If a renowned publication such as Forbes deems something “a game changer,” it probably deserves a long look. 2015 may be remembered as the year that an investment revolution began. In March of 2015, the United States Securities and Exchange Commission finalized rules mandated by the 2012 Jumpstart Our Business Startups (JOBS) Act which made it simpler for companies to raise capital from “non-accredited” investors. Regulation A, as amended by the concluding rules that make up “Regulation A+,” began to takeoff in 2015. Will the momentum generated in 2015 continue to grow in 2016 and create a new opportunity for both investors and companies to succeed?
Ron Miller, an entrepreneur and partner in the crowdfunding platform Start Engine, recently compiled a list of his predictions for crowdfunding in 2016. Mr. Miller believes that the completion of Regulation A+ campaigns that began in 2015 will likely “lead to a snowball effect. Success will breed success; once entrepreneurs see that Reg A+ is indeed a viable source of funding, they will be more inclined to use the funding mechanism.” As more investors become aware of Regulation A+, the increased visibility should result in a surge in investments. Mr. Miller believes that between 10 and 20 multimillion dollar Regulation A+ offerings will close in 2016.
In addition to Mr. Miller’s prognostication on offerings closed in 2016, he also believes that varying industries will begin to discover and utilize Regulation A+. “Industries that have historically experienced difficulty or had access to fewer options when it comes to raising capital will find that equity crowdfunding is a viable fundraising method.” Industries as diverse as sports, transportation, and biotech are industries that could discover the potential of Regulation A+. Mr. Miller also foresees that by the second half of 2016, more tech companies will pursue equity crowdfunding as a means to access precious capital that is notoriously difficult to secure.
In a feature pondering big ideas in 2016, the Chicago Tribune posits, “Everything is about to change for startup and small-business investing.” The newspaper reports that “Global equity crowdfunding activity reached $1.1 billion in 2014, more than triple its size in 2013, and new laws passed in 2015 will likely spike that higher.” Equity crowdfunding has already shown astonishing growth since its inception, and the growth does not appear to be slowing anytime soon.
According to CNBC, more than half of Americans avoid investing altogether. Prior to Regulation A, the opportunity to invest in promising startups through IPOs was limited to accredited investors, who make up less than 1% of the population. Regulation A+ possesses the potential to benefit both investors and companies, creating American jobs in the process. It has been less than a year since the rules for Regulation A+ were finalized and it has already managed to create excitement and optimism for investment experts and rookies alike. 2016 is the year that could see Regulation A+ live up to its lofty expectations.