Last week on October 9th I took part in a roundtable discussion panel on Alternative Financing at the Invest in Photonics event in Bordeaux, France. The event is the primary European conference looking at investment across the photonics industry including applications in environment and energy efficiency, life sciences, consumer electronics, aerospace and transport, 3D printing and advanced manufacturing. I was joined by a sector-specialist serial entrepreneur and angel investor, a partner at a VC firm, B-to-V, with a focus on photonics, and a director of the French growth-stage SME stock exchange, Alternativa.
One year has passed since the SEC released Title II, which removed the ban on general solicitation and general advertising for private issuers. Since then the entire US crowdfunding sector has been waiting the famous Title III, which would eventually allow also non accredited investors to invest through equity crowdfunding portals. Nevertheless, even though Title III is still missing, the US market of equity crowdfunding has been flourishing with interesting numbers.
Crowdinvesting is a relative recent phenomenon which is growing in many different countries around the world. Several people have heard about equity crowdfunding or peer to peer lending only in the last couple of years. Nevertheless, as young as it may seems, crowdinvesting, especially in the form of P2P lending, has been out in the market for while: some pioneering companies have been operating since the early 2000s, while GrowVC itself - i.e. Crowd Valley’s parent company- has been active in the online investment space since 2009. In the past few days crowdinvesting has reached a new milestone with the IPO filing of one of the most established peer-to-peer lending platform in the US.
Securities crowdfunding in Malaysia is developing incredibly fast, pushing the country in a leading position in the area. In fact, in August 2014, the Securities Commission of Malaysia (SC) launched a public consultation on proposed regulations for crowdinvesting. On that occasion, Crowd Valley published an article, explaining the drafted legal framework. Now that the public consultation is over, SC has released a document with the comments received and the changes proposed.
The Intrastate Crowdfunding movement in the US keeps spreading , continuously involving new states. Among these the latest state which released a regulation for securities crowdfunding is New Mexico which is going to be the 13th state adopting an intrastate crowdfunding exemption.
A recent public consultation launched by UK’s government determined that P2P lending will have increasingly a central role in SMEs finance. In fact, starting later this year, British SMEs will have the chance to be linked up by banks to alternative finance providers - such as P2P lending portals -, when rejected by traditional credit providers.
In July 2013, Italy’s financial conduct authority (CONSOB) released one of the first national regulations for equity crowdfunding in the world. More than one year has passed since and despite the regulation being in place, the market is overpopulated with “empty” platforms, lacking a sufficient vibrance, in terms of deal flow and number of investors.
In the last couple of years , while waiting for Title III to be eventually released by the SEC, several US states adopted intrastate crowdfunding laws, which allow companies to raise capital through local securities crowdfunding portals. Among them there is Michigan, whose securities crowdfunding exemption allows resident issuers to offer securities only to local investors, like it also happens in other states.
As Malaysia’s framework for online investment marketplaces (equity crowd funding) is unveiled, there’s a lot of buzz around the region about the impact of new online funding models. While countries like Malaysia are looking to other countries for benchmarks, initial frameworks are still largely mirroring one another and real world applications will show how they can be applied to new regions.
Despite the fact that there are heaps of articles being published, suggesting that a crowd investing sector or geography is dominating the rests. While appealing as a thought, the market is still nascent and any domination, may simply suggest that growth is uneven cross the various dimensions. However, there are observations that can be made in how the market is evolving, at various stages across the world.