It's obvious that the potential upside for equity crowdfunding is huge.
Looking Ahead - 2020 Predictions for Equity Crowdfunding
Given all the progress and momentum that the equity crowdfunding industry saw in 2019, what can we expect in 2020?
Our predictions are:
Over $500M in total Reg CF capital raised by 2021
More, higher-quality deal flow for Reg CF deals (especially with the passage of the Crowdfunding Amendments Act)
Continued innovation in the industry - the announcement of passive index funds of startups (similar to this one in the UK), Secondary Markets, other innovations
A re-thinking of how Reg CF and Reg D operate together with the amendment of the accredited investor definition later in 2020
First, there are a few big things to keep on the radars of startup investors.
Right now, the SEC is open to comments against their proposed changes to the accredited investor definition. If some of the proposed changes are adopted by the SEC, this will allow more non-accredited investors to be able to qualify as accredited investors by either passing an exam, holding certain professional credentials, or having other finance related experience. This would give many more sophisticated (as qualified via a test or actual experience, vs. just the wealth levels that are used today) investors to invest in Reg D offerings.
Second, the Senate is still sitting on JOBS Act 3.0 ("Crowdfunding Amendments Act") changes that the house approved back in October 2019. While the bill doesn't change the Reg CF cap, it does fix the "12g problem" and the Special Purpose Vehicle (SPV) problem that have been current issues as cited by WeFunder and the Association of Online Investment Platforms (AOIP). Removing these obstacles from Reg CF should attract more issuers to platforms and to choose Reg CF as a viable way to raise capital, meaning higher quality and quantity of options for investors.
If growth continues at the current rate and some of the JOBS Act 3.0 changes can be implemented, it isn't unreasonable to predict that we may end the year 2020 having surpassed $500M in total Reg CF capital raised, and over $150-200M in capital in 2020 alone.
Overall, this bodes well for increased access to capital in startups, and thus for attracting more quality issuers and giving investors even better investment opportunities.