Monday 3 July 2017

Overview of the JOBS Act about Equity Crowdfunding and Success Stories

The University of Memphis Cecil C. Humphrey’s School of Law law magazine (Spring 2017) has an excellent and concise five page overview article concerning the JOBs Act and crowdfunding.  The article describes three types of equity crowdfunding under the Act and discusses the related regulations.  The article notes that, “As of this writing, there were over 20 debt and equity crowdfunding platforms, with 186 companies having launched a campaign through them, and with 79 of those companies hitting their minimum funding target.”  Apparently, $19 million was raised for the 186 companies.  Interestingly, the real estate sector is a strong participant in crowdfunding. One success story described in the article concerns Zenefits, a human resources services company for smaller entities which notably raised $300,000 “on at a $9 million valuation in March 2013; [r]aised $15 million at a $70 million valuation in January 2014; [r]aised $66 million at a $500 million valuation in June 2014.”  The second interesting story concerns Elio Motors, which raised $16 million on “StartEngine from 6,600 investors in early 2016.”  According to the article, Elio Motors has an over $1 billion valuation. 

The article points to Indiegogo (“movies, games and tech gadgets”) as an equity crowdfunding platform that “is expected to bring millennials” into the game.  Indiegogo’s website notes that over $1 billion has been raised over 650,000 projects in 222 different countries since 2008.  Indiegogo’s equity crowdfunding platform is called, First Democracy VC, a partnership with MicroVentures.  The First Democracy VC website apparently went live in December of 2016 and a couple of companies have raised a half million dollars (US) or more. 

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