(RaiseMoney.com) -It takes a life-long pioneer in the insurance industry to know best when to grab first mover advantage whenever a new landscape appears, as evidenced by Tuesday’s announcement from New York-based global insurer AIG, which says it will be the first to offer crowdfund insurance for investors in equity crowdfunding deals. Below extract is courtesy of coverage by WSJ reporter Leslie Scism.
(WSJ) American International Group is giving crowdfunding a try. Not to raise money for startups, but to help allay investors’ concerns about being ripped off as they invest in small businesses through this new type of funding.
The New York company is set to launch what it is calling “Crowdfunding Fidelity,” an insurance product developed to protect investors on equity crowdfunding platforms against fraud.
In announcing the new coverage Tuesday morning, AIG noted that there have been few instances of fraud in the sector so far. But it said its new product would help to build investor trust to ensure underlying issuer trustworthiness.
“As a sector still in its infancy, equity crowdfunding platforms are only as strong as the confidence they instill in their investors,” said Lex Baugh, AIG’s president of liability and financial lines, in a news release.
The coverage isn’t available to protect against just any crowdfunding project. So-called equity crowdfunding offers investors stakes in a company. Earlier this month, new U.S. rules kicked in under which ordinary investors—not just wealthy individuals, or so-called accredited investors—can participate in such offerings. The fundraising option originates from the 2012 Jumpstart Our Business Startups Act, or JOBS Act.
AIG will sell the coverage only to those portals it has determined have adequate processes in place to check out backgrounds of the businesses they allow to sell equity stakes, Mr. Baugh said.
(RaiseMoney.com)-Minneapolis-based Stratifund, which models itself as a modern day version of a traditional Wall Street “independent equity research firm” has become the first such firm to plant its flag on the crowdfunding beachhead and bring objective analysis to crowdfund deals. Led by a cadre of Wall Street-trained wonks and crowdfund industry thought-leaders, including company advisors who who helped frame the JOBS Act, Stratifund seeks to bring objectivity as well as analytic expertise to help individual investors across the nascent stage equity crowdfund ecosystem.
Much like contemporary independent research firms focused on listed equities, Stratifund offerings are available via an online portal that enables subscribers to receive what is otherwise private placement offering analysis for a monthly subscription rate of $9.99.
Alex Thaler, Stratifund co-founder and co-CEO, said his company will “bridge the gap” for everyday investors as they decide if they should purchase securities from an issuer raising capital online. The service is launching just as the interest in online investments is beginning to rise.
“We give each investment a rating based on our proprietary algorithm, and back it up with a user-friendly report that highlights key areas that influence a start-up’s position,” stated Thaler.
Stratifund states it does not take any remuneration from any of the companies it rates. The service will be monetized by a small subscription fee that allows individuals access to an unlimited number of reports alongside educational material. Stratifund does not take any funding from the start-up companies it rates, instead relying on nominal subscription fees from investors for unlimited access to deal reports and educational materials.
“Our business model allows us to stay completely independent and objective,” said Marc Snover, Stratifund co-CEO and co-Founder. “We pour an enormous amount of research into every deal report, and we think the pricing structure provides tremendous value to investors. We’re not investment advisors; our only goal is to publish independent research that provides as much information as possible in an approachable, convenient platform so everyday investors can make decisions with confidence.”
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(RaiseMoney.com) The Equity Crowdfund Industry continues to go mainstream, as evidenced by this week’s market data and index intel pact signed between business news platform CNBC and DealIndex, a self-described “global deal and data aggregator for the best crowdfunding opportunities.” The deal will have the two firms launching four equity crowdfunding indices that provide metrics on top equity crowdfund deals from around the globe. Last month Bloomberg LP announced it had formed a pact with Orchard Partners to distribute Orchard US Consumer Marketplace Lending Index, a direct lending (aka peer-to-peer lending) index of marketplace loans.
Equity crowdfunding, which has been a sweet spot for MarketsMuse curators is expected to create more than $4bil in funded deals for startups and fast-growth companies. Booming investments in real estate are leading the way among equity-crowdfunded projects, which rose to $662 million in the first quarter of 2015, a big jump from the $483 million recorded in the final quarter of 2014.
“Equity crowdfunding is going to double every year as more and more investors get to know about it,” said Eric Smith, director of data analytics at Crowdnetic, an online platform that tracks equity investments in real-time and just published the equity-crowdfunding data in its new quarterly report.
In partnership with CNBC, DealIndex announced the launch of four crowdfunding indices: International 50 Index, UK 50 Index, Technology Index, and the International Aggregate Index. The indices take transparency in the crowdfunding industry to a new level by aggregating information on the private fundraising sector into usable and easy-to-understand benchmarks. The indices track the pulse of the alternative finance market, providing a real-time indicator of market activity.
According to one highly-reliable MarketsMuse source, “The race for crowdfund industry data and metrics is only beginning. The fact that CNBC, which most financial industry professionals view as the ‘Cartoon Channel’ when compared to the likes of Bloomberg LP, could certainly add a new silo for the CNBC programming lineup, as the crowdfund industry is expected to soon surpass the grey beard venture capital industry in terms of money raised for innovative startups.
Marathon Asset Management CEO Bruce Richards Leads Crowdfund Campaign for “Veterans Education Challenge”
Hedge Fund Honcho Will Match $1mm Raised via Crowdfunding Platform CrowdRise
(RaiseMoney.com) For those Wall Street sharks and finance industry wonks who haven’t yet received the memo about crowdfunding, you might want to dial in to hedge fund industry icon Bruce Richards, Co-Founder and CEO of Marathon Asset Management, the $12.5 billion investment firm that specializes in global credit markets. Richards, whose pedigree includes 15 years in senior trading desk roles for top Wall Street banks before migrating to the world of hedge fund management in 1998, is not only at the helm of one of the investment industry’s most successful and most philanthropic fund managers, he’s just promised to personally match the first $1million raised on crowdfund site Crowdrise for “Veterans Education Challenge”; a campaign dedicated exclusively to funding college scholarships for US military veterans.
The fund raising campaign, announced this past week in conjunction with the celebration of Veterans Day 2015, seeks to raise at least $1mil within the next 12 months, according to the campaign information at crowdfund platform Crowdrise, one of the industry’s leading charitable donation portals co-founded in 2010 by film industry icon and social activist Edward Norton. The goal for the Veterans Education Challenge is to provide scholarship funding for any veterans at 4-year accredited starting the coming school year. This $1 million matching contribution will remain in place until November 11, 2016, next year’s Veterans Day.
In a special note sent to recipients of Richards’ email distribution list, one that typically provides Marathon clients with the firm’s widely-sought insight to global credit markets, Richards provided a starkly compelling investment thesis as to the importance of supporting advanced education for US military members and the need to insure their successful transition into private sector roles in ways the US Government often falls short in providing. In addition to pointing investment firm clients and friends to the Veterans Education Challenge Crowdrise page, Richards encouraged his followers to help advance awareness of the campaign’s FaceBook page and to enlist their following the Twitter account for VetEdChallenge via @VetEdChallenge.
One such recipient of Richards’ outreach included Dean Chamberlain, the Chief Executive of Mischler Financial Group, the securities industry’s oldest investment bank owned and operated by Service-Disabled Veterans and a firm widely-known for underwriting philanthropic causes that benefit military veterans and their families. Stated Chamberlain, “I’ve known Bruce for nearly twenty five years and I commend his philanthropic leadership. I wholeheartedly endorse and have already made my contribution to the VetEdChallenge crowdfund campaign and I will encourage others to follow suit.”
Richards, along with his wife Avis, an award-winning documentary film producer and director and the founder of Birds Nest Foundation, are considered to be one of New York’s top society couples. They are widely-credited by hedge fund peers for their philanthropic thought-leadership. Marathon Asset Management, whose two other leaders include co-founder Louis Hanover and Andrew Rabinowitz, Marathon’s COO is repeatedly lauded for the firm’s culture of supporting critical philanthropic missions that benefit health and welfare social causes.
For followers of the global equity crowdfund movement and fintech aficionados who are fluent in ‘what’s next?’, this is a big news week from the crowdfund world. Yesterday, MarketsMuse curators spotlighted a just-launched trading exchange that brings billions of dollars worth of private shares into the wacky world of secondary market trading. While there are rumored to be various efforts to package equity-crowdfunded ‘equity stakes’ into exchange-traded fund structures, which is arguably the “next great idea, “the first ETF for Equity Crowdfunding” has yet to be formally announced.
Before that announcement actually happens, today’s announcement from the multi-billion crowdfunding space (see link below) might be the data foundation such an initiative. and could very well be the vision spearheaded by this new portal, RaiseMoney.com.
MarketsMuse editor note: fully-disclosed, one of our favorite staff members was cited in this news story with the following comment
“Noted Pete Hoegler, senior analyst for financial industry blog, MarketsMuse.com, “The RaiseMoney.com platform has three critical elements in its favor. Firstly, they have a really compelling domain name that inspires immediate brand recognition.” Added Hoegler, “Secondly, this group has the benefit of not having “first-mover disadvantage” and most important, RaiseMoney.com is providing a much-needed service for a still nascent industry that is capturing the attention of millions of people and billions of dollars.”
Click below for the formal announcement distributed by NASDAQ’s GlobeNewswire
MarketsMuse FinTech curators feigned no surprise when noticing today’s announcement from the City of London profiling a new initiative just launched today that will accommodate equity crowdfund investors–a real, live exchange to trade out of equity crowdfund investments.
To paraphrase the opening observation from global crowdfund directory and search platform RaiseMoney.com…
“…From the “What Will Those Finance Wonks Think of Next?! Dept,” City of London investors (and the thousands of bank trading desk folks plying their trades down near Canary Wharf) are now getting an exchange to trade crowdfunded investments, as the UK’s first crowdfunding marketplace launches today….
Not to be confused with the London Stock Exchange, or the ubiquitous NYSE, Crowdfunding platform Crowd2Fund is opening “The Exchange”, where investors will be able to sell off investments made in equity crowdfund deals and access their capital.
Crowd2Fund, which launched in late 2014, is an FCA-regulated platform specialising in revenue loans. But trading on the new marketplace won’t be limited to investments made on this platform – it’ll be opened up to exchanges of investments made on any crowdfunding campaign.
Peer-to-peer lending and crowdfunding is a booming part of London’s soaring FinTech sector. Crowdfunding campaigns grew a staggering 420 per cent in 2014, leaving the sector with growth of £1.74bn.