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On the Horizon: 4 Equity Crowdfunding Trends for 2018

On the horizon: More real estate, sextech, corporate crowdfunding, and expansion

Expanding internationally, championing diversity, and reaching new investor markets – by 2017, equity crowdfunding has reached broad horizons, far beyond what its detractors would have predicted. While Invesdor has no crystal ball, progress to date is the best marker of what 2018 and beyond hold in store for the industry of equity crowdfunding. Whether it’s the evolution of platforms themselves, or the adaptation of governments to meet industry performance, the following possibilities bode well for the next stage of equity crowdfunding.

 

Real Estate Crowdfunding to Dominate 

There’s not set alchemy for which industries will magnetise equity crowdfunding. Real estate, however, seems to be emerging as a poster child for the industry.

Sites like RealtyMogul, which allow visitors to crowdfund property from $5,000, have raised more than $290 million.  It has reached more than 135,000 investors in the process. By opening up this previously closed asset class to vast new audiences, equity crowdfunding is empowering non-accredited investors.  

 

X Marks the Spot

However, not all industries have received equal attention. This fascinating article from the Memo outlines how the adult industry has just now found its groove with equity crowdfunding platforms, having previously been turned away owing to their products.

Far from any reputational risk that may be inherent from hosting such raises, these young sex-oriented businesses are able to now accept and celebrate innovation from this space.  Indeed, it has lead to the creation of AllTheSky Holdings, a the world’s first sextech fund, which is intended to allow entrepreneurs to “get funded starting open, healthy, ethical, transparent sextech ventures.”

 

Crowdfunding for all

The democratisation of finance that equity crowdfunding allows is a key selling point. Allowing access for all, also means allowing access to existing corporate entities, some of whom have been especially savvy in tapping into the equity crowdfunding scene. 

Increasingly, established corporations are turning to crowdfunding to test prototypes and acquire funding. The dominance of this trend was noticed and acted upon by Indiegogo last year, as they announced their intent to cater to major firms. Virgin, on their entrepreneur blog, noted how Sony subsidiary Fashion Entertainment raised over $20,000 for its FES watch via Japanese crowdfund site Makuake, stating how “crowdfunding, it would seem, isn’t just for the little guys anymore.”

 

Predicted Expansion 

The oft-quoted figure that the equity crowdfunding industry is set to be valued more than $93 billion by 2025, according to a World Bank report, is indicative of its progress in recent years. As the industry grows in key territories, such as Australia and the US, thanks to improving legislation in these countries, it faces untold expansion. Since the enactment of legislation in the US, more than 335 companies filed with the SEC to raise capital via securities-based crowdfunding portals, with 17 now registered. 

Other nations could do well to mirror liberal regulations, such as those adopted by the UK, where tax incentives for startup investment, such as the Enterprise Investment Scheme, or the Seed Enterprise Investment Scheme, are more appealing (reducing liability by up to 50 per cent). 

 

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Richard Andrée Wiltens

Written by Richard Andrée Wiltens

Richard Andrée Wiltens is a commentator within the fintech sector, who has written for an array of international investment platforms. His career has spanned from investment banking to financial technology firms, backed by an education in economics and finance.