A New Beginning
After awaiting an extended period of time, the Regulation Crowdfunding was finally released by the U.S. Securities and Exchange Commission (SEC). The SEC also set May 16, 2016 as the official date to let websites offer the equity crowdfunding service. Since May 2016, a small grouping of websites that received the approval for operation have entered the U.S. crowdfunding market.
Diversified Crowdfunding Services
A quick look of the U.S. crowdfunding market, one would learn that the marketplace is sort of messy and very confusing. The players in the crowdfunding market include websites that have been offering diversified services. Those existing players include donation-based websites such as for example Kickstarter and Indiegogo, websites that have been approved by state legislation and regulators for intrastate equity crowdfunding, and websites that offer services predicated on Regulation D and/or Regulation A, or even to accredited investors only Republic fees. The brand new websites which can be supposed to offer the Title III, equity-based, or simply equity crowdfunding service could have added more confusion to businesses and investors. Among those new websites, a number of them have previously been in crowdfunding business for several years and opened to accredited investors or accepted investment for Regulation D/A, etc.
With time, any website that wants to offer the Title III (or equity) crowdfunding would have to get approval from regulators. But, right now, either business owners or investors have to find out which website offers what type of crowdfunding service before using any one of them. Perhaps, that has been one of the reasons that crowdfunding websites including some with countless visitors have observed significant drop in traffic in recent months. Although no one knows what will happen in the U.S. crowdfunding market as time goes by, it is hopeful that the marketplace will play it out by itself. With the Regulation Crowdfunding set up, the U.S. crowdfunding market will grow and expand to a healthier market.
In some other countries, crowdfunding was launched without proper regulations in place. The market was quickly turned to be sour for businesses and investors. Although most crowdfunding websites for the reason that country are honest players, the bad reputation of the whole industry pushes most players to either escape the marketplace entirely or conduct crowdfunding business under an address of other businesses. One of the key questions for the U.S. crowdfunding market is whether “crowd” will support and purchase companies that are looking for funding on websites. At the current time, no one has a remedy yet.