Crowdfunding as a market has taken great steps and strides to become what it is today, albeit still a nascent market, the applications into the securities market are becoming more and more evident. What started in a pre-purchase, perk and donation market with creative projects moved into equity financing for startup and growth companies step by step. Restrictions have applied, and will continue to do so, but certain regions such as countries in Europe, like the UK, and more recently Italy, have been successful in pioneering securities crowdfunding and developing best practices along with regulators. However, Europe continues to face challenges due to fragmentation and lack of a uniform market.
The term 'crowdfunding' has also taken an elusive and vague form in the market, referring to a variety of different forms where modern applications of technology allows for more streamlined methods of reducing transaction costs. At the core the crowd can be seen to consist of various audiences from sophisticated or institutional investors, professional niches, to the general public. Coupled with an application such as a niche specific marketplace (e.g. wind farms, medical technology), the forms crowdfunding can take are broad. Discussions in the nascent market gave rise to wider debate about changes in the securities markets. The general consensus seems to be that the securities markets of tomorrow will be far different to those of today, with the Internet and peer-to-peer networks opening opportunities and challenging securities firms to pursue digital opportunities to meet the demand from their customer base and the call for more transparency in public conversation.
Applications in the professional market have started to emerge, as existing securities firms leverage new models for more transparency, efficiency and access. These actors are regulated and authorized financial services companies, with solid track records and ongoing operations. Yet they seek new models to step into the 21st century and gain an edge with new expansions in the digital age. Crowd Valley has already been involved in sectors such as renewable energy, diversification in real estate, retail and wholesale peer to peer lending, all in various geographies and jurisdictions.
Operations and Focus
In the fall of 2012, Crowd Valley's clientele consisted pre-dominantly of those operating in the early stage, entrepreneurial ecosystem. However, as the market and company matured, decisions were taken to provide further support for those in the professional securities market. Today, starting the fall of 2013, the company's audience and customers are largely licensed, authorized and regulated securities firms with a planned expansion and application in the digital era.
Crowd Valley is proud to be supporting various pioneering professional securities firms, with a vision of how the securities markets of tomorrow will need to function. Step by step has also proven to be a useful methodology in moving into a new market that has a lot of uncertainties, and we look forward to supporting our customers to reach new milestones. The evolution of the market has been organic, yet there are several pioneering applications being tested right now, which are still far ahead of the nascent market, and significantly far ahead of mainstream adoption.
The start of the era of public solicitation, with Title II of the JOBS Act set to be effective September 23, will lead the way to the creation of a new securities market that sits at the intersection of Web 2.0 and the financial markets. Despite the securities laws being updated in the US, the new rules can be seen to affect the entire, global market. The implications of this development will be unprecedented.
Predictions for 2013-2014
Looking ahead is always challenging, but from planned applications and ongoing trials, we can extrapolate and make some assumptions on the market:
- New sectors will be impacted. The rise of public information in private placements will have a profound impact on all previously shrouded offerings, which will in turn lead to new business models and the re-thinking of some existing operations, that have thrived because of this asymmetric information.
- New actors from the broader securities markets will enter the market, with expansions of their core business models, rather than additions. Venture Capital funds, Private Equity firms will take advantage of broader distribution for their own deals; LPs and funds of funds will seek to streamline their own approach. Brokers and asset managers will see an opportunity in syndication and new distribution channels.
- There will be a clear polarization in the market, on one side new applications and new actors in the market, on the other existing securities firms with proven track records and ongoing operations, broadening their offerings with new securities rules.
- Crowdfunding and the new securities market will expand and produce a supporting ecosystem. Analysts, valuation firms, auditors and accountants etc. will find new applications of existing business models and some will develop tailored and streamlined solutions with the Internet and online world in mind.
- Market consolidation will commence, aided by a large turnover of new companies entering the space and larger actors finding their fit in the new securities market.
The amount of predictions one could make is great, yet the fact remains that the market at hand is vast and unprecedented, signaling a fundamental change in the securities world. Like many transitions, this one will take several years to see all applications brought to life for the creation of more transparency, efficiency and access, yet through these years we will see the largest industry in the world re-imagined and brought to the modern era.
Crowd Valley will continue to support professional pioneers through its increasing offerings, and see the shift unfold from the front lines.
nternationally awarded entrepreneur, active in pioneering new securities models worldwide at the intersection of the Internet and the securities markets.
Markus serves as the CEO of Crowd Valley Inc, a US-based crowdfunding marketplace platform provider and a spinoff from the Grow VC Group. He is also a global investor and Senior Partner at the Grow VC Group. During his tenure as COO of Grow VC, he recruited over 120 individuals, built up a global team on six continents and expanded operations to over 150 countries. In his earlier businesses, he served in diverse roles, taking on the responsibilities of CFO and increasing sales growth of over 270% per year over several subsequent years. Markus holds an M.S. and a B.A. in Economics.
Markus has pioneered new funding models in the US and Europe, advised policy makers worldwide—including the SEC, the European Commission and Italian regulator CONSOB—for more effective markets, and worked with visionary organizations such as the World Bank and the Kauffman Foundation to improve frameworks for new funding models, including crowdfunding, cross-border investments and private placements. He serves as a frequent public speaker on related themes. He is married and constantly bringing presents from his travels to his two children.