Broker-Dealers Move Into Crowdfunding

brokerdealers crowdfunding

( A new crop of broker-dealers and funding portals are forming to capitalize on new equity crowdfunding rules.

The total number of Financial Industry Regulatory Authority (FINRA) member retail brokerages has been on the decline for the last five years, but one sliver of the universe is showing new signs of life: A new crop of broker/dealers and online funding portals are joining FINRA to capitalize on new opportunities made possible by the JOBS Act of 2012. The legislation prompted the SEC to make it easier to market and solicit investments, and opened the door for small businesses to engage in so-called “equity crowdfunding.”

About 15 to 20 of these new firms have signed on since 2013, according to Fishbowl Strategies, with another three to six launching soon, in anticipation of a wave of issuers and investors entering the market. Whether there is a crowd for equity crowdfunding remains to be seen.

But Paul Boyd, managing partner at ClearPath Capital Partners, a wealth management firm for tech entrepreneurs, says there
is plenty of pent-up demand and a backlog of Reg D deals that are moving forward.

Boyd also expects the next phase of the JOBS Act, Title III, will bring a lot more attention to capital raises online. Set to go into effect in May, those rules let any investor, accredited or not, invest in unregistered securities online (with limits on the amounts that can both be invested, and raised, in a year). The tech-fueled vision of bypassing stuffy financial intermediaries in favor of a new-class of SEC-registered and FINRA member “crowdfunding portals” has inspired a flotilla of startups to enter the space.

Many of the new entrants have affiliated agreements with brokerdealers. Some have launched their own b/ds.

WealthForge launched its own b/d to provide all the services needed to complete a private securities transaction, including investor accreditation, regulatory filings and escrow. Co-founder and CEO Mat Dellorso says the new rules—and bringing the process online—have spurred their growth.

“When you bring the internet and you’re allowed to advertise a private security through 506(c), more investors do take part,” he says. WealthForge has completed 150 private financing transactions, bringing in 2,500 investors. “A traditional investment bank might complete three or five a year,” he says. “It’s a lot more volume because it’s more transparent and online now.

“Normally these transactions take weeks and months, but an investor can literally invest in a private placement on our platform in a matter of minutes,” he says.

Dellorso doubts they will do much work with firms looking to raise capital through the exemptions for non-accredted investors.

CircleUp is another new broker-dealer with a focus on consumer products and retail companies. Bhakti Chai, which makes Fair Trade Certified tea, raised nearly $865,000 on the platform.

Folio Institutional, a self-clearing broker/dealer, saw the interest around equity crowdfunding and decided to launch an online equity and debt-funding platform in September. Since the firm can custody the securities, it can enage in secondary-market transactions and, potentially, public offerings.

For the entire article from please click here

BrokerDealer Leading Crowdfund Bandwagon

crowdfund brokerdealer

As the crowdfund movement picks up more steam thanks to the recent update from the US Securities and Exchange Commission, the broker-dealer community is paying close attention to what could be a big pay day.  One BrokerDealer leading the crowdfund bandwagon is Seed Equity Ventures, led by finance industry veteran Todd Crosland.

In a recent profile, CEO Crosland talks about his broker dealer, which is already operating and doing crowdfunding type equity raises under the SEC’s Regulation D 506(c) rules for general solicitations, says, “ I believe the SEC passing Title III will be a watershed event for both startups and investors. Startups and the general investing public will be forever changed.” is the global directory of broker-dealers; the firm’s database covers brokerdealers operating in more than 30 countries across the free world.

Seed Equity Ventures is a registered broker dealer with the U.S. Securities and Exchange Commission and is a member of both FINRA and SIPC. Seed Equity Ventures provides investment banking services to startups and growth companies from around the world.

The Forbes piece by Devin Thorpe was excerpted by the curators at crowdfund industry search portal,; here’s the link

Why Advisors and BrokerDealers Should Know Crowdfunding blog update courtesy of excerpt from

The moment many advisers hear the term “crowdfunding,” they tune out. Crowdfunding is for the unwashed masses, for Kickstarter fans, for small-time investing neophytes. It’s not a place for real investing.

Well, advisers can continue to believe that, but that doesn’t mean their clients will. Especially given changes on tap for 2016 that will shower more investors with opportunities to “get in on the ground floor of the next big thing.”

The odds of your clients being drawn to new ventures rose markedly on Oct. 30, when the Securities and Exchange Commission passed Title III, part of the 2012 JOBS Act, which allows non-accredited investors to get into private equity through crowdfunding platforms.

Jeff Benjamin’s column quoted a securities lawyer, Doug Ellenoff, calling this move “the publicification of the private investment market.” And Mr. Benjamin cautioned InvestmentNews readers about the coming “aggressive push into the retail space” early next year, when these sites can begin taking non-accredited money.


Luckily for advisers, who hold tight to client assets and manage portfolios holistically, the buy-in for these offers will be limited. The deals themselves will not be able to raise more than $1 million in a 12-month period, and individuals will be able to contribute only between 5% and 10% of their yearly income.

But any chunk broken out of a financial plan to wager on these offers deserves attention. That’s not to say none of these ventures will be worth considering. And likely, if a client wants to support a community project, for example, there may be factors to weigh in addition to possible returns.

But in this new environment, advisers need to tell clients: “Bring anything that comes your way to us first.” Deals will sound too good to be true because that’s how marketing works. That’s fine when it comes to toothpaste or hamburgers, but decisions to spend even a few grand in retirement savings on crowdfunding offers would benefit from professional scrutiny.

And advisers will need to stay current during the evolution of this new retail-level private equity market and its investment structure…

For the full article, please click here

SEC OK’s Start-Ups’ Use of Social Media


Trying to figure out how many investors might want to fund your small business? Go ahead and tweet about it.

The US Securities & Exchange Commission (SEC) has given a social media greenlight to startups seeking to raise money and this week updated rules allowing for use of Twitter and other social media tools to solicit investors.

The Division of Corporate Finance announced that tweets of 140 characters or less are a proper way for a startup to gauge potential investor interest in a stock or debt offering. The posting must include a link to a disclaimer that says the firm isn’t yet selling securities.

If you are interesting in equity opportunities with start-ups, click here. is the leading database for broker-dealers that want to help you.

Bloomberg noted that the SEC has been warming up to social media since April 2013, when it approved the use of posts on Facebook and Twitter to communicate corporate announcements such as earnings. Its latest endorsement of social media applies only to companies looking to raise up to $50 million a year.

Firms that use Twitter to solicit investor interest must include a link to a required disclaimer that says the firm isn’t yet selling securities, the SEC said in this week’s announcement.

It’s not clear how many companies will take advantage of the higher fundraising cap. Fewer than 30 offerings were made from 2012 to 2014, when the limit was $5 million, according to the SEC.

This post is from

JOBS Act Curtain Call: Main Street Growth Act


This post was written by Pete Hoegler, Washington DC-based Social Media intern for The JLC Group. 

Three years after the JOBS Act was passed, it seems that Washington is back for more–a curtain call if you will–making it easier for small ventures to raise capital.

The House Financial Services Committee in early June floated a draft bill that would allow the creation of “venture exchanges” tailored to the needs of small companies looking to raise money. In many ways, the success of the JOBS Act hinges upon the creation of such markets. A healthy secondary market created liquidity that is critical to building investor confidence and creating a robust alternative to the global markets that today are dominated by enormous corporations.

If you are looking for a broker-dealer to get you started, click here. is the leading database for dealers around the world.

The new proposed venture exchange laws are aimed at increasing access to liquidity for early stage investors in private startups and small businesses (some of which could be JOBS Act enabled investors), as a lack of liquidity was a concern voiced by some surrounding the new laws for equity crowdfunding with non-accredited investors. 

Investors in technology startups, for example, are likely to have to hold their position in any one investment for an average of 7 years. Creating opportunities for selling private stock in a startup investment sooner through venture exchanges has the potential to reduce some of the early stage investment risks.

These new venture exchanges could create markets that allow early investors who invested via equity crowdfunding to trade shares far before any kind of liquidity event like a public offering (IPO) might take place, spelling an opportunity for liquidity for those early investors. 

The number of IPOs has gone from an average of 311 from 1980-2000 down to an average of 99 IPOs each year from 2001-2011 so opening up other alternatives for liquidity will de-risk the growing number of startup investments happening online.

This is yet another step towards reforming our capital markets. The first step was to enable access, and was addressed by Titles II, III & IV of the JOBS Act. So regardless of your opinion on this matter, the summer is shaping up to be an interesting time for equity crowdfunding investors, accredited and non-accredited alike.