NCFA Fintech Confidential December 2020 (Issue 3)

“For the first, time we have easily accessible,
real time data on the economic health and
sentiment of startups and small and medium
enterprises (SMEs) and of the communities
where they are based. This enables
policymakers to understand immediately, how
the SEC’s action today is positively impacting
American lives. We are grateful to the Small
Business and Entrepreneurship Council for its
tireless efforts on behalf of these changes and
for their ongoing education of their members
about how to use crowdfunding to enhance
their businesses. Every community across
the country should immediately educate
themselves about this new opportunity to
support their local businesses.”
The vote comes at a time when local
businesses and local economies across
the USA are facing the most challenging
economic crisis since the Great Recession.
The third wave appears to be worse than
the first two with many Americans bracing
for another shut down like in other parts of
the world. If this happens, millions of small
businesses that were just scrapping by might
permanently shut their doors leading to a
housing crisis as unemployed people cannot
pay their rent or mortgages.
There is a way to supercharge Regulation
Crowdfunding and provide immediate,
impactful stimulus to Main Street businesses
that may not survive the pandemic. That is
for the Federal Reserve to take $20 billion
of the $596.3 billion they have remaining
from the Main Street lending, PPP and
EIDL programs and put it into the Main
Street Recovery Co-Investment Fund. This
fund would match dollar for dollar, up to
$250,000, into businesses that are struggling
to survive the pandemic but have customers
that wish to see these businesses survive. By
turning these customers into investors (what
we are calling investomers), the businesses
access capital from customers who are
now stakeholders in the business and the
government can successfully deploy capital
at the most micro level into communities all
across the USA.
FEATURED
Broad Appeal Among Industries Across the
USA
To date, Regulation Crowdfunding has
raised capital for over 430 industries.
The chart to the right looks at the top 15.
It shows is that there is broad appeal by
both issuers in a variety of industries and
investors interested in backing these
enterprises. The two things we
expect to change over the next
year, given the SEC changes,
is more real estate offerings
and more medium sized
issuers entering the market.
The $1 million cap limited
many developers/issuers from
leveraging money from Reg CF
investors, increasing the cap to
$5 million means more small/
medium sized developers/
issuers and more investors will
be leveraging Reg CF for funds
and diversified investment
opportunities. It also means
that firms with Revenues
between $10M and $50M will find Reg CF
more appealing as a mechanism for raising
funds. It will be a cheaper alternative than
hiring an investment bank and a faster
method as the time to raise funds averages
around 90 days.
Source: Crowdfund Capital Advisors
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