Private transactions, both private equity and debt, have been inefficient and littered with information asymmetry due to the way the transactions have been made. The emergence of public distribution of information on private transactions seeks to change that and the quickly arriving secondary markets for private transactions can bring liquidity and efficiency to typically cumbersome asset classes.
The last quarter of 2015 saw a reduction in investments into the fintech sector, with a sensible decrease from the incredible numbers of the previous quarters. Market analysts started to become skeptical that the industry could continue to grow at the same pace, with a slowdown for the start of the year that was foregone. However, the reality turned out to be a different story, with another record quarter of backing for new innovation in the financial services sector.
On April 1st, 2016, a new crowdfunding decree will enter into force in the Netherlands. This is the result of an effort started by The Netherlands Authority for Financial Markets (AFM) in December 2014, when they published a report on crowdfunding, drawing attention to perceived problems in the current regulations and offering their recommendations about how the digital investing market in the country could develop more sustainably.
On February 24, 2016, the Italian securities market regulator (Commissione Nazionale per le Società e la Borsa, Consob), updated the regulations for equity based crowdfunding. It was published in the Gazzetta Ufficiale on March 4, 2016, with the new rules effective since March 5, 2016.
On February 16, 2016, the SEC’s Office of Investor Education and Advocacy issued an Investor Bulletin to educate investors about the opportunities that will arise for investors through securities-based crowdfunding (also known as equity crowdfunding, and digital investing), when the new rules will be enacted on May 16, 2016. Starting from that date, registered platforms will be able to offer securities under Title III of the JOBS Act, and companies to use crowdfunding to offer and sell securities to the investing public.
Private transactions are a vast, often unstructured market with a big emphasis on informal networks. Just think of all the ‘friends and family’ money in the early stage investing market, the angel networks and the importance of their activity. In recent years the uptick of small funds, ‘super angels’, online syndication and co-investment models have paved the way for various family office, smaller funds and private investor networks to question the way they operate. Could structuring the informal networks into a catalyst for larger impact bring more bang for your buck?
The JOBS Act, signed on 5 April 2012, was intended to ease the regulatory burden on smaller companies and expand and simplify the means by which such companies could raise capital. On October 30, 2015, the SEC adopted the final rules and forms implementing the new Section 4(a)(6) of the Securities Act of 1933, as amended (the "Securities Act"), allowing issuers to sell securities to the public under certain circumstances without registering such securities with the SEC. The rules will be effective in late April 2016.