Podcast – The Explosive Growth in Investment Crowdfunding

In a recent episode of the Mission Matters podcast, Adam Torres interviewed Woodie Neiss, a partner at Crowdfund Capital Advisors (CCA), about the transformative impact and rapid growth of investment crowdfunding.

Woodie Neiss is a pioneer in the crowdfunding industry. He co-authored the framework for Title III of the U.S. JOBS Act, which legalized equity—and lending-based crowdfunding. His extensive involvement includes consulting for governments and multilateral organizations and co-founding Crowdfund Capital Advisors and GUARDD.

Neiss shared how his frustrations with traditional venture capital led him to develop the regulatory framework for crowdfunding, enabling businesses to raise money from a broader range of investors. This framework was crucial in filling the funding gap between $25,000 and $250,000, where traditional venture capital and angel investors typically do not venture.

Regulation Crowdfunding allows companies to raise funds from both retail and accredited investors through online platforms, creating a digital footprint that ensures transparency and reduces fraud. This model requires companies to disclose comprehensive information about their business, enhancing investor confidence.

The growth of crowdfunding has been exponential. It took five years for the industry to raise its first billion dollars but only 18 months for the second billion. This rapid growth is attributed to increasing awareness and the successful exits of early crowdfunding investments, which have started to yield returns for average investors.

Neiss highlighted various successful crowdfunding campaigns, such as Boxable, which evolved from manufacturing small prefab casitas to large-scale workforce housing solutions. This diversity showcases crowdfunding’s ability to support a wide range of industries, from biotech to real estate.

For business owners, Neiss emphasized the importance of having a prepared and engaged crowd before launching a campaign. Crowdfunding requires significant preparation, marketing efforts, and a dedicated team. For investors, thorough due diligence is crucial. Neiss advises looking at a company’s revenue model, burn rate, and valuation to make informed investment decisions.

CCA plays a pivotal role in the crowdfunding ecosystem by providing comprehensive data and insights through its CCLEAR database. This data helps track industry trends and company performance and facilitates informed investment decisions. CCA also explores venture opportunities and liquidity solutions, aiming to integrate institutional capital into the crowdfunding market.

Investment crowdfunding has democratized access to capital, allowing businesses to tap into a broader investor base and providing average investors with opportunities to participate in high-growth ventures. As the industry matures, its impact on the economy and its potential for further growth remain substantial.

Crowdfunding from a Data-Driven Perspective – A Podcast Experience

Sherwood Neiss, Principal of CCA, recently had the pleasure of appearing on the Mapable USA podcast, where he discussed the fascinating world of investment crowdfunding from a data-driven perspective. He delved into the intricacies of investment crowdfunding, highlighting the importance of data in shaping successful campaigns and investment strategies. He talked about how AI is helping guide investment decisions already today. Here’s a recap of some key points he covered during the podcast.

Understanding the Data Behind Crowdfunding

Crowdfunding has revolutionized the way startups and small businesses raise capital. Platforms like Wefunder, StartEngine, and Republic have made it easier for companies to access funds from a large pool of investors. But what truly drives the success of these campaigns? The answer lies in the data.

Data-driven insights help both issuers and investors make informed decisions. For instance, according to CCLEAR’s comprehensive dataset, investment crowdfunding activity saw notable trends in 2023:

• Investment Commitments: In Q1 2024 alone, investment commitments reached $159 million, indicating strong investor confidence despite a slight contraction in deal flow compared to the previous quarter​.
• Valuations and Deal Types: Post-revenue companies’ median valuations rose significantly to $20 million. At the same time, pre-revenue issuers saw median valuations drop for the 3rd quarter in a row, reflecting a market preference for less risky ventures.
• Investor Activity: The number of checks written dropped substantially; however, the average check size increased to its highest level, indicating a willingness by investors to deploy more capital.

The Cost of Running a Crowdfunding Campaign

One of the most common questions about crowdfunding is the cost involved in running a campaign. Our discussion highlighted findings from a detailed survey on the costs associated with Regulation Crowdfunding campaigns:

• Average Cost: The average firm spent approximately $16,878 on its campaign, which includes expenses for campaign copy, video production, marketing, legal, and accounting services​.
• Effort and Resources: On average, three individuals spent a collective 241 hours from campaign preparation to funding. This underscores the significant effort required to run a successful campaign​.

The Role of Data in Enhancing Campaign Success

Data plays a critical role in every stage of a crowdfunding campaign. From selecting the right platform to understanding investor behavior, data-driven strategies can significantly enhance campaign outcomes. For example, CCLEAR’s dataset, which tracks over 8,500 unique offerings across 1,800 cities, provides valuable insights into market trends and investor preferences​.

Key Takeaways for Crowdfunding Success

1. Leverage Data: Utilize comprehensive datasets to understand market trends, investor behavior, and platform performance.
2. Plan Thoroughly: Allocate sufficient time and resources to each aspect of the campaign, especially marketing and legal compliance.
3. Engage with Investors: Maintain regular communication with potential investors to build trust and credibility.

Explore CCLEAR.ai for more detailed insights and updates on crowdfunding trends. Additionally, feel free to sign up for the CCA newsletter to stay informed about the latest developments in the crowdfunding space.

Celebrating 8 Years of Empowering Entrepreneurs: The Impact of Regulation Crowdfunding

Yesterday marks the 8th anniversary of Regulation Crowdfunding (RegCF), a transformative force in democratizing capital and fueling the dreams of entrepreneurs across America. Since its inception, Reg CF has unlocked new pathways for entrepreneurs and investors alike. More than 2 million Americans have injected $2.4 billion into over 6,500 startups and small businesses who have tried their hand at regulated investment crowdfunding .

RegCF stands out as a beacon of inclusivity, with nearly 50% of recent offerings by women and minority-led ventures. This legislation has not only fostered diversity but also spurred significant economic growth, supporting over 400,000 jobs and injecting $7.5 billion into local economies.

Just like venture capital, RegCF offers the opportunity to invest in companies at their earliest stages and lowest valuations. While the risks are inherent, the potential rewards are substantial.

The success stories are plentiful. Companies now valued at over $86.8 billion showcase the immense potential for wealth creation. RegCF’s reach spans 1,750 cities, proving that impactful innovation can thrive far beyond Silicon Valley.

Sherwood Neiss, Principal at Crowdfund Capital Advisors, reflects, “Regulation Crowdfunding is ushering in a new era of liquidity, increased venture participation, and a maturing issuer profile. With more revenue-generating and less risky companies entering the market, RegCF is set to drive sustainable economic growth.”

As we celebrate this milestone, we look forward to a future where even more individuals can participate in this dynamic investment landscape, driving economic prosperity and reshaping financial norms.

Thank you for being a part of this journey. We invite you to explore the boundless potential of Regulation Crowdfunding.

Sherwood Neiss on the Evolution of Finance

Investment crowdfunding is evolving and taking on a new role in the capital formation roadmap. Sherwood Neiss, principal at Crowdfund Capital Advisors, discusses this change.

Where is Crowdfunding in the USA

The crowdfunding sector is currently thriving, supported by regulations such as Reg A+, Reg CF, and Reg D, which facilitate innovative fundraising approaches. This webinar provides a comprehensive analysis of recent developments in these regulations, explores the emerging trend of fractional investing, and examines the impact of technology on the future of online capital formation.

Sherwood Neiss on the Real Deal Podcast

Hey there, fellow innovators and dreamers! I’m thrilled to share with you the latest insights from the frontier of financing in our newest podcast episode. As your guide through the ever-evolving landscape of investment, I had the pleasure of sitting down with the brilliant Mr. Woody, a maestro in the realms of crowdfunding and venture capital (VC). 🚀 Crowdfunding: The Game Changer We dove deep into how crowdfunding isn’t just a buzzword—it’s revolutionizing how startups and pre-IPO businesses are turning their visions into reality. Imagine raising up to $5 million, not from faceless corporations, but from your own community of supporters. That’s the power of crowdfunding, and it’s reshaping the way entrepreneurs think about capital. 🌐 Building a Community of Backers Mr. Woody illuminated the shift from solo ventures to creating a thriving ecosystem of backers. This isn’t just about money; it’s about fostering brand advocates who amplify your message and drive your business forward. And guess what? Venture capitalists are taking notice. 💡 Merging Investors with Brand Advocates The lines between customers and investors are blurring. We discussed how turning your customers into investors can create a legion of passionate supporters who are invested (quite literally) in your success. 🔍 Attracting Investors to Your Cause Before you launch your crowdfunding campaign, listen in as we reveal the strategies to build your crowd, from leveraging social media to connecting with angels and VCs who share your vision for innovation. 🔮 The Future of Crowdfunding and VC The landscape is changing, and VCs are joining the crowdfunding party. We explored how this synergy could democratize early-stage financing and give more people a chance to be part of the next big success story. 🤝 A Shift in VC Perception We wrapped up with a look at how VCs are warming up to crowdfunding, recognizing the caliber of companies emerging from this space. It’s an exciting time to be an entrepreneur, and the opportunities are boundless. I can’t wait for you to join us on this journey of discovery. Tune in to the episode and let’s explore the possibilities together. If you’ve got a deal brewing, reach out—your story could be the next feature on our show!

Sherwood Neiss on Fintech Friday

In this enlightening episode of Fintech Fridays, Season 4, Episode 62, host Craig Asano, founder and CEO of NCFA Canada, sits down with the distinguished Sherwood ‘Woodie’ Neiss, a pioneer in the investment crowdfunding industry and an advisor to NCFA. Together, they delve into the evolution of investment crowdfunding, its impact on startups and investors alike, and the potential for future growth. Woodie shares his journey, from the inception of crowdfunding regulations to leading the charge with data-driven insights and AI technology in investment strategies. Listeners will gain an insider’s perspective on the latest developments, the significance of data in shaping the industry, and the role of technology in advancing investment opportunities. Whether you’re an investor, entrepreneur, or fintech enthusiast, this episode offers a comprehensive look into the dynamic world of investment crowdfunding, revealing how it’s reshaping the landscape of finance and opening new doors for innovation and growth.

The Triumph of Regulation Crowdfunding: A Call to Strengthen Our Entrepreneurial Ecosystem

In the decade since the JOBS Act of 2012 introduced Regulation Crowdfunding (Reg CF), we’ve witnessed a transformative shift in startup financing. This innovative funding mechanism has democratized access to capital, empowering a diverse array of entrepreneurs and invigorating the American economy. The success stories are numerous, with over $2 billion invested across thousands of companies, nurturing innovation, fostering job creation, and driving economic growth.

For instance, restauranteur Hawaiian Bros was able to raise over $3 million through Reg CF, enabling it to expand its operations and create and support an estimated 7,200 local jobs in and around its locations. Similarly, Boxabl secured over $16 million in funding. Boxabl, much like Ford in its pioneering days of assembly line manufacturing, is revolutionizing the housing industry by standardizing and streamlining the production of foldable, transportable homes, thereby making housing more accessible, efficient, and scalable. Their technology is a breakthrough that has the potential to revolutionize the housing industry.

Reg CF has proven to be a vital tool for small businesses, offering a lifeline to many during economic uncertainties. It’s a testament to the resilience and ingenuity of the American entrepreneurial spirit. The process allows startups to secure funding while building a community of supporters, all under a regulatory framework designed to protect investors and promote transparency.

As we look to the future, it’s crucial that we build on this success.

Strengthening Reg CF and Access to Capital

The introduction of the “Expanding Access to Capital Act” (H.R. 2799) and its passage by the U.S. House represent a pivotal opportunity to enhance and expand Reg CF’s impact.

(Read SBE Council’s Statement of Support for H.R. 2799, which covers its key measures here.)

H.R. 2799 is designed to further democratize access to capital, enabling more small businesses to secure the funding they need to innovate, expand, and compete in a global marketplace. By supporting this legislation, Congress can ensure that more small businesses have the resources they need. It’s not just about funding; it’s about fostering a robust ecosystem where startups can thrive, innovate, and contribute to a vibrant and inclusive economy.

The data speaks volumes. Investment in Reg CF offerings has shown consistent growth ($19.6M in 2016 to over half a billion in 2023), signaling strong investor confidence and a thriving market for early-stage investment. The average raise amount ($173K in 2016 to $437K in 2023) and the success rate of campaigns (51% in 2016 to 63% in 2023) have steadily increased, indicating a maturing market that attracts serious entrepreneurs and committed investors.

However, the potential for Regulation Crowdfunding is far from fully realized. With Congressional support for H.R. 2799, we can unlock new opportunities for growth, innovation, and job creation. H.R. 2799 is a forward-looking initiative that adapts our regulatory framework to the evolving needs of the modern economy. It recognizes the increasing importance of alternative financing mechanisms in a digital age and seeks to enhance the effectiveness and reach of Reg CF, ensuring that the United States remains a global leader in entrepreneurship and innovation.

Supporting H.R. 2799 is more than a legislative action; it’s a commitment to the future of American entrepreneurship. It acknowledges the role small businesses play in driving innovation, creating jobs, and enhancing our global competitiveness. By backing this bill, Congress can provide a catalyst for sustained economic growth and a more prosperous future for all Americans.

The success of Regulation Crowdfunding underscores the importance of innovative financial mechanisms in supporting economic growth and entrepreneurship. Now is the time for Congress to act, and for the Senate to follow the lead of the House by advancing H.R. 2799. The bill will not only boost the availability of capital for startups and small businesses, it serves to reaffirm a commitment to America’s small businesses and an inclusive and vibrant economy. Let’s seize this opportunity to strengthen our entrepreneurial ecosystem and pave the way for the next wave of American innovation and prosperity.

Sherwood Neiss is a principal of Crowdfund Capital Advisors, and one of the key players in introducing the idea of regulated crowdfunding to Congress and the White House and subsequent passage of the JOBS Act of 2012.

This Week in Crowdfunding | Recapping What Happened in February w/ Woodie and Yvan

Sherwood Neiss appears on The Next Big Thing to discuss Regulated Investment Crowdfunding February results.

Platform Trends that are Impacting Issuers and Investors

Sherwood Neiss appears on an expert panel taking a look at the regulations set by the SEC and FINRA along with the pending legislations in Congress, and the platform trends that are impacting issuers and investors.

Introducing the Crowdfinance50 Index: A Daily Barometer for Investor Sentiment in the Crowdfunding Arena

Unlock the Future of Finance: Explore the Regulated Investment Crowdfunding Trends 2024 Report

In the ever-evolving world of finance, staying ahead is key. That’s why we’re excited to present our comprehensive “Investment Crowdfunding Trends 2024” report, your free gateway to understanding the future of investment crowdfunding. With over 200 meticulously curated slides, this report offers a macro-level overview of the industry from its inception, drawing parallels to the seminal Mary Meeker Internet Trends Report but focusing on the niche of crowdfunding.

Dive deep into data-driven insights, sector-specific analyses, and forward-looking predictions that are crucial for investors, entrepreneurs, and market analysts. This extensive resource is designed to arm you with the knowledge to navigate the complexities of tomorrow’s investment opportunities, highlighting pivotal trends, technological advancements, regulatory landscapes, and market dynamics.

Whether you’re a seasoned investor or new to the crowdfunding scene, this report is an invaluable tool for anyone looking to harness the potential of the future financial landscape. Download your free copy today and embark on a journey to financial foresight.