Investments in crowdfunding campaigns for everyone are on the rise.
Before May 2016, only accredited investors (earning more than $200,000 a year or with a net worth of over $1million) could invest in early stage start-ups or real estate projects. Title III of the JOBS Act, more commonly referred to as Regulation Crowdfunding, changed that. Now it possible for anyone over the age of 18 to go online, invest as little as $100 and own a piece of something they believe in.
The new rules do set some limitations for those raising money. Still, despite early concerns that the costs and difficulties surrounding the new regulations might discourage entrepreneurs from raising capital this way, Regulation Crowdfunding seems off to a great start.
Since May 2016 investments have grown steadily to almost $75 million invested. In just the last month, the number of campaigns were up by 50.
Some doubted that tech companies, one of the fastest-growing sectors, would use Regulation Crowdfunding to raise capital as the potential amount – $1,070,000 over a 12-month period – may be too low for the effort involved. There are less doubters now though, as tech companies have the highest number of investments followed closely by food and drink .
Regulation Crowdfunding offerings in real estate have been slower to emerge since real estate typically has a longer lead time than a business. But Regulation Crowdfunding offers numerous benefits over traditional real estate investment opportunities. Developers will find plenty of new investors and flexibility in the type of offering and financing options they can pursue. Many investors will be given a first opportunity to invest in real estate, in a transparent, accessible, diversified and tangible way. On platforms like Small Change, they will have a change to invest in projects meaningful to them and their neighborhoods and cities. Public interest has been piqued in an asset class that previously had been unavailable to tap.
*Multiple are businesses who fall into 2 or more of categories
Regulation Crowdfunding has given everyone access to new investment opportunities and is expanding the pool of available capital for entrepreneurs.