DENVER, COLORADO, January 6, 2020, ZEXPRWIRE,— Crowdfund Capital Advisors (CCA) today released key findings from its 2020 Online Investment Year in Review report. The report is a comprehensive review of the online investment industry with a comparison to prior years and predictions for 2021. The data in the report is aggregated from all online investment platforms that are registered with the Securities and Exchange Commission (SEC) and overseen by FINRA. Each day, data is collected, normalized, aggregated and reported to Bloomberg for industry analysis and coverage.
“2020 was a terrible year for our country. However, in the face of this health and economic crisis, the online finance industry enabled over 1,100 small businesses, across 48 states and territories, to raise USD 239,000,000 from over 358,000 investors in their communities. This capital was unavailable from traditional sources and provides a model for potential public-private partnerships to support small businesses in the future,” says Sherwood Neiss, Principal at CCA. “Our data suggests these numbers could double in 2021.”
Some of the highlights from the report include:
- HISTORIC SEC REGUALTORY CHANGES TO RAPIDLY EXPAND THE INDUSTRY IN 2021: The Securities and Exchange Commission (SEC) voted to approve Regulation Crowdfunding amendments including:
- Increasing the maximum issuers can raise from USD 1M to USD 5M, essentially allowing startups to raise a full seed round online.
- Allowing for the use of Special Purpose Vehicles which will streamline the communication between issuers and their investors and ease follow on financing.
- Amending the investment limits for investors by removing the limits for accredited investors and using the greater of annual income or net worth when calculating investment limits for non-accredited investors, this will increase the amount of capital invested.
- Streamlining the offering exemption framework and put the online investment industry at the tipping point.
- CAPITAL COMMITMENTS INCREASED 77.6% from USD 134.8M in 2019 to USD 239.4M in 2020. This is very positive given how the pandemic raged throughout the year.
- There were over 150,000 more INVESTORS (a 75% increase) in 2020 than 2019 withmore than 358,000 recorded investments. Average investment remained around USD 650 per investor.
- OFFERINGS INCREASED 61.2% from 2019, with 1,149 offerings in 2020.
- There were nearly as many offerings in 2020 than in the first 3 years of the online investment industry combined. Momentum accelerated as issuers sought solutions to the capital crisis in the traditional markets.
- March and April saw the slowest month in offerings which also coincides with the uncertainty that issuers and investors felt with the onset of the pandemic. This quickly turned around with subsequent months seeing record amounts for offerings, investors and investments.
- 58.6% more UNIQUE COMPANIES raised money online in 2020 than in 2019.
- The number of issuers that ran subsequent offerings online increased 47% proving continued interest in this funding mechanism prior to seeking more institutional capital.
- Average VALUATION of successful raises grew from USD 11.4M to USD 13M which is a result of more established, post-revenue companies coming online to raise capital.
- The average SUCCESS RATE for companies raising money online in 2020 was 63.7%. This is much greater than the average 2% success rate for Venture capital.
- Top 5 States for issuers, investments and investors were: California, New York, Texas, Massachusetts and Florida.
- The average raise increased from USD 298,331 in 2019 to USD 308,978 in 2020. This is positive as it solves for the Valley of Death that many entrepreneurs face when they run out of their own personal capital options but are too early for more sophisticated capital.
- There are over 450 NAICS industry codes represented in the dataset, proving the wide appetite both issuers and investors have for online finance and the fact that this industry isn’t relegated to industries, geographies or demographics that more sophisticated investors wouldn’t focus on.
The full report will be released later this month and is available for pre-order.
“Startups and small businesses are the economic engine of our country. The SEC’s regulatory changes now enable everyone from technology innovators and hard-working small business owners to raise up to USD 5m from both retail and accredited investors. The rapid adoption of online/mobile investment platforms for public market investing is a good thing for the private markets. It gives both accredited and retail investors more opportunities to invest in ways that are aligned with both their financial goals and their values.” says Jason Best, Principal at CCA.
“We expect over half a billion dollars to be invested by local investors into local businesses across the United States in 2021. This will not only provide critical capital but sustain jobs and act as a local economy energizer. We are excited about what is on the horizon this year.” concludes Neiss.
For more information, please visit CrowdfundCapitalAdvisors
Contact: Sherwood Neiss, Crowdfund Capital Advisors LLC
Email: [email protected]