Climate change and global warming are two topics media, policymakers and scientists often talk about. Some see them as an hypothetical future situation, others instead consider them as a present issue. No matter the different stakeholders’ views, the UN, in its last report on climate change, insisted on the necessity to move from fossil fuels towards low-carbon alternatives. In particular, a commonly cited statistic says that there should be an investment of $ 1 trillion by 2030, in order to avoid the worst consequences of climate change.
Considering that a three-percent return on common bonds is seen as high, there is no reason to doubt why individual investors are flooding to seven-percent return rates provided by mini-bonds. A rapidly growing number of well-established companies in the UK that are raising growth capital are looking to the public for sources of finance, and skipping the banks. Within a matter of a few weeks, companies have been able to borrow millions, at a rate much less than that offered by banks. However, due to the nature of the mini-bonds, many questions are starting to arise with this new ‘hot’ form of ‘easy’ financing. Is the high risk worth the high return? Is the individual investor protected enough? More and more national regulators are working to provide a legal framework to allow securities crowdfunding. After many Western countries, like the US, the UK, France and Italy, securities crowdfunding entered in the agenda of some Eastern countries’ financial authorities too, like Japan’s and Australia’s. It is now the turn of India, where the Securities and Exchange Board of India (SEBI) has launched in the past week a public consultation on the drafted rules for securities crowdfunding. May 2014 ended to be a record-breaking month for UK crowdfunding. A grand total of £270 million of equity crowdfunding was invested, making May the highest recorded month to date. The analytics came from data company, Beauhurst, who has been watching the equity crowdfunding industry since 2010. From the last Global Crowdfunding Market report published by Crowd Valley, real estate crowdfunding emerged as one of the main trends worldwide. As the image on the left shows, in Q1 2014, real estate was the asset type whose demand by Crowd Valley’s potential clients has increased the most compared to previous quarters, passing from 19% in Q4 2013 to 30% in the first quarter of the present year. At first glance, crowdfunding and the Middle East do not seem to go hand-in-hand; strict religion and politics would appear to suppress the transparent nature of the crowdfunding ecosystem, but it appears that the area will soon enough become a major player in the industry. The form of crowdfunding as we know it, may not work for the Islamic world, yet the area is adopting their own version that could potentially take off with great force. At the 2012 Milken Institute Global Conference, it was widely agreed between leaders across the Middle East that, “a lack of economic opportunity was a major, if not the main, catalyst for the start of the Arab Spring.” Crowdfunding is certainly a potential solution to the capital markets that are limited with venture capital and public offerings, unequal access to capital funding, economic inequality, and political instability. In September 2013, the Corporations and Capital Markets Advisory Committee (CAMAC) – the Australian financial market authority – released a discussion paper about equity crowdfunding and its current regulation, to evaluate it and understand whether there is need to intervene. A few months later, CAMAC is now calling for the government to pass a regulation that would allow every adult in Australia to invest through equity crowdfunding. It has been over two years since the JOBS Act was passed, but famous Title III, which would allow crowdinvesting, has not yet been approved. While the entire US crowdfunding scene waits for the SEC to release the final rules, some states decided, in the meantime, to enable crowdinvesting within their borders. Crowdfunding is quickly changing the way we are investing, but unfortunately, the online payment processing industry has been rather slow to update, causing roadblocks and mistrust for investors as well as for companies seeking financing. PayPal is paving the way to embracing crowdfunding as they adjust company policies. |
Categories
All
|