The Future Of Investment Crowdfunding


As we firmly take our place in the year 2013, it’s interesting to take a step back and review the progress that the investment world has made. Seeing how the investment process used to be run makes the present and future that much more exciting. Looking forward, the trajectory points straight to the online world, and a much more automated process than the one we currently operate in.

Gift or reward-based crowdfunding has been revolutionary over the past two years and has proved to be an incredible tool. Anyone could raise money for a specific goal, project, or cause, from an artist trying to put on a gallery show, to an at home inventor producing his latest invention. Instead of the old handout option, “Mom, Dad, I know this will be huge one day,” these creatives now had a credible medium to collect funds and generate excitement.

Now however, the real game changer is investment crowdfunding. For so long, the world of investments has been a gated one, only available to the 7.2 million Americans (1% of the US population) who are classified as accredited investors. With the number of small businesses rising each year, it only makes sense to increase the pool of investors. The 500,000+ startups that launch each month need to start looking elsewhere for funds.

The White House seemed to agree, and on April 5th, 2012 President Obama signed The JOBS Act into law, permitting the general public to invest in private offerings. While the SEC drafts the regulations (which could take as long as 2014 to implement) the focus is shifted more towards the actual practice. Currently, platforms are permitted to operate underRegulation D, by partnering with a registered Broker-Dealer.

In this modern age people are constantly in a rush, and don’t have the patience for lengthy procedures, piles of paperwork, and general inconvenience. That is why, at RockThePost, the company I co-founded, we joined the investment crowdfunding movement, with our own streamlined twist. You can find a detailed comparison of offline investment processes compared to online fundraising here.

After spending over two years in the reward space, we realized that small business owners were just as busy as investors, and strategically turned our focus to streamlining the entire fundraising lifecycle.

For RockThePost, and the other platforms currently operating under Regulation D, I am sure the potential of The JOBS Act poses an exciting unknown. Non-Accredited investors will finally be able to get a piece of the pie and invest in startups, and the overflowing pool of potential investors will hopefully give startups a better hope. Revising the general solicitation rule will also play a huge role in the exposure of these deals. Depending on how the SEC determines this, private offerings will eventually be able to promote their raises publicly, which until now has been absolutely forbidden.

While the world of non- accredited investment crowdfunding remains at a bit of a standstill for the next year or so, the actual process of raising online through regulation D for startup investing is still steamrolling ahead, finessing the process every day.

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