Year-end predictions are always a dicey game, and that’s especially true as we close out a tumultuous year that turned conventional wisdom (and decorum) on its head. But there’s one thing we can say with a modicum of assurance: crowdfinance will continue to pick up steam in 2017, especially in a deregulatory environment.
At Locavesting, we look forward to increased innovation in community-based financial models, such as community investment funds, CDFI advancements, social enterprise funds, and new investment products that support entrepreneurs of color. We think 2017 will be the year that intrastate crowdfunding takes off—thanks to updates to the intrastate exemption that go into effect this spring. And that crowdfunding will get a social conscience.
The bottom line is, in 2017, everyday investors will have more opportunity than ever to invest in the change they want to see, starting in their own communities.
To round out our outlook, we asked some notable crowdfunding experts to weigh in on what they see coming in the year ahead:
“As the financial markets become increasingly opaque and volatile and farther removed from what people really value, a lot more people will invest in direct public offerings via Title III of the JOBS Act, state-based registrations, and the growing number of investment funds open to the general public like C-Note.”
– Jenny Kassan, attorney & advisor for mission-driven entrepreneurs“
“We’ll see 200%-300% growth in RegA+ crowdfunding, fueled by the entrance of well-capitalized successful firms seeking alternatives to a full public offering.
The new administration will realize that providing support to education and training in RegCF and Rule 147 Local Crowdfunding can directly affect job creation, especially in communities with a growing SME (small and mid-sized enterprise) sector but a lack of risk capital. This will result is some broad initiatives to raise awareness of best practices supported by the government.”
– Richard Swart, Chief Strategy Officer, NextGen Crowdfunding
“Title III as an industry will hit its stride next year. Two to three portals will emerge as clear industry leaders, while the other couple dozen platforms will serve a growing range of niche markets. I expect to see at least a few campaigns pitching live on TV, through shows like Shark Tank. 2016 has been more like an R&D phase, and 2017 is ‘go-to-market.’”
– Ken Nguyen, founder, Republic.co
“More African Americans will be introduced to equity crowdfunding, particularly given the startup investing I’m seeing with professional athletes and celebrities and the growing number of black cofounders of high-growth startups looking to raise equity capital. Crowdfunding will be necessary to compensate for the lack of ‘family and friends’ investing in underrepresented communities due to the racial wealth gap.
Additionally, black churches and universities will begin to consider debt-based crowdfunding as an alternative to traditional banks and financial institutions. The lower interest rates from this kind of community-based funding will free up resources, allowing these non-profit organizations to increase their investment in economic and community development initiatives such as skills training and small business investment.”
“Organizations that have been running intrastate crowdfunding platforms and educational programs for the last year or so now know what needs to change in their state laws… what needs tweaking is now becoming quite clear in many states. During 2017 we will see which states are true leaders in this arena and which states laws fizzle for lack of a comprehensive statewide approach.”
– Amy Pearl, executive director, Hatch Innovation
“We’re going to see a thinning out of securities crowdfunding platforms in 2017, as most of these companies are burning through cash, yet have not demonstrated an ability to effectively monetize. When you’re Kickstarter or Indiegogo, a high volume, a low-margin business model might work, but in securities crowdfunding, a low-volume, low-margin model is a recipe for impending doom.
“Securities crowdfunding requires a combination of effective storytelling and digital marketing. Those who fail to grasp this concept will surely miss the boat—if they haven’t already.”
“As a staunch advocate of promoting the interests of small business generally, and smart regulation of capital formation in particular, 2017 stands out to me as one of high hopes and great expectations.
We will very shortly have a new President move into the White House, one who has promised to be the greatest “jobs” President of all time, and has promised to cut out overly burdensome government regulation.
We will have a Commission at the SEC comprised of five Commissioners, three of whom will be Republican appointees.
We may have a Chair of the SEC by the name of Paul Atkins who is a vocal proponent of deregulation of financial markets.
And with the passage of HR 3784 unanimously by Congress in December 2016, the SEC will have a new, permanent office in 2017 – the Office of Small Business Advocate — an independent office reporting directly to Congress, with the singular mission of protecting the interests of small business and small business investors at the SEC.
Time will be the ultimate arbiter of 2017. But from where I sit, 2017 is shaping up to be one of the best years ever for small business, our country’s greatest job creator.”
– Sam Guzik, lawyer, Guzik & Assoc.