October 14th, 2016 by: Grow VC Group

Thomson Reuter’s Practical Law division published an article that provides a comprehensive review of the 60 crowdfunding offerings that were filed within the first two months of Regulation Crowdfunding becoming effective on May 16, 2016. This publication contains highlights and a more detailed analysis of a nascent, but promising sector.

Companies that have launched crowdfunding offerings differ greatly in terms of size, industry, creation date and origins. And yet, some market trends seem to be emerging, for example:

  • More than 40% of those companies chose to file in the State of Delaware, way above California (2nd on the list) that registered 5 issuers, compared to 25 in Delaware. Striking as it is, this figure is actually lower than the proportion of publicly-traded companies registered in Delaware (more than 50% of the country’s total) due to the State’s business-friendly environment. 
  • With 30% (or 18 issuers) of the total, Consumer Products was the industry the most   heavily represented in the offerings filed, followed by the Internet & Mobile Apps, and the Services sectors with both 10 issuers. Together they account for more than 60% of all offerings.
  • Globally, less than half of the securities issued had a voting rights. This could be explained by companies’ reluctance to manage hundreds or even thousands of ‘small’ equity owners.

More data and insight is included in the original publication but two elements seem to be particularly relevant for actors looking to build a crowdfunding platform:

  1. Companies seem to be rather cost-sensitive when selecting a funding portal: despite the variety of platforms available to issuers, the one charging the lowest fee to issuers was behind almost half of the offerings. This fact could imply that robust platforms, with the most resources, were able to develop an aggressive pricing strategy, which translated in a strong deal flow.
  2. Regulatory requirements seem to impact the offerings’ target amounts: two thirds were seeking to raise less than $100,000, and none attempted to raise more than $500,000. This is due to the different thresholds that were set by the legislator. Above $100,000, issuers’ financial statements must be reviewed by independent accountants, and thoroughly audited beyond $500,000.

At Crowd Valley, our goal is to provide our customers with an infrastructure that makes their marketplaces operations as efficient, secure and sustainable as possible. And we look forward to assist established institutions and niche specialists in the creation of crowdfunding marketplace services.

Read more at Crowd Valley News.

US crowdfunding

October 12th, 2016 by: Grow VC Group

A ‘Fintech Sandbox’ is a technology environment where companies/firms would work in close partnership with regulators to develop their ideas and technology without the red tape that may inhibit their potential growth. In the UK, France, Singapore, Hong Kong and Australia, regulators have already or are currently laying the groundwork for a such a Sandbox environment that gives the firms the ability to test a new product or business model with a limited launch, without going through the full regulatory process.

Ideally, this would create the perfect environment to foster rapid growth for these budding firms/technologies and focus solely on the product without being impeded by the regulators. To bring the United States on par with its peer nations and allow FinTech firms in the United States the opportunity to realize their potential (whether it be in the payment space, new financial products, lending, ID verification etc), Representative Patrick McHenry (R-NC) has introduced a bill that would mirror the UK’s sandbox, requiring many federal agencies including the Federal Reserve Board, the Treasury Department and the Securities and Exchange Commission to develop an internal “Financial Services Innovation Office” where companies can seek help in testing a product.

Under the McHenry proposal, financial technology firms would be required to prove to the regulator that:

– their innovation serves a public interest,

– improves access to financial products or services,

– doesn’t pose a system risk to the financial system or consumers.

While McHenry conceded that passing the bill this year would be difficult, he emphasizes that the introduction of this bill sparks a much needed conversation and would lay the groundwork for supportive regulations and infrastructure for the future.

Read the whole article on Crowd Valley News.

US Congress finance sandbox

Photo: Wikipedia.

October 11th, 2016 by: Grow VC Group

US/UK/EU

More established markets like the US, UK and Europe have followed a similar evolution. Due to more transparent regulations, it has allowed players to enter the market and try new models.

Asia

The most active involvement in digital finance (outside of mainland China) may be South East Asia. Malaysia in particular has been actively drafting their P2P framework, taking a similar stance in their regulation to the FCA. Hong Kong recently created a regulatory FinTech “Sandbox”, which may spark activity in what could be a very exciting market, while Singapore’s involvement has sputtered.

Latin America

Like Southeast Asia, the emerging markets of Latin America are solely focused on providing debt capital to the general population and businesses. Interest rates offered by banks, regulated and non regulated institutions are 3-6X higher when comparing to developed markets. On top of high interest rates, the lack of willingness to lend capital, makes Mexico, Central and South America ripe for FinTech innovation.

Pioneers looking to capitalize on collaboration within the fintech space, please get in touch with us at Crowd Valley to leverage our industry leading Digital Back Office and API operational in dozens of countries and territories around the world.

Read the whole article and more regulation details at Crowd Valley News.

Crowd Valley back office

October 10th, 2016 by: Grow VC Group

Grow Advisors fintech minute

Grow Advisors (a Grow VC Group company) publishes its daily insight into the world of alternative finance and fintech. Here are some highlights:

4 market entry options for traditional banks to compete in online lending sector (& an invitation to join the conversation!)

Much has been written about the threat that new online lending platforms pose to the revenue and profit streams of traditional banks. In extreme cases, certain commentators have predicted the demise of weaker traditional banks at the hands of these disruptive online lenders.

The emergence and proliferation of FinTech platforms has been a wake-up call for the industry that has been trialing a range of responses, from those downplaying the threat to others looking to grasp the opportunity to transform into an innovative customer-centric lender.

For this edition, we will provide an overview of the four models and set up the discussion for subsequent editions.

 

Fintech – An Irish banking perspective

The number of challenger banks using new digital technology grows everyday.

It’s interesting to see that The Irish Times reported that the Bank of Ireland is planning to invest €500 million over the coming years to modernise its group IT infrastructure. Since the financial crisis of 2008 banks across Europe have been faced with the challenge of restoring balance sheets to meet the European Central Bank’s standards.  This has involved not only working with customers to deleverage loans but by carrying out stringent cost cutting exercises, which often include branch closures and reductions in staffing levels.

According to a 2013 a report in the Irish Independent:

‘Bank of Ireland came last in the study of 21 banks and Ulster Bank came second last. Bank of Ireland had a consumer satisfaction rating of just 41%, a full 50% lower than the leading bank. It performed particularly poorly in relation to customer service, regular communication, clarity of statements and branch availability’

Read more at Grow Advisors Blog.

Irish banks

October 8th, 2016 by: Grow VC Group

On 27 September TradeUp (a Grow VC Group company) Founder Kati Suominen joined the plenary meeting of the World Trade Organization’s Public Forum, that brings together all key players in international trade for three days of deliberations in Geneva. Suominen spoke of ways in which the WTO and the international trade community can advance small and mid-size companies’ trade through new rules on trade facilitation, online payments, finance, and digital policies. You can hear her remarks here, scrolling down.

The high-level panel featured also Roberto Azevêdo, Director-General of the WTO, Rt Hon Liam Fox MP, Secretary of State for International Trade of the United Kingdom, Robert B. Koopman, Chief Economist of the WTO, Manuel Aldrete, General Manager of Chicza Rainforest, Sherill Quintana, Owner and Founding President of Oryspa and Hildegunn Nordas, Senior Trade Policy Analyst at the OECD.

Suominen spoke at two other panels at the forum on digitization of trade and opportunities ecommerce opens to small busineses.

Read more about international trade and its finance at TradeUp site.

TradeUP liam fox bob koopman

TradeUp Founder Kati Suominen (right) with UK’s Secretary of State for International Trade Liam Fox and WTO’s Chief Economist Robert Koopman

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