One Year of Equity Crowdfunding: Initial Market Developments And Trends
Lindsay M. Abate for the U.S. SBA Office of Advocacy
First published March 2018
On May 16, 2016, the U.S. Securities and Exchange Commission’s new investment crowdfunding rule, Regulation Crowdfunding (Regulation CF), went into effect, marking an important step in the federal government embracing financial technology (FinTech) to increase access to capital for small businesses. Regulation Crowdfunding enabled small businesses to raise up to $1,000,000 annually by offering and selling securities through internet-based crowdfunding campaigns. This issue brief analyzes all crowdfunding filings made pursuant to Regulation CF during the first year of activity (May 16, 2016 – May 16, 2017). It highlights key attributes of the firms that have attempted to raise capital through this financing method, including firm location, legal structure, age, employment, and gender. This analysis also describes trends among the online intermediaries responsible for hosting the campaigns as well as transactional characteristics, such as the type of securities offered and the amount of capital sought and raised. The paper concludes with a discussion of policy implications for small businesses seeking capital through crowdfunding and other innovative financing methods.
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