Hey Cooper – another great question.
In the case of AngelList, they actually have started to enter the Reg CF space, only it is via their spin-off, Republic.co.
I think one part of keeping the entities separate is that under today’s regulations, it’s a lot of extra effort to register as a FINRA-approved Reg CF funding portal, which is likely why Republic chose to create a separate entity from AngelList. It also attracts a different type of customer – looking for smaller dollar-amount investors vs. larger accredited investors. Lastly, it isn’t technically legal (or feasible) to set up a non-accredited investor syndicate today because of the regulations.
Wefunder has mentioned in their letter to the SEC that they are moving ahead with the lead investor structure in advance of answers to some clarifying points in the regulations that are a gray area in terms of whether it is allowed or not. I suspect more portals may follow Wefunder’s example, especially if the SEC is OK with their proposed structure.
I also think the potential market for smaller, non-accredited investors was very small four years ago, and still is today. When you consider that investors invest upwards of $1.5 trillion (with a T!) dollars under Reg D 506(b) alone in 2018, Reg CF is only a little over $300 million total since 2016 – that’s not even a fraction of a rounding error in terms of market size.
But – as you noted and as we believe – that is starting to shift and there has been a lot of growth, especially in the first half of 2020. More and more investors are finding out about Reg CF, and even accredited investors are seeing the benefits of being able to create diversified portfolios via passive holdings in promising early-stage startups.
As an accredited investor, you can get access to deals on some of the secondary sites that let employees and other investors sell private shares such as EquityZen, SharesPost, etc.