RealtyShares, the online marketplace for real estate investing that connects accredited and institutional investors to real estate investment opportunities, today released data on crowdfunding projects throughout Florida. Working with local developers, RealtyShares has leveraged its network of 20,000 investors to help fund more than 200 properties in Florida for $28.1 million. This Smart News Release features multimedia. View the full release here: http://www.businesswire.com/news/home/20160628006435/en/ An infographic featuring a sample of properties financed through crowdfunding in Tampa, Orlando, Jacksonville and South Florida. (Photo: Business Wire) RealtyShares is not just a listing website. It’s a tech-driven marketplace where Sponsors are vetted through a strict underwriting process. Even after the deal is funded, RealtyShares is helping to manage the deal. Deals on the platform average around 55 investors each, with Florida-based opportunities largely focused on residential revitalization projects. These fix and flip debt deals are funding rapidly, giving developers and borrowers efficient alternative access to financing around the state.
Like most startups, QaZing in Peterborough needs to raise money. And like many, it needed to choose between crowdfunding and selling equity to rich investors. But unlike any other startup in New Hampshire, it’s doing both. QaZing, which makes an app to connect people with a variety of services in the on-demand marketplace, is the only company in the state to have sought investors under new federal equity crowdfunding rules. This system, which has been in the works since 2012 but only went fully into effect in May, allows virtually anybody to buy equity in a private company, something previously limited to accredited investors with at least $1 million in net worth. “For the first time, anybody, not just the wealthy, can invest in a local company,” said Jason Garland, CEO of QaZing, which has an office on Peterborough’s Main Street. “It’s often the case that a local startup company, if it has the whole community behind it, has a much greater chance of success.” If you donate to a company through Kickstarter, you might get a T-shirt or a gizmo; doing it through StartEngine, the equity crowdfunding portal used by QaZing, gives you a piece of the company that, hopefully, will rise in value. (For details, go to startengine.com/startup/qazing.) Equity crowdfunding, officially called Regulation Crowdfunding Title III or Title IV from Securities and Exchange Commission rules and legislation, is so new that the New Hampshire Bureau of Securities Regulations issued a cautionary press release about the topic Thursday even though the state has virtually no oversight in this area. “It’s just getting started, so we have to see how it develops. What we’re really focused on is making sure that investors realize that it’s out there, but that you’re dealing with startup companies, which have a high failure high, high rate of risk,” said Kevin Moquin, senior staff attorney for the Bureau of Securities Regulation. “You need to know what you’re getting into.” If an equity crowdfunded investment disappears, he said, New Hampshire would get involved only if there was fraud. Otherwise, investors beware.
For tips on the new crowdfunding exemption and what startup companies need to know, click on the video below. Regulation Crowdfunding, new rules promulgated by the SEC to assist small issuers in raising capital, became effective May 16, 2016. To assist issuers in their crowdfunding efforts, the SEC has issued the “Regulation Crowdfunding: A Small Entity Compliance Guide for Issuers,” which provides issuers helpful guidance on how the regulation works. The guide provides an overview of the regulation, issuer disclosure requirements (both during and after the crowdfunded offering), restrictions on advertising a Regulation Crowdfunding offering and promoter compensation, restrictions on resales of securities purchased in a crowdfunded offering, and a discussion of “bad boy” events applying to the issuer, its directors, officers, certain beneficial owners and other covered persons that could disqualify an issuer from using Regulation Crowdfunding. The guide is available here. The SEC also has published additional guidance clarifying interpretation of Regulation Crowdfunding to assist issuers in complying with the new regulation. This guidance is available here. Use of Regulation Crowdfunding offerings may get off to a slow start due to several factors. The regulation contains many requirements and restrictions, including the portal registration requirements, investment amount limits and issuer disclosure and reporting obligations. Issuers may be reluctant to use a capital raising method that could result in a multitude of small investors to which issuers and their management are responsible. The investing public may be reluctant to invest in unknown and possibly unproven enterprises, especially with the lack of a secondary trading market enabling investors to liquidate their investment. All of this may reduce the appeal of the new regulation. Only time will tell whether this new capital raising alternative will prove useful for small issuers. For tips on the new crowdfunding exemption and what startup companies need to know, please click the video below.