NEW YORK & LONDON — Based on the SEC’s proposed crowdfunding Title II and Title III rules, equity crowdfunding will soon enter the United States, providing a new option for small businesses to raise financing, bringing with it the promise of democratizing access to capital by giving power to the crowd.
But in new research, “US Crowdfunding: The Making of a Market,” co-written by CEO Larry Tabb and contributing analyst Deepali Nigam, TABB Group says the jury is still out on the final rules’ impact:
Will they have the power to create a healthy new marketplace where US small businesses will be able to successfully gain access to funding?
Will crowdfunding expose innocent, small-time investors to fraudsters and scam artists?
Will the rules prove too rigid, stifling this industry before it even starts?
Will crowdfunding be too expensive for US businesses?
Who will gain advantages, broker/dealers or funding portals, with barriers-to-entry costs for one, potential liability exposure for the other, among other issues?
Assuming a conservative 5% growth rate per year, TABB believes angel investing will grow to at least $28.5 billion by 2016, but will angel investing rules be more impactful to investors or issuers?
As new platforms targeting accredited investors emerge, how easy will it be for high net worth individuals to meet their investment strategy requirements from as little as $1,000 to $37,000 per investment?