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January 16, 2014

New Report Signals Potential for Crowdfunded Investing

Crowdfund Capital Advisors (CCA) today launched a report that illuminates market signals emanating from crowdfunding.   The reports uncovers how companies that use crowdfunding as a means to raise capital are creating jobs, building stronger businesses and attracting follow on capital.   

According to Sherwood Neiss (@woodien), principal at Crowdfund Capital Advisors, "When we set out to write this report we wanted to test a big assumption about crowdfunding. Namely is it more than just money?  The results, which are early indicators, show that in fact it is."  Some of the key findings in the report include:

    Screenshot 2014-01-14 16.38.38Companies that were success with crowdfunding campaigns saw a 24% quarter-to-quarter increase in revenues net of crowdfunding proceeds.  Filtered for only equity campaigns, they saw a surprising 351% quarter-to-quarter increase 39% of the responders hired on average 2.2 employees and an additional 48% signaled they intended to used the crowdfunding proceeds to hire new staff. 71% of companies that were successful with crowdfunding either received or were in conversations to accept follow on investment. Other than money key benefits from the crowd during and post campaign included knowledge, experience, strategy, marketing, product position and demand.   
The report’s authors identify these positive signals as an initial verification that debt and equity crowdfunding, when it fully goes live in 2014 will have a tremendous impact. Jason Best (@CrowdCapAdvisor), Principal at Crowdfund Capital Advisors and a co-author of the report adds, “These are still early days for crowdfund investing. It is exciting to see Web 3.0, where the social network meets community finance, develop in front of our eyes. We hope this evidence further encourages global policy makers, regulators and investors to take note of this opportunity and consider this new asset class to enhance current efforts to train and support entrepreneurs in their markets.”

Crowdfund Capital Advisors has been the global thought leaders on crowdfunding investing having written the framework to legalize debt and equity based crowdfunding in the United States.  Their principals were at the White House as President Obama signed the JOBS Act into law.  They are also the authors of the World Bank Report, "Crowdfunding’s Potential for the Developing World."  Richard Swart, Research Director for CCA said, “By analyzing campaigns globally we were able to get an early view into the potential crowdfunding not only has for the USA but globally.  By leveraging the power of the crowd we can help fund the next generation of entrepreneurs.”

Crowdfunding is attracting global interest as a simple but transformative concept. Someone proposes a business, charitable or creative project on a crowdfunding website. If convinced, tens, hundreds or even thousands of individuals commit relatively small amounts of capital to support the idea or business. Taken together, these contributions are significant enough to turn the idea into a commercial reality.

Crowdfund investing is the newest and potentially most powerful model for crowdfunding: instead of donating money, investors receive a debt instrument or an equity share in the business.

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