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What Does the Future Hold for Equity Crowdfunding?

By Motley Fool Staff - Mar 23, 2017 at 10:18AM

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The equity crowdfunding market has just started to take off after last year's implementation of the JOBS Act. Here's what two pioneers in the space see in store for it.

Thanks to the JOBS Act, the average investor can get a stake in early-stage startup businesses. We're less than a year into this "new world," but that doesn't mean the space is staying static. 

In this clip from Industry Focus: Tech, Motley Fool analyst Dylan Lewis interviews Indiegogo founder Slava Rubin and MicroVentures founder and CEO Bill Clark about potential changes they see coming for equity crowdfunding in the next few years.

A full transcript follows the video.

This podcast was recorded on March 17, 2017.

Dylan Lewis: Slava, you mentioned how there might be some changes in how VCs are involved. Are there any other shifts that you could see happening in this space in the next couple years? It could be on the deal formation side, it could be on the route that companies take to go public, or anything like that in the pre-public formats?

Slava Rubin: Hopefully, some of the terms of Reg CF will evolve. For example, right now, it's a $1 million limit. Hopefully that'll raise to $5 million to $10 million. Then, there's some other terms, like being able to test the waters in advance of actually launching, so you can promote it in advance of starting your raise, or being able to not have each individual investor be individually on the cap table, but rather funnel them into one SPV or one investor, all combined.

Lewis: And would that be for simplicity and being able to make it easier to manage?

Rubin: Yeah, for sure, as well as staying within the rules of not going over 2,000 investors, as well, as it relates to having to go public. But, yeah, also for simplicity from management.

Bill Clark: To add to that, I think that over the next few years you'll see Title III as the first fundraising, and Reg A as a potential second fundraising when the company needs to raise $10 million to $50 million. And that will be more accepted.

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