Schools that Launch Equity Crowdfunding Sites Now Will Learn How to Market Investment Opportunities to Accredited Investors and Get a Head Start on the Vast Amount of Money that Will Flood the U.S. when the SEC Finally Approves Title III Crowdfunding Guidelines
Investor Surplus, Deal Flow Shortage
Believe it or not, there is a growing surplus of angel investors, accredited investors and venture capitalists that have the money to invest in new startups, but cannot find enough good deals being circulated by entrepreneurs and startups that need investment startup capital.
A recent member of the San Francisco Angel Group member recently said that there many startups in San Francisco currently receiving seed investment that really are not worthy of seed investment capital, but are getting lucky because there is a surplus of money and a shortage of good deals.
The good news is that college and universities can now take advantage of a new rule passed as a part of the JOBS Act, which approved something known as General Solicitation. For the past 80 years it has been illegal to advertise or market private equity deals to the general public, but that ban has been lifted.
In November 2014, a new SEC rule was passed that makes it possible to advertise private placement memorandums (PPMs) to approximately 8.7 million accredited investors throughout the United States and abroad. This is great news because only about 3% of all accredited investors are active angel investors. This means that 97% of this group has never been approached by startups seeking investment capital.
This means that any school can setup an equity crowdfunding platform and start marketing their local community’s entrepreneur and startup business plans to a nationwide or global network of accredited investors. Once a platform is setup, investors with the right credentials can search through the platform’s online equity investment opportunities on a 24x 7 basis.
And then, hopefully in October 2015, the SEC also will pass the final rules that open up Title III equity crowdfunding to every adult in the United States who is 18 years or older. When that happens, the same equity crowdfunding site will have the ability market deals to every adult in America or approximately 180 million new investors. Take that with a grain of salt because the new Title III rules are three years overdue, but if they do make it to the Federal Registry there will be flood of money seeking great business plans and startups who need startup capital.
In order to leverage the growing pool of accredited investors now, colleges and universities should begin the process of setting up a streamlined equity crowdfunding ecosystem as soon as possible. It will open up schools to a nationwide and/or global network of angel investors now and help them get a head start on the vast amount of money that will flood the marketplace when the SEC finally approves the Title III crowdfunding guidelines.
Learn more about crowdfunding:
- Building a Rewards-based and/or Equity-based Crowdfunding Ecosystem;
- Providing Easy Access to Seed Investment Capital with Crowdfunding;
- Generating More Revenue to Support Co-Working Spaces and Startups;
- Using Equity Crowdfunding Sites to Finance Incubators and Accelerators;
- Taking Advantage of Investor Syndicates that are Seeking Better Deal Flow;
- Splitting Revenue from Incubator and Accelerator Mentors Consulting Fees;
- Streamlining Technology Transfer Offices (TTOs);
- Cross-Pollinating College Education with Real World Startups; and
- Learning to Build Better Alumni and Local Community Relationships
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