Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
International Business Times by Nat Rudarakanchana | January 23, 2014
Interest in crowdfunding from traditional finance players like private equity’s Bain Capital is growing, even though skeptics have downplayed crowdfunding in serious corporate finance.
RockThePost, a crowdfunding platform that seeks money for startups, holds monthly "Demo Days," where startups pitch ideas to wealthy investors, angel investors, family office investors and institutional investors.
The latest Demo Day hosted pitches from five companies seeking crowdfunding. Representatives of Bain Capital, along with venture capital firms like Emerald Stage2 Ventures and Fresh Track Capital, attended.
Companies selected to pitch include those that are trending on RockThePost’s crowdfunding platform, which has raised $23.5 million for its startups since its March 2013 launch. Each startup has ten minutes to make its case before investors rate them publicly and later send feedback.
On Tuesday evening, the most recent Demo Day, one startup pitched creating digital marketplace for green construction products, and another pitched a cloud computing service for K-12 educational tests and quizzes. More than 200 investors attended the latest demo, according to RockThePost CEO Alejandro Cremades.
He told IBTimes that without the platform he provides, “It would’ve taken these people at least two years to make the right introductions. So it’s very powerful for the startup. But it’s also very powerful for the investor … At the end of the session, we actually showcase the voting from all investors that have participated, to gauge their interest.”
Bain Capital didn’t return a request for comment. The firm has a venture capital arm that manages $2 billion and a managed portfolio of 65 companies.
Still, many are skeptical of crowdfunding as an effective financing tool. They argue that regulatory burdens, like a $1 million fundraising cap and audit requirements, undermine its appeal. It’s unclear when, if, or how institutional investors and Wall Street firms will take a serious interest in crowdfunding.
The Securities and Exchange Commission (SEC) is expected to finalize rules legalizing equity crowdfunding later in 2014. That would allow people who earn less than $200,000 to invest up to $2,000 annually in crowdfunded ventures.
Advocates say that crowdfunding democratizes investment and allows ordinary people to support worthwhile small businesses, overcoming outdated securities laws. The collective wisdom of the Internet will help prevent fraud, they say. Critics charge that crowdfunding will pair uneducated investors with risky startups, and it's well-known that the vast majority of startups fail.
The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada crowdfunding hub providing education, advocacy and networking opportunities in the rapidly evolving crowdfunding industry. NCFA Canada is a community-based, membership-driven entity that was formed at the grass roots level to fill a national need in the market place. Join our growing network of industry stakeholders, fundraisers and investors. Increase your organization’s profile and gain access to a dynamic group of industry front runners. Learn more eBrochure |Prezi or contact us at casano@ncfacanada.org.
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