This BrokerDealer is Bullish on CrowdFunding Via OneVest

crowdfunding blog update profiles broker-dealer North Capital Private Securities bent towards the surge in  Crowdfunding and their recently-announced strategy to promote the OneVest platform. This story is courtesy of with reporting by Alessandra Malito

InvestmentNewsBroker-dealer North Capital Private Securities has agreed to add the crowdfunding site OneVest to its platform that syndicates private offerings for investors. The platform, called 99Funding, has a minimum investment of $1,000 to $5,000, depending on the offering, but no fees for advisers or investors.

North Capital Private Securities vets each investment opportunity by reviewing documents, analyzing investment propositions against the market, doing background checks on principals and performing other due diligence.

More advisers are getting involved in crowdfunding, according to Jim Dowd, managing director of North Capital Private Securities.

“Just now it’s sort of getting into the more established financial services phase where financial advisers and independent broker-dealers are starting to look at these opportunities on behalf of their clients,” he said. “It’s driven by clients more than anything. Clients are insisting on these opportunities instead of brokers or advisers bringing the opportunities to them.”


Crowdfunding grabbed regulators’ attention a couple years ago when Ohio officials sought to shut down a crowdfunding site for allegedly misleading investors about the earnings potential of investment opportunities.

Since then, state regulators, like in Massachusetts, have wanted investors to know that “some crowdfunding platforms might exaggerate potential returns and not present fair and balanced risk and opportunity,” according to Mr. Dowd.

“That’s why we embrace the idea of regulation from the beginning,” he said.

Marianne Hudson, executive director at Angel Capital Association, a network of accredited angel investors, said that if done right, crowdfunding can be a way to diversify a portfolio.

“It’s just a matter of finding out if it fits in your interest and understanding and own investment preferences,” she said. “A lot of them offer opportunities to make smaller investments . . . which then totally adds for diversity.”

Having the ability to make small investments may make the process more attractive to advisers and their clients who can then allocate a portion of their portfolio to this type of investment.

Ms. Hudson’s advice to financial advisers is to do their own due diligence.

“They need to get each individual platform to make sure they’re comfortable,” she said.


BrokerDealers Want To Ride With Uber

Shanghai, China. February 13th 2014. Driver images for UBER marketing content. blog update is courtesy of the New York Times’ Deal Book’s Mike Isaac.

Uber is an app-based transportation network and taxi company based out of San Francisco, California. It began in 2009 and has slowly been making its way across the United States and the world. Customers use the app to request rides and track their reserved vehicle’s location. Uber vehicles range from black luxury SUVs and town cars, to taxis, drivers’ personal vehicles. Although Uber hasn’t gone public yet, they have recently expanded their venture round to a total capacity of $2.8 billion due to high demand. Now, it is only a matter of time before the company decides to go public and the brokerdealers can’t wait. 

Uber, the ride-hailing service, likes to trumpet its popularity with consumers. Their fervor is surpassed, perhaps, only by investors’.

Facing overwhelming demand from institutional investors, Uber has expanded its Series E round of venture financing by $1 billion, according to documents filed Wednesday with the Delaware secretary of state, bringing the total capacity for the round up to $2.8 billion.

The move, which was confirmed by Uber, occurred just weeks after the company closed a $1.2 billion round of financing. At the time, Uber said it had left capacity for about $600 million in additional strategic investments, according to a Delaware filing. The company is incorporated in Delaware and based in San Francisco.

But the appetite for a piece of Uber has proved to be greater than the company had imagined. The $600 million was quickly oversubscribed, and Uber decided to raise the amount. Baidu, the Chinese Internet giant, accounts for part of the additional investment beyond the $1.2 billion round.

The most recent expansion is on top of some $4 billion Uber raised, including a recent $1.6 billion round of convertible debt financing from the clients of the private wealth arm of Goldman Sachs, the investment bank previously confirmed.

Uber’s $40 billion valuation, extraordinary by any private technology company’s standards, remains unchanged since the company announced the first part of the round in December. Uber is one of the most richly valued private technology start-ups, second only to Xiaomi, the Chinese smartphone manufacturer.

“The participation we have seen in Uber’s Series E underscores the confidence investors have in Uber’s growth,” Nairi Hourdajian, the head of global communications at Uber, said in a statement.

Even in Silicon Valley’s recent venture capital environment, where hundreds of millions of dollars and high valuations seem much easier to come by, Uber remains an anomaly. The company has raised close to $5 billion in private financing since it was founded in 2009, and it appears in no hurry to introduce itself to the public markets.

Uber is likely to need full pockets to continue its rapid growth.

The company is working to expand UberPool, its ride-sharing initiative that links multiple passengers heading toward the same destination and lets them split the cost.

Uber has also said it intends to bolster its European operations and push into the Asia-Pacific region.

It can expect to meet opposition. Uber faces stiff resistance from taxi and limousine interests in countries like Spain, Germany and Belgium, among others, and will probably need to spend heavily to market itself to win favor with locals.

To do well in China, the world’s most populous country, Uber will probably have to spend heavily to take on services like Kuaidi Dache and Didi Dache, China’s two largest taxi-hailing services, which recently announced plans to merge. That deal, if completed, would give the two services more than 90 percent of the market.

Meanwhile, Uber’s largest United States competitor is also raising money. Lyft, identified by its signature pink mustache logo, is trying to raise at least $250 million in private capital, with participation from at least one previous investor, the Alibaba Group of China.

For the original article, click here.

BrokerDealers Crow About Crowdfunding blog update courtesy of extract from the New York Times.

For most start-up businesses, money to finance the business is a key issue, in recent years, start-up businesses have been turning to crowdfunding.

Crowdfunding is raising money contributions from a large number of people, typically through the use of the Internet. Some of the  more popular crowdfunding sites include GoFundMe and Kickstarter.

These kind of small businesses are the ones President Obama wanted to help in 2012 when he signed the Jumpstart Our Business Startups Act, better known as the JOBS Act. Part of the law, Title III, was intended to allow small businesses seeking capital to crowdfund, or raise money from virtually anyone, by selling stock and other securities over the Internet. “Start-ups and small business will now have access to a big, new pool of potential investors,” Mr. Obama said at the time. “For the first time, ordinary Americans will be able to go online and invest in entrepreneurs that they believe in.”

crowd-fundingCongress directed the Securities and Exchange Commission to finalize the rules by December 2012, but the agency has yet to do so. As it reviews Title III of the JOBS Act, a debate has raged. Supporters say crowdfunding is an innovative way to finance new ideas. Others say the high risk associated with backing early-stage businesses is inappropriate for ordinary investors.

Only accredited investors — those with annual income of more than $200,000 or $1 million in net worth not including their primary residence — are permitted to participate in crowdfunding deals. Under the proposed rules, which the S.E.C. introduced in October 2013, businesses could raise up to $1 million in a 12-month period without registering the offering with the agency.

“The goal is to democratize and improve finance,” said Representative Patrick T. McHenry, Republican of North Carolina, who worked on the House crowdfunding bill that was incorporated into the JOBS Act.

In writing its rules, the S.E.C. adopted strict requirements intended to minimize fraud and protect investors. Individuals who are not accredited investors, for instance, would face limits on how much they could invest. Businesses would be required to go through a registered broker or a new type of registered platform called a funding portal for their offerings. Businesses also would be required to submit audited financial statements. The rules are still under review and may change.

While the rules are still under review having a brokerdealer in your corner to help find smart investments to make whether it is in a small company or large corporation.

For the full story from the New York Times click here


JOBS ACT Unintended Consequences: Already-Public Companies Reaching Out For More Cash blog update courtesy of extracts from the WSJ story “Rules Eased For StartUps Benefit Older Companies”

But another breed of company is angling to benefit from the Jumpstart Our Business Startups Act: freely traded firms, a few of which have been operating for a long time.

Salon Media Group Inc., SLNM -21.05% a 19-year old financially fighting Internet media business, and Giggles N Hugs Inc., GIGL 21.28% a seven-year old food-and-play-space chain, are among dozens of publicly traded companies that have signaled they intend to solicit investors using the new independence in the JOBS Act. Both trade on the over-the-counter market, and auditors have raised worries about their capability to continue operations.

The businesses are seeking new investors using some of the JOBS Act that lets small-scale private businesses advertise to affluent people, known as “accredited investors,” changing an 80-year old “general solicitation” marketing prohibition designed to safeguard investors.

The companies’ use of advertising independence meant for young start-ups exemplifies how a surprisingly extensive array of players expect to obtain an advantage under the brand new law. “You can place it in the class of unintended effects,” says New York securities attorney Douglas Ellenoff, referring to using the JOBS Act by publicly traded firms. “The entire purpose” of the law “was to allow it to be simpler for private companies to raise money,” he adds. Continue reading

Accredited Investor Rule Subject To Change Thanks to Crowdfunding and JOBS Act blog update courtesy of extract from

FINALTERNATIVESThe Securities and Exchange Commission is considering changes to its 30-year-old definition of “accredited investor” that could have serious implications for the crowdfunding industry.

Accredited investors are permitted to participate in private securities placements, and since the passage of the JOBS Act in 2012 opened the door to general solicitation for investors, many have been finding those opportunities through crowdfunding platforms.

The current definition of an accredited investor, written in 1982, says it is a person with earned income in excess of $200,000 (or $300,000 with a spouse) in each of the prior two years or one with a net worth over $1 million (alone or with a spouse), excluding the value of his/her primary residence.

Those pushing for change say the income thresholds have not been updated for inflation—that in today’s dollars, $200,000 and $300,000 would be $500,000 and $700,000.

But critics, like Brendan Ross, president of Direct Lending Investments, say such a change would halve the number of accredited households in the U.S., which today make up, by the SEC’s own calculations, 7.4% of all households.

Ross, who manages a short-term, high-yield small business loan fund, told FINalternatives that as regulators “become more educated on the implications of such a change, they will be less likely to move forward.”

“This would negatively impact the investment management industry as the number of accredited investors would sharply decrease. It’s unlikely that the SEC would want to impinge upon the private placement industry, which is the source of most financial innovation. Value investing, small companies, emerging markets, commodity funds, and REITs all started with accredited investors putting money into private placement vehicles, which then evolved into mutual funds.”


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