Does Equity Crowdfunding Work? Yes it does. Here are the numbers.

When the JOBS Act was enacted into law in 2012, I pivoted my law practice and soon thereafter became recognized as one of the leading experts on Regulation A and Regulation Crowdfunding (Reg CF). I wrote about it for Entrepreneur. I spoke around the world to crowds of people who wanted to learn more. More importantly, I refused to fall into the “those who can’t do something, teach it” category. I have been legal counsel for companies raising capital as well as broker-dealers, funding portals and others in the industry since the law was passed. As both a securities lawyer and as a “quarterback” who provides non-legal advice and acts as a project manager for equity crowdfunding offerings, I have helped raise a lot of money for companies from pure start-ups to unicorns.

I see this burgeoning industry from the inside every single day. Because of my position in the industry, I also get asked a lot of questions from those on the outside peeking in. One question I get asked the most often is, “Does it really work?”

?While I can give numerous real-world examples from my own experience, nothing beats a good study from a group of industry experts. The folks at Crowdfund Capital Advisors do an amazing job of tracking the Reg CF industry and providing reporting, statistics and insights that are invaluable to anyone interested in this new world of finance that democratizes the capital raising process. Here are some findings they published in May 2024, with a bit of commentary from your truly to help with perspective.

?Needless to say, looking at their data makes it easy for me to answer the question of “Does it really work?”

The answer is a resounding, “Yes!”

Here are a 6 key points from their recently reported findings:

1. More than 6,500 U.S. startups and other small businesses have raised nearly $2.48B in capital through 8,400 investment rounds.

?2. More than 2,000,000 Americans have invested in Reg CF offerings, averaging about $1,200 per investment.

3. Women & Minorities constitute nearly 50% of successful Reg CF issuers and often opt for Reg CF over venture capital for their funding needs.

4. Reg CF has created or supported over 400,000 jobs, has been used by companies in more than 1,750 cities across all 50 states, and has caused $7.5B in economic stimulus through business expenditures, with the majority of spending and jobs staying local.

5. Reg CF has attracted companies from over 620 industries.

6. 14 firms that raised money using Reg CF have pursued public offerings and 71 have been part of a merger or acquisition.

?The simple bottom line is that equity crowdfunding works - if you do it the right way. These numbers and observations reflect that in pretty dramatic fashion. Interestingly, they do not include capital raised, jobs created, and the economic impact of Regulation A which allows a small company to raise far more capital online than Reg CF, and which has been responsible for billions of additional investment dollars flowing into small businesses across the country.

Equity crowdfunding is here to stay.

To read more, click on the link in the comments.

?#RegCF #RegA #RegulationCrowdfunding #EquityCrowdfunding #StartupFunding ?#SmallBusinessFinance #StartupFinance #RaisingCapital #CapitalRaising #investment #fintech #businessgrowth #funding #venturecapital # #alternativeinvestments #JOBSAct #securities #startups #entrepreneur #earlystagecompanies #earlystageinvestments #privateequity