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Private Equity, Angel Networks and Broker Dealers Ready for Crowdfunding

21 Jan

Rich Man’s Crowd Funding

by My Say, Contributor

Private Equity, funds, angel networks and broker dealers are embracing the technology underpinning crowdfunding with its standards of deal presentation and distribution channels to potential investors.

According to Jouko Ahvenainen, Chairman and co-founder of Grow VC, “At Grow VC Group we work with many broker dealers to offer our platform as a service for their use. Through GrowVC they can easily transfer many offline activities and investors to an online marketplace as a strategy to get more investors and make their operations more effective.”

The use of this technology by broker dealers was presented to the National InvestmentBanker Association in Spring 2012 and today we have seen recent movements with SoMoLend and CrowdFunder signing up with the leading broker dealer Gate Technologies, whose back end crowdfunding platform is run by visionary CEO Vince Molinari. We will see the two to three dozen dedicated crowdfunding for equity sites partner up with broker dealers in Q1 2013 and start pursuing SEC broker dealer transactions under the “Rich Man’s Crowd Funding” option in wait for crowdfunding for equity to become legal.

Leading players in the market like Crowdfunder, SeedInvestCircleUp, LaunchtWeFunderFundableIndiegogoRockethub and Crowd Valley will be the new broker dealers joining the industry in 2013 although Kickstarter will not enter this segment. These firms are the new blood in the market and are leveraging this technology.

“I believe the jury is out on who the winners will be in the long run relative to the crowd platforms,” says Steven Cinelli. “Much like an investment bank, issuers will opt for those platforms that build a history of getting deals done. It’s all about successful distribution.”

CircleUp has already done half a dozen projects as a broker dealer with their license held by WR Hambrecht & Co. The fact crowdfunding for equity is delayed pushes these sites to start brokering “Rich Man’s Crowd Funding.”

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