Small Businesses Need Capital

Small businesses are essential to the economic well-being of a country, but unfortunately, many find it challenging to obtain the capital they need. It is expensive to access the public capital markets at the best of times, but in times of economic hardship and uncertainty,  traditional financing options become especially scarce as well. Fortunately, private capital markets have emerged as a viable and advantageous solution for small businesses to raise the funds they need to grow, sustain jobs, and contribute to their communities. 

 

Raising Capital is Expensive

 

Small businesses are often faced with tedious and expensive processes when trying to access traditional capital sources. Raising capital for companies when going public compared to private can be expensive and complicated. The costs associated with this type of fund-raising include:

 

  • Underwriting fees
  • Exchange listing fees to launch on the stock exchange or other public markets
  • Professional fees for attorneys, accountants, and other financial advisors
  • Printing and distribution costs for prospectus and registration statements
  • Costs associated with filing regulatory paperwork such as the SEC Form S-1

 

These costs can add up, and the process of going public is also typically long and complicated, requiring a great deal of time and energy from company founders. In addition, many banks impose strict guidelines limiting the amount of capital small business owners can borrow, and it might not be enough to cover the cost of going public.  For small startups especially, the possibility of going public may be decades away, if it exists at all. For organizations that need to raise capital more immediately, the private market is a much more viable option than raising capital publicly.

 

The Solution: Private Capital Markets

 

Fortunately, private capital markets provide a viable solution for small businesses during tough economic times. With private businesses able to use JOBS Act regulations like RegA+, RegD, and RegCF to raise millions in capital from accredited and nonaccredited investors, they need not rely on traditional lenders. The cost of raising capital privately using JOBS Act regulations compared to taking a company public is significantly lower. This is because:

 

  • Although there are still securities regulations to protect investors, the reporting requirements are much lower and less costly.
  • Private capital markets avoid the lengthy legal process involved in taking a company public, thereby saving time and legal fees.
  • Private capital markets offer more flexibility than traditional financing sources, allowing businesses to craft more creative and advantageous terms for the capital they need.

 

This makes it easier for small businesses to access the funds they need without having to worry about high costs and long wait times. Furthermore, leveraging private capital markets provides an opportunity for small business owners to cultivate relationships with investors who can provide valuable insights and advice that they may not be able to access through traditional lenders. And that can open more doors.

Approaching the 11th Anniversary of the JOBS Act

Eleven years ago, the Jumpstart Our Business Startups (JOBS) Act was signed into law in a White House Rose Garden ceremony. Looking back on this landmark legislation, we see its impact has been far-reaching. From increased access to capital for small businesses to the rise of new markets for investment opportunities, the JOBS Act has reshaped how companies raise funds and spur economic growth. In 2022, $150.9 B was raised through Regulations A+, CF, and D, showcasing the tremendous power of these regulations for companies. As we mark the 11th anniversary of this game-changing law, let’s look at what it has accomplished and how it is (still) changing the capital formation landscape.

 

David Wield: The Father of the JOBS Act

 

David Weild IV is a veteran Wall Street executive and advisor to U.S. and international capital markets. He has become well known as a champion of small business as the “Father of the JOBS Act”. Signed into law by President Barack Obama in April 2012, the Jumpstart Our Business Startups (JOBS) Act has opened up access to capital markets, giving small businesses and startups the ability to raise money from a much larger pool of investors. Wield has remarked that this was not a political action; it was signed in “an incredibly bipartisan fashion, which is really a departure from what we’ve generally seen. It actually increases economic activity. It’s good for poor people, good for rich people. And it adds to the US Treasury”.

 

As such, Weild is seen as a leading figure in the JOBS Act movement, inspiring the startup community to break down barriers and build the future. He has helped make it easier for companies to become public, empowering a new generation of entrepreneurs looking to start or grow their businesses. Furthermore, Weild’s efforts have allowed more investors to participate in capital markets.

 

Benefitting from the JOBS Act

 

At the inception of the JOBS Act in 2012, non-accredited investors were only allowed to invest up to $2,000 or 5% of their net worth per year. This was designed to protect non-accredited investors from taking on too much risk by investing in startups, as these investments would likely be high risk and high reward. Since then, the JOBS Act has expanded to allow non-accredited investors to invest up to 10% of their net worth or $107,000 per year in startups and private placements.  

 

For companies they were initially allowed to raise:

 

  • Up to $50 million in RegA+ offerings
  • $1 million through crowdfunding (RegCF)
  • Unlimited capital from accredited investors under RegD

 

These numbers have grown significantly since 2012, with:

 

  • Reg A allowing $75 million to be raised
  • Reg CF allowing $5 million to be raised

 

These rules have opened the door for startups to access large amounts of capital that otherwise may not have been available to them. This has allowed more companies to grow, innovate and create jobs in the U.S.

 

How Much has Been Raised with JOBS Act Regulations?

 

The JOBS Act regulations have revolutionized how capital is raised by companies and how investors access new markets. According to Crowdfund Insider, companies have raised:

 

  • $1.8 Billion from July 2021 to June 2022 with RegA+
  • $2.3 trillion with RegD 506(B)
  • $148 trillion with RegD 506(C)
  • $506.7 million with RegCF

 

Since its formation in 2012, the JOBS Act has opened up a variety of avenues for entrepreneurs to access capital. The exempt offering ecosystem has allowed innovators to raise large sums of money with relatively fewer requirements than a traditional public offering, while still requiring compliance and offering investors protection. This has enabled companies to stay in business and grow, allowing the US economy to remain competitive on the global stage.

 

Insights from Industry Leaders

 

Expanding the discussion about capital formation, KoreConX launched its podcast series, KoreTalkX in April 2022. Through this platform, we’ve hosted many thought leaders and experts to share their insights on capital-raising strategies and compliance regulations. Guests have included renowned thought leaders including David Weild, Jason Fishman, Shari Noonan, Joel Steinmetz, Jonny Price, Douglas Ruark, Sara Hanks, and many others. Each of these episodes has explored topics in-depth to provide entrepreneurs with the tools they need to be successful when raising capital from investors.

7 Things You Need to Raise Capital Online in 2023

. ising capital online can be a great way to a vast pool of potential investors. With the JOBS Act exemptions and many online funding portals available, it’s easier than ever to get started. Here are 7 Things You Need to Raise Capital Online in 2023.

 

1. Know Your Options

 

From Regulation D 506(c) offerings to RegCF and RegA+ offerings, it’s important to understand the differences between them. Each option has different requirements for time, cost, and resources. Plan accordingly for whatever option you choose by considering the trade-offs. Many issuers start with a RegD, then move on to a RegCF, and then a RegA+ because of the costs and compliance efforts required with each exemption.

 

2. Plan for a Higher Cost of Capital

 

Raising capital can be expensive. Especially when doing so online, you should plan on paying more than you usually would because of the additional costs associated with marketing, platform fees for using a crowdfunding platform, etc. These costs, along with fees for broker-dealers and legal counsel, can add up quickly, but understanding the potential costs will help you to plan accordingly. While raising capital online will cost more than a brokered or VC deal, you will retain greater ownership and control and suffer from less dilution, which may be a valuable tradeoff.

 

3. Find the Best Online Capital-Raising Platform

 

Before you embark on your journey to raise capital online, you need to find the right platform for your needs. You will want to make sure that you are working with the best platform possible. The first step is to do your research and find out which platform suits you best. You should look into the fees each platform charges, their customer service ratings, and whether or not they have any special features such as automated investing tools or portfolios with pre-set risk profiles.


Be wary of platforms that promise unrealistic returns or make promises about how easy it will be to raise capital in a short amount of time. Seek out platforms that have built up a good reputation and are transparent with their fees and services. Platforms do not raise money for you. Be sure to have a clear strategy in place before you launch your capital-raising campaign, and do not use a platform that promises too much. You can explore the list of FINRA-regulated funding platforms
here.

 

4. You’re Responsible for Marketing

 

You’ll need to craft an effective message and have the resources available to get it out there – whether that’s through social media, email campaigns, print ads, or other forms of advertising.  When you sign up for a capital raising platform, they do not help you with marketing or getting investors. This is left up to your organization or you can hire a marketing firm that is experienced in marketing for online capital raises. Ensure you know your target market and audience so that your message resonates with the right people who will invest in your cause or project. Researching trends in the current market can help you refine your strategy over time as well. Focus on building relationships with potential investors by providing value upfront before asking them for anything monetary related – this can go far towards building trust and credibility between both parties when marketing for your capital raise.

 

5. Launch with an Announcement and Target Multiple Investors

 

Announce the closing of your last smaller raise and its success when launching your next round. You can create a sense of urgency that will attract investors and help drive interest in your offering. This proven strategy can be rinsed and repeated as often as needed (though it can be overdone, and your audience will eventually catch on that this isn’t really the last chance to invest). Another way to maximize your chances for success when raising capital online is to target multiple investor types. While it’s important to target self-directed investors online, you can also retain marketing partners to reach out to family offices and institutional investors. By targeting multiple investor types simultaneously, you’ll improve your chances of raising more capital.

 

6. Focus on Marketing and Platforms

 

It is essential to have a well-structured marketing plan. That will help you reach your target audience and create awareness of your offering. It’s also important to focus on choosing the right platform for your capital-raising efforts. Consider your capital-raising goals, the platform you plan to use to meet those goals, and the availability of resources to help you achieve success. Will your campaign primarily use affinity marketing? Or will you utilize tools such as advertising, email campaigns, and social media?

 

7. Get a Valuation Report and a Securities Attorney

 

During the process of raising capital online, understand the value of your assets and make sure that you are compliant with security laws. A 3rd-party valuation report can give you a better understanding of your company’s worth and help inform investors about its potential. These reports are available from many reputable firms, and retaining one can help you to make a more convincing case for the worth of your company. It is also essential to hire a securities attorney to ensure you comply with JOBS Act exemptions. Without a lawyer experienced in securities law on your side, you could be risking legal violations and hefty fines.

 

Seeking Opportunities in Times of Crisis

The collapse of Silicon Valley Bank has sent shockwaves through the financial sector, sending bank stocks plummeting, heightening stresses, and leaving many people with feelings of anxiety and uncertainty about the future. However, amidst this chaos lies a unique opportunity to innovate and create jobs, which can stand as a shining message of hope. We see this as a time for ingenuity and entrepreneurial spirit to uncover a unique solution to this crisis and serve as the spark that sets off further development in the sector. This blog will discuss how opportunity and crisis are closely linked, showcasing the potential for businesses to use this moment of disruption as a chance for growth and renewal.

The Innovation Opportunity

 

When crises arise, they can often be overwhelming and unsettling. But, in times like these also lies a unique opportunity for entrepreneurs to shine, by innovating solutions that meet the challenges of the moment. This is an opportune time for businesses to:

 

  • Make a meaningful difference.
  • Find creative solutions to problems.
  • Identify new markets for their services.
  • Develop products that can meet the unique needs of those affected by this crisis.
  • Offer creative solutions that can help bring stability and growth back to the sector.

 

When businesses take advantage of these types of opportunities, it can result in job growth and increased economic activity. But, to take advantage of this opportunity, companies need access to capital that can fund innovation and job creation. Fortunately, RegA+ and RegCF exist to fund businesses. And because retail investors can make investments into companies through these JOBS Act exemptions, it provides companies a source of capital even if there is decreased venture capital or private equity activity.

 

Raising Capital During a Crisis

 

In times of crisis and disruption, finding capital can also be difficult. This is especially true for start-ups that do not have access to the same resources as large businesses. Fortunately, there is a range of ways that companies can raise capital, such as through RegA+, and RegCF

 

Through RegA+, companies can raise up to $75 million from both accredited and nonaccredited investors. And since it offers companies the ability to turn current customers into investors and brand ambassadors, the exemption can bring a company tremendous value and help to grow the business. A Reg A raise is excellent for companies that have a wide customer base or need to raise a large amount of capital.

 

Like RegA+, RegCF allows both accredited and nonaccredited investors to invest in the offering. However, offerings are limited to a maximum of $5 million per year. Compared to other regulations, Reg CF is one of the most popular due to its lower cost and ease of implementation. 

 

These options offer companies a way to raise capital to fund innovation, job growth, and other related activities when traditional means might be less available.

 

The collapse of Silicon Valley Bank has sent shockwaves throughout the financial sector. But despite times of crisis like this, entrepreneurs can find unique solutions and opportunities to innovate, create new jobs, and make a meaningful difference. By seeking creative solutions that are tailored to the unique needs of those affected by this crisis, entrepreneurs have the potential to help bring stability and growth back to the sector. In addition, through access to capital through the JOBS Act, businesses can have the resources necessary to fund their growth during a time of disruption. All-in-all, the opportunity is closely linked with times of crisis, providing companies and entrepreneurs with a unique chance for growth and renewal.

Addressing the Decrease in VC Funding to Women-Led Startups

In recent years, the number of female entrepreneurs has grown exponentially. Many women have decided to turn their business ideas into reality. Others have leveraged the resources available to expand an existing business. Despite data suggesting that female-led startups outperform male-led startups, studies have shown that women-led startups only received 1.9% or around $4.5 billion of the total venture capital allocated in 2022, a startling statistic when $238.3 billion was raised from VC investments according to PitchBook, a decline from 2.4% the previous year. The gender gap in VC funding to women-led startups has become more pronounced.

 

What are the Causes of this Gender Gap?

 

Various factors cause the gender gap in venture capital (VC) funding, but most importantly it’s due to an overall lack of access to resources, networks, and mentors that can help female entrepreneurs succeed. Male investors dominate most venture capital firms, making it difficult for women to receive funding. Furthermore, women are not as well-represented in the technology industry. That is a key factor in obtaining VC investments due to the high growth potential of tech companies.

 

How Does This Affect Female Entrepreneurs?

 

The gender gap in VC funding can have a huge negative impact on the success of female entrepreneurs. Without adequate startup capital, developing a successful business and scaling it to profitability is difficult. This is especially true compared to male-led startups that receive more access to resources that can help foster growth.  And it’s a vicious circle. Less investment in woman-run companies makes it harder for them to succeed, which feeds the perception that they’re not good investments. With a drop in the female-owned businesses in VC funds, alternative means of capital raising like RegA+ and RegCF offer female entrepreneurs a chance to access the capital they need.

 

The Benefits of Alternative Capital Raising Options for Women-led Startups

 

With VC funding becoming increasingly difficult to attain, there are other options that female entrepreneurs can tap into to secure the resources needed for their companies. RegA+ and RegCF offer two alternatives that allow private companies to raise capital through more accessible means.

 

Regulation A+ is a type of private offering, exempt from SEC reporting requirements, that allows companies to raise up to $75 million from accredited and non-accredited investors. This makes it an attractive option for female entrepreneurs looking for significant sources of capital. Regulation Crowdfunding allows companies to raise up to $5 million from both accredited and non-accredited investors as well. The main advantage of this type of capital raising is that it is typically more cost-effective than a RegA+ raise. For early-stage companies, it is the ideal option.

 

What Can Female Entrepreneurs Do To Combat this Gender Gap?

 

The best way for female entrepreneurs to fight the gender gap in VC funding is by taking advantage of alternative capital-raising options. By utilizing RegA+ and RegCF, female entrepreneurs gain access to much-needed resources to launch their businesses and scale them. Additionally, female entrepreneurs need to continue networking with potential investors and other entrepreneurs to build their own trust networks. By leveraging the power of these networks, female entrepreneurs can gain access to capital from a diverse pool of investors.

Overall, the gender gap in venture capital funding is an issue that needs to be addressed and overcome by women-led companies. Regulation A+ and Regulation Crowdfunding offer two viable solutions for female entrepreneurs to gain access to the resources they need.

To sum up: With these capital-raising options, female entrepreneurs can take their businesses to the next level.

How Do I Know if My Cap Table is Ready?

A cap table (short for capitalization table) is essential for any company looking to raise capital. It provides a detailed breakdown of the equity owned by shareholders, enabling founders to understand how their offerings will be impacted and make sound decisions regarding their finances. When properly managed, cap tables help potential investors feel confident in their investments as they provide a clear picture of the company’s ownership. As such, understanding your cap table and ensuring it is up to date is important when assessing if your company is ready to move forward with fundraising efforts.

 

Must-Haves for Proper Cap Table Management

 

When it comes to cap table management, remember to include this elements:

 

  • Voting rights
  • Share issuance
  • Past and current shareholders
  • List any future projections for additional capital raises or dilution
  • Track all options grants, vesting schedules, and related information
  • The amount of money each shareholder has invested in the company
  • Include details about convertible notes, warrants, and other debt instruments
  • Clearly list all shareholders, their ownership percentages, and the date of their investments

 

All of the above must be taken into consideration and recorded accurately to ensure proper cap table management. With these basics accounted for, founders can feel confident that their cap table contains the necessary information so they can be ready to raise capital. Still, some dos and don’ts should also be observed to ensure the best possible outcome for organizations raising capital.

 

Cap Table Dos: 

 

  • Ensure that all information is readily available in an easy-to-understand way
  • Maintain accurate and up-to-date information
  • Take into account dilution from future funding rounds, options pools, and performance issues

 

Cap Table Don’ts 

 

  • Overlooking the potential for dilution when raising capital
  • Failing to update it when new shareholders invest
  • Hesitating to consult a legal or financial advisor with any questions that arise
  • Neglecting the importance of understanding the cap table and its implications

 

By following these dos and don’ts, organizations can avoid potential pitfalls in the capital raising process and ensure an efficient, effective raise for all involved parties. A well-maintained cap table ensures transparency between investors, founders, and shareholders.

 

Best Practices for Managing a Cap Table

 

Though having a comprehensive cap table is vital, keeping it updated and organized requires consistent effort. To ensure your cap table remains accurate, it’s essential to follow the best practices for managing a cap table, including:

 

  • Updating the tables regularly as new investments come in or out
  • Keeping multiple copies of the tables in both digital and physical form
  • Storing the cap table in a secure location with proper backups for redundancy
  • Utilizing a FINRA broker-deal with knowledge of and experience handling cap tables for JOBS Act raises
  • Monitoring new regulations and laws to ensure the cap table is compliant with all applicable standards

 

By following these best practices for managing a cap table, companies can ensure accuracy, transparency, and compliance when looking to benefit from raising capital. It will also give investors confidence that they have all the information they need to make informed decisions.

Who Does Due Diligence on Companies using RegA+?

Due diligence is an essential part of the investment process. Especially following the passage of the JOBS Act in 2012, which expanded Regulation A+ (RegA+), companies now have additional opportunities to seek capital from investors. This has created a need for due diligence on these companies that is both thorough and efficient. In this blog post, we will discuss who does due diligence on companies using RegA+ and who does due diligence on companies using RegA+.

 

What Is Due Diligence?

 

The Securities Act of 1933, a result of the stock market crash years earlier, introduced due diligence as a common practice. The purpose of the act was to create transparency into the financial statements of companies and protect investors from fraud. While the SEC requires the information provided to be accurate, it does not make any guarantees of its accuracy. However, the Securities Act of 1933 for the first time allowed investors to make informed decisions regarding their investments.  

 

In the context of raising capital through RegA+, due diligence means that the issuer has provided all of the necessary information to investors and securities regulators so that they comply with securities laws. This may include information like:

 

  • Funding: The issuer should provide a detailed plan of how the money raised through RegA+ will be used.
  • Products/Services: The issuer should provide a clear description of their products and services, as well as any potential advantages that they may have over the competition.
  • Business Plan: The issuer should provide a detailed and comprehensive business plan outlining their current and future projects, as well as realistic projections based on their financial reports.
  • Management Team: The issuer should disclose information about the company’s officers, founders, board members, and any previous experience in business that may be relevant to investors.

 

Issuers should also use a registered broker-dealer as an intermediary to comply with Regulation A+ (RegA+). By doing this, they will ensure that they are meeting their due diligence requirements.

 

Who Is Responsible for Doing Due Diligence on companies using RegA+?

 

When it comes to due diligence for companies using RegA+, typically, the issuer’s FINRA Broker-Dealer is responsible for conducting due diligence both on the potential investors and the company itself. The broker-dealer will be required to perform regulatory checks on investors such as KYC, AML, and investor suitability to ensure investors are appropriate for the company. Additionally, they will perform due diligence on the issuer so that they can be assured that the company is operating in a manner compliant with securities laws so that they do not present false information to investors. Failing to meet compliance standards can result in the issuer being left responsible for severe penalties, such as returning all money raised to investors. 

 

However, both investors and issuers have a responsibility for due diligence as well. Investors should research the company thoroughly and make sure they understand all details surrounding the offering before investing their money. This includes reviewing all relevant documents, such as the offering circular, stock subscription agreements, and other related materials that give them a good understanding of the investment opportunity and its potential risks.

 

Issuers also contribute to due diligence as they must work with their FINRA Broker-Dealer to ensure that their offering is compliant with all laws and regulations. This includes verifying all information provided in the offering materials and making sure it meets regulatory requirements. The issuer must also disclose all information that could influence an investor’s decision to purchase the securities. 

 

Due diligence is essential for both investors and issuers when it comes to investments under Regulation A+ (RegA+). Ensure that thorough due diligence is conducted ensures that the offering is conducted in a manner that aligns with the best interests of both investors and the issuer. Ultimately, due diligence is a key component when it comes to investments under Regulation A+ (RegA+) and should not be overlooked.

 

Why Use RegCF for Real Estate?

Companies in the real estate industry have a variety of financing options available for their projects, but one that is often overlooked is the use of Regulation Crowdfunding (Reg CF). Equity crowdfunding is becoming an increasingly popular tool among companies due to its potential to provide access to potentially high-yielding investments and the ability to offer new ways for investors to diversify their portfolios. 

 

What is Reg CF for Real Estate?

 

Reg CF is a type of equity crowdfunding that allows companies to raise capital from everyday individuals, not just accredited investors. Unlike traditional real estate investments, the price tag for Reg CF investments is much smaller, making it more appealing to a wide range of investors. Companies can sell securities such as stocks or debt instruments in exchange for investor funds. For real estate, this can be done in various ways such as selling shares in a real estate investment trust (REIT), selling property-specific investments, or launching a syndication.

 

Benefits of Reg CF for Real Estate

 

Using regulation CF for real estate offers a wide range of benefits to both investors and issuers that may not be readily available with other forms of capital raising. These benefits include:

 

It Can Provide Access to High-Yielding Investment Opportunities: Real estate investments can offer higher returns than traditional stocks and bonds, with an average annual return of 12.9% according to a study by the Cambridge Centre for Alternative Finance in 2017. By using Reg CF, investors can tap into this high-potential market and issuers can access the capital to fund their real estate projects.

 

It Offers a More Diverse Investment Portfolio: Real estate equity crowdfunding allows investors to invest in specific projects or properties, rather than having to invest in an entire REIT or development company. This provides more control and transparency for the investor as they can see exactly where their money is going.

 

It Can Offer Lower Investment Requirements: When using Reg CF, the minimum investment is typically much lower than traditional real estate investments, meaning that anyone can invest as little or as much as they want in a given project. This makes it easier for companies to attract a larger pool of potential investors and increase their chances of successfully raising the necessary funds.

 

It Can Help Facilitate Market Research: When using Reg CF, issuers must provide investors with all the information they need to make an informed decision, in-depth market research included. This can increase investor confidence in the project and potentially lead to higher returns for real estate agents.

 

Reg CF is an effective tool in the real estate space, allowing companies to access capital quickly and easily from a wide range of potential investors. As the popularity of crowdfunding continues to grow, it is becoming increasingly important for companies in the real estate space to understand how Reg CF works and how it can be used in conjunction with other financing methods to maximize their fundraising efforts.

Looking Ahead at the Growth of Private Equity

As a market now worth millions of dollars on a global scale, the history of private equity dates back to the early 1900s when J.P. Morgan purchased the Carnegie Steel Corporation. Since then, the industry has seen tremendous growth, especially as the global economic climate continues to develop. Over the next four years, analysts predict that the global private equity market will grow by $734.93 billion between 2022 to 2027, a CAGR of 9.32%. 

 

Much of this growth is being driven by many factors. One of the most important factors is the increasing number of high-net-worth individuals on a global scale. High-net-worth individuals are defined as people with net investable assets amounting to more than $1 million. Because of this wealth, they are key players in private equity investments. Based on a report published by Boston Consulting Group, its projections show that capital commitments to private equity funds from these wealthy individuals will grow at a CAGR of 19% to reach $1.2 trillion by 2025 and account for over 10% of all capital raised by private equity funds.

 

The rise in private equity deals is another major driver of the market. Strategic alliances between companies are becoming more common, allowing them to access resources they otherwise would not be able to gain access to on their own. For example, Blackstone recently partnered with Thomson Reuters to carve out its financial and risk business into a USD 20 billion strategic venture. 

 

Despite the various drivers of market growth, there are a few challenges that could impact the future development of the private equity market, such as transaction risks and liquidity. This concern primarily arises in transactions between companies from two different countries. Transaction risk can lead to losses when the currency rate changes before transactions are completed, as well as through delays or defaults in payments due to foreign exchange controls or political instability in certain countries. Additionally, low liquidity levels of private equity assets could hinder investments in private equity, as investors require more liquidity to invest in other assets.

 

Overall, the private equity market is expected to experience moderate growth over the next five years. This growth will be driven by factors such as an increasing number of HNWIs investing in private equity and a rise in strategic alliances between companies. However, some challenges could impede this future development including transaction risks associated with international transactions and low liquidity levels of assets. Despite these potential issues, global private equity investments will likely increase between 2023 and 2027 due to economic recovery and businesses seeking new investments. 

What You Need to Know About Cap Table Management

More than a simple spreadsheet, a cap table (short for capitalization table) records detailed data regarding the equity owned by shareholders. When it comes to raising capital, your cap table will help you make sound decisions regarding your offering. So, what exactly is cap table management?

 

A clear and well-managed cap table paints a detailed picture of exactly who owns what in the company. Whether a founder is looking to raise additional capital or offer incentives to employees, a correctly-managed cap table will show the exact breakdown of shares, digital securities, options, warrants, loans, SAFE, Debenture, etc. This information enables founders to understand how equity distribution is impacted by business decisions.

 

Proper cap table management ensures that all transactions are accounted for and that potential investors are easily able to see the equity structure during funding rounds. Founders are also able to better negotiate the terms of a deal when they have the entire picture of their company’s structure available for reference. Without a cap table, companies can face challenges when it comes to raising capital, due to a lack of transparency in the ownership of the company.

 

But, it’s not enough to simply have a cap table. Once created, it must be maintained properly and updated each time an equity-based transaction is conducted. In the early stages of the company, the cap table will be relatively simple to manage but as rounds of funding progress, it becomes more complex as shares are distributed amongst investors and employees. Some of the key features of a well-managed cap table management include: 

 

  • Records the voting rights of each shareholder.
  • Documents when shares are issued and diluted.
  • Keeps track of all equity holders, past and present.
  • Records who owns what percentage of the company.
  • Increases transparency among shareholders and investors.
  • Enables quicker and more efficient transactions due to up-to-date information.
  • Shows how much money each shareholder has invested in the company.

 

While simple cap tables can be created in programs such as Excel, a cap table management software may provide a better solution as it becomes more complex.  As part of its all-in-one platform, KoreConX provides companies with the tools to properly record every transaction in their cap table. Encouraging transparency of shareholders, every type of security (including digital securities, shares, options, warrants, loans, SAFEs, and Debentures) that may be offered is accounted for and kept up to date as deals occur. By maintaining transparent records, companies can benefit from both shorter transaction times and expedited due diligence.

 

With an understanding of the importance of keeping a properly managed cap table, founders can arm themselves with the ability to make well-informed business decisions. Detailed insight into a company’s financial structure allows potential investors to feel confident in their investments, secure with the knowledge that their share is accurately accounted for. Even if the task of creating a cap table may seem daunting, it is simplified with a cap table management software so that everyone is on the same page.  

How Does Technology Improve Transparency and Sustainability?

Technology has significantly impacted many different aspects of our lives, and the world of capital raising is no exception. With the help of technology, we can more efficiently raise capital and improve transparency and sustainability in the process. Here is a closer look at how technology is helping to improve transparency and sustainability in the world of capital raising and investment:

 

Improving Transparency

 

One of the biggest ways technology improves transparency in capital raising is by providing more information to investors. In the past, it was often difficult for investors to get a clear picture of where their money was going and how it was being used. However, thanks to technology, there are now a number of platforms and tools that provide investors with real-time updates and insights into how their money is being used. This increased transparency gives investors more confidence in the process and helps build trust between them and the companies they invest in.

 

Another way that technology is improving transparency is by making it easier for companies to comply with regulations. In the past, companies often had to spend a lot of time and money on compliance, which could cut into their profits. However, thanks to the advent of compliance automation, companies can now more easily and efficiently comply with regulations, which frees up more time and resources to focus on other areas of their business.

 

Improving Sustainability

 

In addition to improving transparency, technology is also helping to improve sustainability in the world of capital raising. One of the biggest ways technology does this is by making it easier for companies to access alternative funding sources. In the past, companies often had to rely on traditional funding sources, such as banks and venture capitalists. However, thanks to JOBS Act regulations like Reg A+ and Reg CF, companies can now more easily raise capital from a wider pool of investors, including regular people. This not only helps to improve the sustainability of businesses but also helps to create more opportunities for people to invest in the companies they believe in while having customers that not only help you raise capital but can be seen as brand ambassadors.

 

Another way that technology is improving sustainability in capital raising is by making it easier for companies to track their progress and impact. In the past, it was often difficult for companies to track their progress and impact due to a lack of data. However, thanks to technology, companies can now more efficiently collect and track data related to their business. This data can then be used to help improve companies’ sustainability by helping them track their progress and make necessary adjustments. 

 

Thanks to technology, we can raise capital more efficiently and create more opportunities for people to invest in the companies they believe in while improving transparency and sustainability. This means more confidence in the process and trust between investors and the companies they are investing in. For businesses, this means more time and resources to focus on other areas of their business. And for the world, this means a more sustainable future where anyone can invest in the companies they believe in.

 

What are the Differences Between Regulations A, CF, D, and S?

When it comes to raising capital, there are various ways you can raise money from investors. And while they all have their own specific compliance requirements, they all share one common goal: to protect investors while still providing them with opportunities to invest in private companies. Let’s look at the four most popular types of equity crowdfunding; through Regulation A, CF, D, or S. 

 

Regulation A+

 

Offering size per year: Up to $75 million

Number of investors allowed: Unlimited, as long as the issuer meets certain conditions.

Type of investor allowed: Both accredited and non-accredited investors.

SEC qualification required: Reg A+ offerings must be qualified by the SEC and certain state securities regulators and must also file a “Form 1-A”. Audited financials are required for Tier II offerings.

 

This type of crowdfunding is popular because it allows companies to raise up to $75 million per year in capital and is open to accredited and non-accredited investors. Offering the ability to turn current customers into investors and brand ambassadors (like several JOBS Act regulations promote) can bring a company tremendous value and help to grow the business. A Reg A raise is excellent for companies that have a wide customer base or need to raise a large amount of capital. Compared to other regulations, Reg A+ is a bit more complex and time-consuming to implement. Yet, it still offers a great deal of potential with the ability to market the offering to a wide pool of potential investors.

 

Regulation CF

 

Offering size per year: $5 million

Number of investors allowed: Unlimited, as long as the issuer meets certain conditions.

Type of investor allowed: Both accredited and non-accredited investors

SEC qualification required: The offering must be conducted on either an SEC-registered crowdfunding platform or through a registered broker-dealer. Audited financials are required for companies looking to raise more than $1,235,000. Companies must fill out a “Form C.”

 

Compared to other regulations, Reg CF is one of the most popular due to its lower cost and ease of implementation. Regulation CF offers companies the ability to raise up to $5 million per year and allows accredited and non-accredited investors to invest in the company. Companies that need a smaller sum of capital while still leveraging the power of marketing can benefit from utilizing this type of regulation. 

 

Regulation D

 

Offering size per year: Unlimited

Number of investors allowed: 2000

Type of investor allowed: Primarily accredited investors, with non-accredited investors only allowed for 506(b) offerings.

SEC qualification required: Reg D offerings do not need to be registered with the SEC but must still meet certain filing and disclosure requirements.

 

A Reg D offering must follow either Rule 506(b) or 506(c). Both allow up to 2000 investors but differ slightly in that 506(b) offerings allow up to 35 non-accredited investors. Additionally, 506(b) offerings do not permit general solicitation. This means that companies will have to rely on their own network of investors to reach their goals. While this type of offering is more restrictive than others, it can be attractive to companies that need a smaller sum of capital and have access to a network of accredited investors. 

 

Regulation S

 

Offering size per year: Unlimited

Number of investors allowed: 2000

Type of investor allowed: Foreign (non-US) accredited and non-accredited investors

SEC approval/qualification required: Reg S offerings are not subject to SEC rules, but they must follow the securities laws in the countries issuers seek investors from.

 

An excellent complement to Reg D, Reg S allows companies to raise capital from foreign and non-U.S. investors. This regulation was made for big deals, allowing companies to reach a larger and more diverse pool of investors. Reg S is great for companies looking to raise a large amount of capital or to break into foreign markets. Issuers must be careful not to make the terms of the offerings available to US-based people.

 

Depending on the size of your offering, the number of investors you’re looking to attract, and the type of investor you want, one regulation may be better suited for your needs than another. Still, it is important to consult with a professional when making these decisions to ensure that you meet all necessary compliance requirements.

How Much Can I Invest in a Company with RegCF?

As Regulation Crowdfunding offerings continue to grow in popularity, more and more investors are looking to get involved. RegCF gives investors the ability to invest smaller amounts of money into early-stage companies as non-accredited investors. This is why investors put $1.1 billion into RegCF offerings in 2021 and this is predicted to double in 2022. But what exactly is Regulation Crowdfunding? And how much can you invest in a RegCF offering?

 

Why Invest in RegCF?

Reg CF allows you to invest in some of the newest and most innovative companies. This is because early-stage startups often have a difficult time accessing traditional forms of funding, such as venture capital. Other offerings have fairly large minimum investment amounts, which non-accredited investors might have trouble affording (since this prime directive of investing is never to invest more than you can afford to lose). This traditional approach to capital raising meant that only wealthy investors could afford to participate.

 

Since RegCF is specifically set up around the crowdfunding paradigm, the minimum investment amount is more affordable to more people. This is why in 2021 over 540,000 investors put their money into over 1,500 Reg CF offerings, double the number of offerings in 2019 and 2020 combined. This showcases the clear and continued interest in this type of investment from the public.

 

Investing in a RegCF Raise

Regulation Crowdfunding is a process through which companies can offer and sell securities to the general public. This process was created by the JOBS Act, and it allows companies to raise up to $5 million per year from non-accredited investors. So what does this mean for investors? Well, basically, it means that you have the opportunity to invest in some of the newest and most exciting startups, even if you’re not an accredited investor. And while you can’t sell your shares for the first year, there are several other benefits of investing in a RegCF company, but you must be aware of how much you can invest before doing so. Because of the inherent risk of investing, the SEC has placed limits on how much nonaccredited investors can invest within any 12-month period.

 

In a 12-month period, nonaccredited investors are limited in the amount they can invest in a RegCF offering. This limit is based on the investor’s annual income or net worth, whichever is greater. If an investor’s annual income or net worth is less than $124,000, then the investor can invest up to the greater of $2,500 or 5% of the greater of their annual income or net worth. If both an investor’s annual income and net worth are more than $124,000, then the investor can invest up to 10% of their annual income or net worth, whichever is greater. However, the total amount invested in RegCF offerings during a 12-month period cannot exceed $124,000.

 

Accredited investors have no limit to how much they can invest in RegCF offerings and are defined as individuals that meet at least one of the following criteria:

  • Annual income greater than $200,000 (or $300,000 with a spouse or spousal equivalent);
  • Net worth of over $1 million (with or without a spouse and excluding the value of the individual’s primary residence);
  • OR holds certain professional certifications, designations, or credentials in good standing, including a Series 7, 65, or 82 license.

 

Calculating Net Worth

To determine how much an individual can invest in securities through crowdfunding, it is vital to understand how Regulation Crowdfunding defines net worth. There are a few ways to calculate net worth, but the most common is to add up all your assets and subtract all your liabilities, according to the SEC. The value of an individual’s primary residence is not included in the calculation of their net worth, and neither is any loan against the residence up to its fair market value. Any increase in the loan amount in the 60 days before the purchase of securities will also be disregarded, to prevent artificially inflated net worth.

 

For joint calculations, you can also determine your combined net worth or annual income by adding your spouse’s income and assets to the calculation, even if the assets are not owned jointly. In these cases, the maximum investment cannot exceed that of an individual with the same net worth. 

 

Once you understand how much you can invest, the only thing left is to do your due diligence! You’ll want to review the provided disclosures so that you can get the full picture of the investment’s risk to ensure it aligns with your level of risk tolerance. 

How Does Tech Allow People to Make Smaller Investments?

The world of technology has completely revolutionized the way we view investments–no longer do people need to invest large sums of money to have access to incredible investment opportunities. Through the use of online platforms and computerized transactions, people can now make smaller investments that still have the potential to provide generous returns. This change has made it possible for more people to invest in the private market and other forms of capital, thus democratizing the process and giving more people a chance to participate in the economy.

 

Making Investments Accessible

 

In the past, making investments usually required working with a financial advisor and entailed putting down large sums of money. This often puts investing out of reach for the average person. However, with the advent of online platforms, virtually anyone can now get started in investing with relatively little money. For example, Acorns is an app that rounds up your credit or debit card purchases to the nearest dollar and then invests that spare change into a portfolio of ETFs. In this way, users can invest without even realizing it, while simply making purchases as they normally would. This convenience is one of the main reasons why investing has become more popular in recent years. And, with JOBS Act regulations, nonaccredited investors can use technology to pool their money and invest in startups that were only accessible to the wealthy.

 

While VCs have been known to invest large sums of money into startups, there are now platforms that allow nonaccredited investors to get in on the action with as little as $100. This is made possible through the use of crowdfunding platforms such as WeFunder and Republic. These platforms give everyone a chance to support the businesses they believe in and potentially make a profit from their investment. 

 

Technology has also made it easier for people to keep track of their investments and monitor their portfolios. In the past, people had to rely on paper statements and manual calculations to track their progress. Now, numerous apps and websites offer real-time data and analysis of an investment portfolio. This makes it easy for investors to stay on top of their finances and make well-informed decisions about where to allocate their money.

 

A Technology-Driven Evolution

 

It is clear that technology has completely changed the landscape of investing. No longer do people need to have a lot of money to get started. With the click of a button, anyone can now invest in the stock market or support their favorite businesses through crowdfunding. This accessibility has democratized the process of making investments and given more people the opportunity to participate in the economy. In the past, only those with a lot of money could afford to invest. However, thanks to technology, that is no longer the case.

 

The changes that have been brought about by technology are sure to revolutionize the way we think about investments in the years to come even more than they have already. This not only benefits the common person who wants to invest their money but also smaller organizations and startups looking to raise capital. Through acts like Reg CF and Reg A+, businesses now have a better chance than ever before to get the funding they need from a wider pool of potential investors that are accredited and nonaccredited alike. This is all thanks to the power of technology and its ability to connect people from all over the world.

 

Thanks to technology, making investments has become more convenient and accessible than ever before. Whether you’re looking to invest a small amount of spare change or put together a portfolio of startups, there’s an online platform that can help you do it. This change from the past has democratized investing and given more people the opportunity to participate in the economy. In the years to come, we can only expect this trend to continue as technology continues to evolve.

 

Over the Next Five Years, the Private Capital Market is Expected to Double

Over the past decade, fiscal stimulus and opportunities for liquidity have caused a surge within the private capital markets. Even though this year’s outlook is challenged by increasing borrowing costs and economies cooling, London-based research firm Preqin forecasts that the industry’s global assets under management will double to $18.3 trillion by the end of 2027, from $9.3 trillion currently. The study highlights how investors desire to seek alternative investment types in an economic environment characterized by uncertainties. While the first half of 2022 did see a fundraising drop in private capital by $337 billion from $495 billion in the same period last year. However, by 2023, private capital fundraising is expected to return to 2019 levels as the growing trend of private capital continues.

 

Private equity fundraising hit a record $561 billion in 2021, with North America leading the way, followed by Asia-Pacific and Europe, according to Preqin. According to McKinsey North America had about a 22% growth in private capital markets, compared to Europe with 17% and Asia with 13%. This means that for investors and companies raising capital, the US is a more attractive market than Europe and Asia and is a great place to market your private capital offering, notably through JOBS Act regulations like Reg A+ and Reg CF. 

 

Private markets have been able to continue to grow during this pandemic because of the growth in digitalization and the internet. This has allowed for a decrease in face-to-face interactions, which has made it easier for managers to connect with LPs, as well as an increase in online tools and resources. For example, many fund managers have started using online data rooms, which allow investors to access documents and due diligence materials remotely. In addition, online investor portals have become more popular, providing LPs with 24/7 access to information on their portfolios.

 

The study found that the average private equity fund size has increased over the past decade, while the number of first-time funds has declined. The report attributes this to the “maturing” of the industry and the rise of large institutional investors, which have become an increasingly important source of private capital. Institutional investors, such as pension funds, insurance companies, and endowments, are allocating more of their portfolios to private capital as they seek higher returns. Private markets have outperformed traditional public markets in recent years, but that outperformance is expected to moderate over the next decade. Preqin’s study predicts that private equity returns will net 7.6 percent annually between 2018 and 2027, compared to 6.4 percent for public markets.

 

According to Preqin, the interest in impact investing has also increased in recent years. The firm estimates that there are now more than 3,000 impact funds globally, with assets under management totaling $228 billion. In particular, environmental, social, and governance (ESG) considerations are becoming increasingly important to private capital investors. A majority of private capital firms say that they consider ESG factors when making investment decisions, and almost half of firms say that they have adopted policies or strategies specifically focused on impact investing. As the private capital markets continue to grow, firms need to consider how they can best position themselves to capitalize on this growth.

 

The private capital markets are expected to continue growing in the coming years, presenting a unique opportunity for raising capital. In addition, the growth of the private capital markets may lead to more regulation, as policymakers seek to mitigate risk and protect investors. Overall, the study provides a positive outlook for the private capital markets. For firms looking to take advantage of this growth, it’s vital to consider how they can best position themselves to capitalize on these opportunities. For investors, this means considering which private capital investment opportunities offer the best potential returns. But regardless of how the private capital markets evolve, one thing is clear: they are likely to play an increasingly important role in the global economy.

Cannabis Consumers’ Home Growth Increases Worldwide

As marijuana becomes increasingly legalized all over the world, an interesting trend is developing–an increase in the home-growing of the plant. This can be seen in the US, Canada, and Europe, with more people taking up this activity to ensure they have access to safe, high-quality cannabis, especially in more rural areas where access to dispensaries is limited. Keep reading to learn about what the rise in homegrown means for the global cannabis industry.

 

Global Home-growing Trends

 

Cannabis consumers are growing their own plants at home more frequently worldwide, as laws surrounding cannabis production and consumption continue to change. In Luxembourg, people 18 years or older will now be allowed to grow up to four cannabis plants in their homes, making it the third country in the world to legalize this activity, after Uruguay and Canada. This new legislation is intended to address the problem of drug-related crime by introducing fundamental changes in Luxembourg’s approach to recreational cannabis use.

 

The decision by the small but financially powerful European country to legalize the production and consumption of the drug is a milestone on the continent, which has been slower to adopt more liberal cannabis laws. Consumption will only be legal within the household, although fines for the possession of a maximum of three grams in public will be reduced considerably from current amounts.

 

In the United States, you can grow cannabis for medical or recreational purposes in 19 states. The rules vary by state, but generally, you are allowed to grow a certain number of plants, and the plants must be at a certain maturity level. For example, in Massachusetts, you are allowed to grow up to six plants, and only three of those plants can be mature. In California, you are allowed to grow up to 25 plants, regardless of maturity level. This increased demand for home growing in the US can be seen because of the numerous benefits it offers. Home-grown cannabis is typically cheaper than store-bought cannabis, and it also allows for more customization and control over the product. With store-bought cannabis, you are at the mercy of the growers and manufacturers, but when you grow your own, you can choose exactly what goes into your product. You can also grow unique strains that may not be available at your local dispensary, just a few reasons why home-grown cannabis has risen in popularity across the globe.

 

In Canada, where recreational cannabis was legalized in 2018, there is a growing trend of cannabis cultivation in people’s homes. This trend can be seen as an effort by consumers to have more control over the quality and price of the product they are buying. In general, when a product is legalized, there is often a surge in demand for that product. The legal status of cannabis has done nothing to slow this trend. As recreational cannabis has become legal in Canada, 10% of the country’s cannabis users grow it at home, according to the National Cannabis Survey (NCS) of 2019. This showcases how there is an increasing demand among cannabis users to be able to grow their own.

 

Creating Business Opportunities

 

With homegrown cannabis becoming more popular, businesses are taking notice and looking for ways to get in on the action. The JOBS Act regulations provide an opportunity for companies to connect with small investors and raise capital through crowdfunding. By using these regulations, companies can crowd-fund their business ventures related to cannabis home-growing. This includes businesses that sell products or services that help people grow cannabis at home or companies that invest in the cannabis home-growing industry.

 

The JOBS Act regulations have been a boon for small businesses and startups, and the cannabis industry is no exception. These regulations have opened up a new avenue of investment for companies involved in the cannabis home-growing industry. By connecting with small investors through crowdfunding, these businesses can raise the capital they need to grow and expand their operations. With global cannabis sales projected to skyrocket, now is the time for businesses to get involved in the home-growing market.

 

Global Cannabis Sales are Projected to Skyrocket

Cannabis has been legalized for both medicinal and recreational use in many states, and this is only expected to increase the demand for the product. Experts believe that the cannabis market will continue to grow as more states legalize it and that by the end of 2026, the global industry will be worth $57 billion. This growth is being driven by many factors, including the changing attitudes towards cannabis, the increasing number of people who are using it for medicinal purposes, and the fact that it is now being sold in more places than ever before.

 

Changing Views on Cannabis Globally

One of the biggest drivers of this growth is the changing attitude towards cannabis. In the past, it was seen as a dangerous drug with no medicinal value. However, over the last few years, there has been a shift in public opinion. More and more people are now beginning to see cannabis as a potential medication, and this is reflected in its legality. In certain states in the US, such as Colorado and Washington, cannabis is now legal for both medicinal and recreational use. This change in attitude is also being seen in other parts of the world. In Canada, cannabis was legalized for medicinal use in 2001, and it became legal for recreational use in 2018. This has had a positive effect on the growth of the industry, as it has made it more socially acceptable. 

 

The changing attitude towards cannabis is not the only factor driving growth; the increasing use of cannabis for medicinal purposes is also having an impact. In the past, cannabis was mostly used to treat pain, but it is now being used to treat a wide range of conditions, such as anxiety, and depression. This is likely because more research is being carried out into the potential medicinal benefits of cannabis. As a result of this research, the number of people using cannabis for medicinal purposes is increasing. In Canada, the number of people with a medical cannabis license increased from just over 5,000 in 2001 to over 300,000 in 2018. This increase is also being seen in other parts of the world, such as Australia and the United States.

 

The final factor driving the growth of the cannabis market is the increasing availability of the product. With cannabis sold in legal dispensaries, this has made it more accessible to people who want to use it, and it has also made it safer, as the product is regulated. In addition, there are now many different types of cannabis products available, which appeals to a wider consumer base.

 

Industry Growth in the US

The growth of cannabis sales in the United States is projected to be a significant contributor to overall global growth. By 2026, US cannabis sales are estimated to reach $42 billion, making up 75% of the global market. This steady growth is attributed to new markets opening in states where cannabis has been legalized for adult use. And, major markets like New Jersey legalized adult use of cannabis this year, and New York is expected to follow, which would bring the number of legal states to 33. These new markets are expected to generate an additional $5 billion in sales by 2026. Medical cannabis sales have also seen a steady increase, although at a slower rate than adult-use sales.

 

Expanding Capital Access for Cannabis Companies

 

Just as the cannabis market is expected to grow, cannabis companies also have the opportunity to take advantage of the growing private capital market. For cannabis companies who often have difficulty seeking traditional funding, there are a growing number of investors looking to invest in private capital through the JOBS Act exemptions, like RegA+ and RegCF. This market is expected to grow to $30 billion by 2030, which gives cannabis companies an excellent opportunity to seek the funding needed to fuel their growth. 

Labor Day: Democratization and Opportunities to Create Jobs

The growth in Regulation A+ and Regulation CF offerings fuels entrepreneurship and job growth in the United States. Since 2016, there have been over 4,600 capital offerings utilizing Reg A+ or CF, with over $500 million raised in 2021 alone. This capital helps companies grow, create jobs, and positively impact their local communities. Crowdfunding is a robust tool for businesses to secure funding, with an average of 43.8% of pre-revenue startups successfully using this method.

 

Crowdfunded Capital and Democratization

 

When businesses utilize crowdfunding, they can access a much larger customer base, allowing them to have a more significant impact on their local communities. it is particularly well-suited for getting loyal customers, employees, suppliers, and other stakeholders to become investors in your company. Crowdfunding enables the democratization of the private capital market by giving these parties an opportunity to participate in the investment process, something that has not been practical before with traditional investing. For many companies, this unlocks a powerful opportunity and  42% of raises reach their goal in 3 days. 

 

Creating Job Opportunities

 

With over $1 billion in capital raised through Reg CF at an average of $1.3 million per raise, these businesses create innovation and bring economic change to local communities in the form of spending and jobs. An estimated $2.5 billion went into local communities from crowdfunded companies in 2021 alone, with money changing hands as much as six times before leaving the local economy. This demonstrates how crowdfunding directly impacts many communities across the country. It brings money to a community by creating jobs; companies that utilize regulated crowdfunding support over 250,000 American jobs across 466 industries. That number is expected to grow as the private market continues to expand. 

 

Crowdfunding allows all types of businesses to access the capital they need to grow and create jobs through Reg A+ and Reg CF. Between 2000 and 2019,  small businesses created 10.5 million US jobs, while large companies only created 5.6 million, according to 2020 data from the US Small Business Administration. This highlights the importance of small businesses within the economy. However, many small businesses have not traditionally had the same access to capital as large ones. This changed with the JOBS Act, increasing the availability of capital for these small businesses and leveling the playing field. As these companies continue to receive capital from the JOBS Act exemptions, the economy continues to benefit from the democratization of capital. 

 

It’s not only the number of jobs that are important but also the quality of those positions. Good jobs lead to a better living standard. When people have good jobs, they can afford to make purchases, give their children better access to education, access healthcare whenever needed, and many other positive benefits for these individuals. At the same time, they support businesses within their community, which helps those grow as well. A strong economy also attracts business investment from other parts of the country and the world. All of these factors lead to more jobs, and the cycle continues.

 

Investing in the Future

 

The expansion of crowdfunding presents opportunities for anyone interested in becoming an investor, with a chance to get in on the ground floor of the next big thing, while also supporting businesses and creating jobs. It’s a win-win for everyone involved, and it all starts with the democratization of capital. When you invest in a company through crowdfunding, you can invest in your community. The money that is raised through these offerings stays local, and as the businesses grow, they pump even more money back into the economy.

 

Crowdfunding is an excellent way to support businesses and create jobs, but it’s also a great way to invest in the future. With the industry expected to continue to grow, now is the time to get involved. With opportunities for everyone, from accredited to retail investors, there has never been a better time to get involved in the democratization of capital. So this Labor Day, remember that when you support businesses through crowdfunding, you also help create jobs and create a brighter economic future.

 

Arcview Access & Cannabis Investment Summit Takes Places October 19th-21st in NYC

If you’re an investor, cannabis company, or industry specialist looking to make connections in the legal cannabis industry, the upcoming Arcview Access & Cannabis Investment Summit is not to be missed. Taking place in New York City from October 19th-21st, this event will bring together some of the biggest names in the business for three days of networking and learning. Arcview has been a trusted global leader in the cannabis industry for years, and this event is highly anticipated. This summit offers investors, companies, and entrepreneurs unparalleled access to top regulators and an opportunity to pitch their businesses to a panel of expert judges in hopes of winning investment funding. Attendees can expect two days of engaging main stage content, workshops, and panels on topics such as capital raising, company valuations, and opportunities in the cannabis market. 

 

Arcview serves the hemp and cannabis industry, with a keen focus on investing, education, and networking. Approximately 60% of attendees are expected to be investors in public cannabis companies, private equity funds, accredited individual capital, and more. Another 30% of the audience is expected to be cannabis companies in various niches with company valuations ranging from $2m to $200m, while the rest are expected to be industry specialists. 

 

The cannabis investment summit is an excellent event to attend for many reasons. For starters, it gives investors an opportunity to learn more about the industry and explore potential investment opportunities. Additionally, it’s a great opportunity to network with other like-minded individuals and make connections that could prove to be beneficial down the road. Whether you are in the industry or just looking to invest, this three-day event will have something for you. The event will take place at Convene, located at 45th and Park Ave in Manhattan. It will start with a reception on October 19th and continue into two full days of highly curated content, speeches, and even a field trip.

 

Come network with some of the biggest names in the business, learn from top regulators, or pitch your businesses to a panel of expert judges. If you want to make connections and do business in the legal cannabis industry, this event is for you! You can register now here.

Opportunities to Invest in the Private Capital Market

The private equity market is rapidly growing, fueled by expansions to the JOBS Act exemptions in 2021. By 2030, the private capital market is anticipated to grow to a total value of $30 billion. This is largely driven by more companies seeing the potential in regulated crowdfunding through RegA+ and RegCF, and the rising interest of retail investors looking to move into the private space. Plus, research has shown that there is nearly $5 trillion in uninvested funds held by private equity firms alone. In addition, retail investors now represent 25% of the security trading volume in the public markets, a significant increase from the previous decade. According to BNY Mellon, “a new generation of younger retail investors are purchasing equities with the intention of becoming long-term market participants.” These factors have coalesced to create a favorable environment for investments in the private capital market. 

 

With favorable conditions to invest in public companies, there are many emerging and attractive industries for investors. Some of these include:

 

  • Medtech: Every day, companies are creating lifesaving technologies to improve human health and revolutionize medical care. Medtech companies often require high amounts of capital to fund clinical trials, research and development, and the many other processes they must go through. Since offerings limits for RegA+ were expanded to $75M, Medtech companies are increasingly viewing the exemption as a viable choice for raising capital.

 

  • Cannabis: The cannabis industry is rapidly growing, especially as public perception grows more favorable and legalization at the state level spreads across the US. However, cannabis companies are often underserved by traditional financial institutions due to the illegality at the federal level. With RegCF and RegA+, cannabis companies can tap into a vast market of retail investors who are willing to invest in an evolving industry.

 

  • Real Estate: Traditional real estate investments are capital intensive, making them cost prohibitive for many investors who are not high net worth individuals, private equity, or institutional investors. However, with RegA+ and RegCF, retail investors can own fractions of properties. And in, 2020, insurance, finance, and real estate accounted for 53% of qualified RegA+ offerings and 79% of the funds raised through the exemption. This indicates that real estate is an attractive investment opportunity for many investors. 

 

  • Franchises: JOBS Act exemptions create new opportunities for franchisees and franchisors to raise capital. These companies often have existing customers, who can become investors and brand ambassadors.

 

Regardless of the industry, a key component of any offering is the broker-dealer. Many states require issuers to work with a broker-dealer when selling securities in those states. A broker-dealer ensures that the issuer follows all SEC and state securities laws. More importantly, working with a FINRA-registered broker-dealer gives investors confidence by verifying that the issuer has provided all required information for the investors to make a sound investment decision. FINRA protects American investors by ensuring that brokers operate fairly and honestly. Plus, the broker-dealer also completes compliance activities, such as KYC, AML, and investor suitability and due diligence on the issuer themselves. 

 

Working with a broker-dealer ensures that the issuer behaves compliantly and gives the investor peace of mind when investing in one of the many investment opportunities within the private capital market.