harder than large companies by the Great Recession. During and for a period after the financial crisis (2009-2013), big banks reduced lending to small businesses by 20%. Still, they increased loans to larger companies by 4%. During the Covid-19 crisis, access to financing for small businesses is more critical than ever before. A new category of financing—crowdfunding—was created to meet some of this need. This article is focused on investment crowdfunding and its three forms enacted by the JOBS Act, which allow businesses to raise money via online platforms: Regulation Crowdfunding (Reg CF) enables companies to raise about $1 million per year from both average and wealthy (accredited) investors. Rule 506 of Regulation D enables issuers to raise money from wealthy investors. Regulation A+ (Reg A+) enables issuers to raise up to $50 million from both average and wealthy investors provided that the offering is qualified by the SEC. Due to the Covid-19 Crisis, the SEC has announced an update of some Reg CF rules, including lifting the cap on how much a company can raise from $1 million to $5 million. Separately, it has recommended making this permanent along with other rules. Even in 2012, Congress agreed on little, but getting capital to small businesses and startups was something they did. A bipartisan, overwhelming majority passed the JOBS Act. It was intended to encourage funding of small businesses by easing many of the country’s securities regulations. It took four years to phase-in the laws for all three forms of investment. Sherwood Neiss and his partner, Jason Best, of Crowdfund Capital Advisors, are leading the charge for Reg CF. Neiss is a co-founder of FlavorRX, which offers flavored medicine that kids are more likely to take. “Our phone rang off the hook from mothers and fathers asking to invest in the company,” said Neiss. If you weren’t rich, there was no way, as an average Jane or Joe, to invest in a private company. He sold the company in 2007. When small businesses struggled to get financing during and after the Great Recession, Neiss asked himself, “What if there was a way to turn customers into investors?” This would require changes to SEC investor laws. Naive to the way laws are made in DC, Neiss and Best sought the help of Karen Kerrigan, president and CEO of the Small Business and Entrepreneurship Council. It advances policies and initiatives that encourage entrepreneurship and small business growth. Together, they walked the halls of Congress, pushing the idea that you could raise money from the masses to invest in local businesses, particularly those owned by minorities and women entrepreneurs. Some were concerned about fraud and dissed this new form of financing. Even so, on May 16, 2016, Reg CF was the last of the three forms of investment crowdfunding to be enacted. To date, there has been NO FRAUD, proving naysayers wrong. You can fool investors one by one, but it’s hard to pull the wool over thousands of investors’ eyes, commented Neiss. It also turns out that the crowd picks winners as well as, if not better than, the professionals—venture capitalists. Using these new forms of investment crowdfunding, 3,100 stock offerings from 2,600 plus companies from over 850 jurisdictions across the country have been made. Anecdotal evidence finds minority- and women-led ventures have success raising money through Reg CF. I’ve written about a few female founders who have raised Reg CF funding, including Liza Velarde of Delee, Max Tuchman of Caribu, Amber McDonald of Indemnis, and Desiree Vargas Wrigley of Pearachute. “There is a disconnect between what’s happening in our local communities and what is getting DC’s attention,” said Neiss. During the pandemic, Reg CF has grown. “[In July and August,] there were over 40,000 investors investing each month in local businesses,” said Neiss. The vast majority of the dollars—80%—comes from wealthy investors. “There’s massive interest from investors in supporting these businesses.” For example, this past August, $25 million was raised—nearly three times the amount raised six months ago, before the crisis. Top industries include a couple of the hardest hit by the coronavirus—restaurants and personal services. Interestingly, 95% of women-led congressional districts had investment crowdfunding offerings and 93% of minority-led districts. Having role models in leadership positions, not just as entrepreneurs, is particularly important for women and minorities, commented Kerrigan. “It’s very empowering.” “The recovery will be stronger and move faster if monetary policy and fiscal policy continue to work side by side to provide support to the economy until it is clearly out of the woods,” said Jerome Powell, chairman of the Federal Reserve in The Wall Street Journal. With the Main Street Recovery Co-Investment Fund, the federal government would match 100% of debt and equity investments raised from communities by small and high-growth businesses via SEC-regulated crowdfunding platforms. Matching funds are capped at $250,000 per business. A $20 billion fund would impact over 100,000 small businesses and startups. Community investors have a vested interest in the business’s success and are the users and marketers for these businesses. Loans or equity investments are paid back first to community investors, followed by the government. Data on these companies’ 100 performance metrics are captured and updated daily and reported to the SEC, Bloomberg, and other entities. The database can be provided to Congress, the Treasury, and the SEC to provide transparency and oversight. Investment crowdfunding is showing the way to a broader, more inclusive recovery. It could do more. The Main Street Recovery Co-Investment Fund not only provides additional capital to worthy companies based on the investment dollars of customers, but it would spur further interest and investments from others who don’t know about investment crowdfunding. How will you show your support for the creation of the Main Street Fund?

Video Replay – Policy Briefing from Oct. 1st The Main Street Recovery Co-Investment Fund

Sherwood Neiss speaking as part of a panel talking about the Main Street Co-Investment Fund

A Tale of Two Streets in the COVID-19 Economy