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FINRA Grants ATS Licensure to SeedInvest

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FINRA Grants ATS Licensure to SeedInvest

ATS Licence Granted

News came today, from Circle and subsidiary SeedInvest, that the latter has successfully applied for, and been granted, an ATS license. This approval took place through FINRA – a United States regulatory body, which oversees the actions of broker/dealers.

This approval grants SeedInvest the ability to form a secondary market in which they can trade traditional securities. This is important, as it allows for SeedInvest to bring forth greater liquidity in its supported assets.

Many who follow securities may have realized, by now, that liquidity is an oft sought after, but hard to attain, attribute in many traditional assets. By achieving this, SeedInvest has set themselves up for big things in the coming years.

First from the Gates

This announcement marks the first time that a crowdfunding platform in the United States has been granted this type of licensure. In doing so, they become a sort of blueprint for future companies looking to follow in their path.

Hold Your Horses

While this is, undoubtedly, a huge step forward for SeedInvest, it is important to realize that this licensure comes with its limitations; mainly, the lack of ability to trade digital securities on secondary markets. While this is the end goal, being granted an ATS licence is a big step towards this.

For the time being, secondary market trading will be limited to traditional securities.

Dissuasion

It should be noted, that while this ATS license comes with its limitations, SeedInvest will not be dissuaded from their goal of eventually supporting digital securities. Both SeedInvest and Circle remain steadfast in their belief that in the coming years, digital securities will become, not only commonplace, but an essential cog in finance.

In the past, Jeremy Allaire, CEO of Circle, has commented on the future of tokenization. He stated, “…We believe that the tokenization of financial assets will ultimately unlock capital for rowing companies and investment opportunities for people everywhere. Over time, more functions of private equity will be tokenized – including voting and governance, dividend payouts, and other economic features. Tokenization will also create new opportunities for businesses to build better relationships with their customers by leveraging tokens linked to ecosystem behaviours.”

Commentary

In their press release, the CEOs of each, SeedInvest and Circle, took the time to comment on the development discussed here today. The following is what each had to say on the matter.

Ryan Feit, CEO of SeedInvest, stated,

Liquidity remains a key missing piece towards democratizing the private capital markets. Creating a truly vibrant secondary market for private company shares has the potential to make startup investing a significantly more attractive asset class.”

Jeremy Allaire, CEO of Circle, stated,

“ATS approval for SeedInvest sets us on a path to develop secondary trading marketplaces and to facilitate liquidity for private securities, which together hold the promise of significantly democratizing private capital markets,” said Allaire.

SeedInvest

SeedInvest is a crowdfunding platform that is headquartered in New York. The company was founded in 2012, and has gone on to experience great success in their industry.

Company operations are overseen by CEO, Ryan Feit.

Circle

Headquartered in Boston, Circle is a financial services company that was founded in 2013. Company operations are spearheaded by CEO, Jeremy Allaire. Under his watch, Circle has bet large on the future of blockchain. We have seen, not only the purchase of cryptocurrency exchange Poloniex, but strategic acquisitions – such as the one involving SeedInvest, discussed here today.

In Other News

Over the past few months, we have detailed Circle various times, including their acquisition of SeedInvest. Check out the articles below to learn a little more about how these companies came to work together, in addition to some thought from Circle.

Circle Eyes Tokenized Securities with SeedInvest Acquisition

Circle Identifies Stablecoins and Digital Securities as Emerging Trends

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Joshua Stoner is a multi-faceted working professional. He has a great interest in the revolutionary 'blockchain' technology. In addition to this, he is a licenced Paramedic in Nova Scotia, Canada. As such, he can provide emergency care/medicine to any situation necessitating it.

Crowdfunding

SeedInvest Gaining Momentum

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SeedInvest Gaining Momentum

COVID-19 has made life difficult for many.  There are those however, that have made the best of a bad situation.  A prime example of this is the recent resurgence of crowdfunding platform, SeedInvest.

In a recently shared update, SeedInvest elaborated on a notable uptick in platform participation throughout 2020.

Moving Forward

Best quarter on company record? Check.  Investment volumes reaching new highs? Check.  Massive investor signup, dwarfing multiple previous years combined? Check.

With people adjusting to the new world, it is clear that they are recognizing the benefits and efficiency afforded through crowdfunding.  April, alone, saw roughly 25,000 new investor signups on the SeedInvest platform.

Commentary

In their post, SeedInvest CEO, Ryan Feit, elaborated on how their platform differs from traditional means of raising capital.

“Unlike venture capital firms, online fundraising platforms are perfectly situated to help startups in the current, post-COVID-19 world we are in. Online fundraising platforms are not dependent on capital from a handful of pensions and endowments, but rather a large, diverse network of investors (SeedInvest has had over 350,000 investors register for example).”

He continued,

“…while the traditional venture capital investment process is highly dependent on in-person meetings (which is next to impossible in the current environment), the online fundraising and investing process is inherently digitally native. Furthermore, there are a number of pending improvements to U.S. securities laws (the most significant changes since the JOBS Act was signed into law), which will turbocharge online fundraising for entrepreneurs and investors alike.”

Widespread

SeedInvest is not the only platform to see a recent boost in usage.  Rival crowdfunding platform, StartEngine, has seen a similar uptick.

While this positive turn may be due, mainly, to venture capitalism drying up, due to the ongoing pandemic, there is no doubt that the SEC has also played a role.

While the SEC is often viewed as a regulatory body that simply punishes those breaking the rules, they also have a direct hand in crafting friendly environments for growth.  Recognizing the potential harm of COVID, they recently relaxed regulations surrounding crowdfunding.  The following are a few examples of this:

  • Financial statement exemptions
  • Broader eligibility
  • Easier ‘early closing’

SEC to Give Crowdfunding a Boost through Relaxed Regulations

Boding well

While no official announcements have been made, it has long been suspected that SeedInvest owner, Circle, intends to sell the crowdfunding platform.

Reports of a possible sale surfaced after Circle began streamlining their operation in 2019.  Their efforts saw the sale of popular exchange, Poloniex, as well as the departure of multiple ‘C-level’ employees.

With the recent growth seen at SeedInvest, Circle has every reason to be happy.  Either they keep SeedInvest under their umbrella, and benefit from their successes, or they sell the platform, and benefit from an increased market value.

Circle Ponders SeedInvest Sale while Doubling Down on Stablecoin

SeedInvest

Founded in 2011, SeedInvest is a crowdfunding platform, which operates out of New York.  Above all, SeedInvest acts as a bridging platform, connecting vetted investment opportunities with eligible investors.

CEO, Ryan Feit, currently oversees company operations.

In Others News

For those interested in learning more about what Crowdfunding is, and how it can transform the way we invest, make sure to peruse the following article.

What is Equity Crowdfunding?

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Andrew Adcock, CEO of Crowd for Angels – Interview Series

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Andrew Adcock, CEO of Crowd for Angels - Interview Series

Andrew is the Chief Executive Officer at Crowd for Angels an equity crowdfunding platform. He often attends and speaks at events on Crowdfunding, Alternative Finance and Investment. Previously, he worked at NinetyTen, a web application developer and provider of Private Social Networks, whose clients included Nokia, Channel 4 and Shop Direct

You were one of the original Co-Founders of Crowd for Angels. Can you discuss the inspiration behind launching this business?

I was indeed one of the Founding team at Crowd for Angels, but the inspiration for launching the company comes from our Director Tony de Nazareth, who combined his decades of financial knowledge with the ‘social media’ approach. This was to get the community involved when funding and supporting a business, thereby creating brand advocates that not only financially supported the aspirations of a company but also became a voice and customer of the company.

How much do you involve yourself in the pitch decks and packaging the deals that are found on Crowd for Angels?

I am involved in most companies that seek to list on Crowd for Angels. I take a genuine fascination in the lives of start-ups and companies looking to expand. Each has its own story and passion, which I am enthused by. Having raised funds for my own company and invested in many others, I hope to provide insight for the company.

What type of due diligence is performed on the companies that are listed?

A lot! Crowd for Angels breaks due diligence down into 3 key areas, firstly, we conduct factual checks such as KYC, AML, PEP, Credit Checks on the directors, reviewing accounts produced by the company and verifying facts stated on their pitch. Secondly, we conduct market checks, for instance, is the product available and as described, is there an addressable market, is the valuation reasonable, what legal challenges the company might face and is it ethical. The final check is one of sanity, which is not only tested by Crowd for Angels, but also by our Angels, who will ask the company their own questions.

What are some of the main reasons behind companies being turned down for listing on the platform?

There can be a number of reasons but a few we find most common are as follows:

  • The valuation is simply too high in comparison to the companies position
  • The company does not provide documentation (business plan, management accounts, incorporation documents)
  • The product is too early-stage or not yet developed
  • The directors have no ‘Skin in the Game’

What are the biggest benefits of equity crowdfunding?

I personally believe the biggest benefit is the ability to create brand advocates, people who support your business financially and become active customers, drawing in others to check out your brand, whether that is through word of mouth or social media.

Could you give us a success story of a company that raised funds on the Crowd for Angels platform?

One of my favourites is a company called CNPPS. A young entrepreneur, who was studying engineering at university at the time had created a permeable pavement solution that used recycled aggregate. Now that might not sound as fascinating as an app, but our world is covered in roads and pavements. His solution, used 100% recycled aggregate and was carbon negative, furthermore, it allowed water to pass through. Working with the entrepreneur we were able to raise £100,000 for a phase of testing that has now led on to a commercial contract and further funding for the company.

What made it interesting was the ethical approach the company had took to change an old industry, the tenacity the entrepreneur showed never giving up and that a business can truly be grown from the ground up, out of university none-the-less. So far in a 2 year period, the company’s valuation has increased 4 fold, delivering a solid return for the Angels involved.

Crowd for Angels is one of the few crowdfunding platforms that accept bitcoin. How many investors use bitcoin, and where do most of these investors originate from?

Yes, we have been accepting cryptocurrency as a form of payment for investment since early 2016. At that time, we integrated this payment option to allow foreign investors to invest in UK companies without the costs and time associated with international bank transfers. Initially, we saw a number of Australians, Chinese and mainly Asian investors utilise this form of payment. However, as bitcoin and other cryptocurrencies gained in popularity, we did see growth in European investors utilising cryptocurrency. Partly this is due to the gains they might have experienced and I believe the convenience cryptos offered. Now, we have over 14,000 members registered with a cryptocurrency wallet on our platform, with many of them in Europe.

A few years ago, the ANGEL token was released. What are the use cases for this token?

The ANGEL token was released to drive down the user acquisition cost of investors whilst rewarding stakeholders for interacting with our platform. It is hoped that when users interact and share content in the network, say an investment they had just made in a fledgeling company, that they would be rewarded with ANGEL. Crowd for Angels has then committed to buy back and burn ANGEL linked to the revenue generated from our pitches, thus creating a virtuous circle. We hope in the future, our Angels will also be able to use the ANGEL token as a method of payment towards an investment.

How do you see digital assets and digital securities eventually merging with crowdfunding?

Crowdfunding utilises technology to allow the masses to invest small amounts into pitches, but the shares are usually held with a nominee and should you wish to sell them or give them to someone else, it is difficult. Therefore, the integration of digitalised assets should be a no brainer, because it potentially gives the control of the asset back to the investor and follows a set of rules, that can’t be broken. In a utopian world, you would allow investors to purchase, hold and trade any assets that they wish. With the blockchain, you benefit from an immutable ledger that would record these transactions, giving you efficiency and transparency. I believe we are only a stones throw away from some big changes.

Is there anything else that you would like to share about Crowd for Angels?

We are always open to ideas, a conversation can go a long way.

Thank you for the interview. Readers who wish to learn more may visit our Crowd for Angels business listing or the Crowd for Angels website.

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Republic Acquires Fig, As Crowdfunding in Gaming Grows

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gaming

In an exciting development, equity crowdfunding platform, Republic, has just announced the acquisition of Fig.

Fig is also a crowdfunding platform, however, with a specific niche – gaming.  Gaming has never been bigger, and represents a perfect avenue in which developers and investors, alike, can benefit from such methods of capital generation.

While Fig has, indeed, been acquired by Republic, the companies have noted that the status quo will remain for now.  Each entity will continue to operate as they have been, with a merger between platforms being a gradual process, over time.

Equity Crowdfunding

What separates both, Fig and Republic, from the competition, is their approach to crowdfunding.  Due to cost, complexity, compliance measures, and a myriad of other reasons, traditional crowdfunding platforms do not reward investors with equity/dividends from listed companies.  Rather, they typically provide investors the promise of a product, or future access to a service.

What about those that believe in the potential of gaming, and associated financial windfalls, but are not gamers themselves?  How can they contribute and still receive something in return?  The answer is increasingly common – equity/dividends.  Check out the following article to learn more about this form of crowdfunding, and the benefits associated with it.

What is Equity Crowdfunding?

Commentary

Upon announcing the acquisition, representatives from each, Republic and Fig, took the time to comment.

Justin Bailey, Founder of Fig, stated,

“Joining Republic means more investors, more ambitious games, greater exposure, and the opportunity for higher returns. I’m ecstatic Republic contacted me and excited about how this acquisition will further aid us in our mission to empower independent developers”

Chuck Pettid, CEO of Republic’s Funding Portal, stated,

“When I first talked to Justin I was blown away by his industry knowledge and connections to the best game developers in the world. It’s no wonder Fig has been so successful.”

Republic

Founded in 2016, Republic is an equity crowdfunding platform, which operates out of New York, New York.  The company has noted that their overarching goal is to provide investors, of any ilk, access to quality opportunities – essentially ‘democratizing investing’.

CEO, Kendrick Nguyen, currently oversees company operations.

Fig

Founded in 2015, Fig is a crowdfunding platform operating out of San Francisco.  The company maintains a unique and focused approach towards the development and funding of video games.

CEO, Justin Bailey, currently oversees company operations.

On the Rise

In a time when capital is notoriously hard to generate, equity crowdfunding has garnered the attention of many.  This is no more obvious than another recent partnership, developed between StartEngine and Kevin O’Leary (aka Mr. Wonderful).  While Kickstarter and Indiegogo may be the most notable names when discussing crowdfunding, StartEngine is a much closer rival to Republic.  This is due to the focus of each platform on equity based offerings.

Mr. Wonderful Aligns Efforts with Equity Crowdfunding Platform ‘StartEngine’

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