The Big Problem Equity Crowdfunding Platforms Face

The Big Problem Equity Crowdfunding Platforms Face
Posted on January 7, 2014 by Michael Ibberson Updated January 7, 2014


Equity crowdfunding platforms encounter several challenges. The SEC knows this better than most, but there are more than just regulations standing in the way of this industry. While investors and project creators must tread carefully when raising capital, the many portals online face several obstacles of their own.

Once such challenge has been called the “Due Diligence Dilemma.” In the US, most equity crowdfunding platforms have a very low project acceptance rate — anywhere from 1-5% — meaning that portals must perform a substantial amount of due diligence in order to approve only a handful of applicants per few hundred. While this, in itself, poses a great amount of work, the real trouble may lie in the illusion of safety that results.

Portals with very low acceptance rates appear as the smarter investment compared to those with lenient filters. If investors believe that portals have done the due diligence for them, they may feel less inclined to conduct research themselves. Although this will not be a concern for seasoned investors, it’s a problem for those entering the market for the first time. If start-ups on a portal fail, investors may blame the website for their losses, generating poor publicity, which, in crowdfunding, is a huge deal.

On the flip side of things, portals may find difficulties raising awareness for certain campaigns since many start-ups try to hide from the public while in a volatile state. Although this would inevitably lead to the campaign’s failure, it’s still a situation portals and crowdfunders must both consider before moving forward. Determining the readiness of a given project will be important as competition between platforms increases.

Since reputation plays such an important part in a portal’s success, attracting investors who will put these worries to rest is paramount. Finding the balance between a healthy start-up and investor population is not so easy, however. Without a large population of investors, crowdfunders see no chance of success, and without enough lucrative projects, investors look elsewhere. As equity-crowdfunding portals scan more and more traffic to achieve this balance, things may get overwhelming. How they handle their due diligence under such circumstances will become a leading factor for industry success.

Location:Sycamore Dr,Lancaster,United States

Danny Kelman of Crowdboarders Speaks on Social Investing

Danny Kelman of Crowdboarders Speaks on Social Investing
Posted on March 31, 2014 by Michael Ibberson Updated March 31, 2014
Michael Ibberson Of CrowdClan speaks with Danny Kelman, CEO of CrowdBoarders, to talk about his latest venture and how he plans to integrate a social networking platform directly with crowdfunding.

Michael Ibberson of CrowdClan.com: Social networking and crowdfunding are two of the same. CrowdBoarders’ combination of the two is a particularly interesting idea. Right now, CrowdBoarders offers a variety of neat features: Could you highlight a few major benefits in becoming a Crowdboarder? How can a crowdfunder extent these benefits to their campaigns?



Danny Kelman of CrowdBoarders.com: Firstly in our mind crowdfunding and social networking couldn’t be further apart, one of the main differentiators we have seen from people raising the money they are looking for and failing isn’t based on the merit of the idea but their own networks. People have friends on facebook and followers on twitter, but could you tell me the average of one of your twitter followers last four investments, what industries they were in and where they spend the majority of their time looking for investment opportunities? No of course not. This is where CrowdBoarders comes in, crowdfunders who want to be fully immersed in a network of visibility and endless capabilities become crowdboarders, the rest simply remain on their first generation platforms.

Michael Ibberson: As CrowdBoarders is currently invite only, what stand-out qualities do you look for in an applicant?

Danny Kelman: This is only because we are pre-launch, we are inviting people who want to create crowdboards first so people will have things to look at when the site is live. Once we launch anyone will be able to become a CrowdBoarder.

Michael Ibberson: CrowdBoarders advertises “no time deadlines.” As well, you allow members to post investment opportunities for free. What inspired these decisions and what has been the audience’s general reception? They seem to set you apart from a lot of other portals.

Danny Kelman: Raising money for free doesn’t exist in todays world, because currently crowdfunding companies are building their businesses off of a financial model, not a technology one. We have analyzed a lot of markets and their migration from offline businesses to online one in particular being ticket sales, you wouldn’t dream of charging an artist or concert promoter a % of their ticket sales so why an entrepreneur with their idea.

We have found the most open way to generate revenue to build our network is to charge those investing a small processing fee instead of taking a massive portion off of the person raising funds. This way it all ads up the same but this way the person creating the CrowdBoard receives what they are looking for and the person investing knows exactly how much of their money is actually being invested and how much is being paid in fees. So someone building a crowdboard to raise $100,000 would actually receive $100,000 instead of $95,000 and someone investing $50 wuld invest $50 and pay $6 in processing fees. We have always found an honest and up front approach to business is always key in building success.

We didn’t want to focus on raising money quickly; we are focused on raising money correctly. If you have a great idea who says it has to raise money within a month, maybe your industry isn’t ready for it but it is the next great idea of next year. CrowdBoarders isn’t trying to copy the traditional model of crowdfunding, in fact you will see everything done on our site differently and we believe for the better and this is what our patents protect.

The general perception of the audiences we have been speaking too, and the conventions we have been doing is normally “oh, of course” we have made some very simple changes to the way people can raise money online and from the feedback we are receiving I think people see it as the same way we do. People are very confused about this industry I always get asked questions about sites and what they specialize in, it has been our vision to bring them all into one network with all sorts of fundraising from loans to equity, charity and reward happening in one place putting crowdboarders at the center of the action being able to be apart of everything that is going on. The constraints and limitations of crowdfunding have been lifted with crowdboarders we have built a site where people have freedom.

Location:Sycamore Dr,Lancaster,United States

Types of Loans Available through Debt Crowdfunding

Types of Loans Available through Debt Crowdfunding
Posted on April 18, 2014 by Michael Ibberson Updated April 18, 2014
Debt Crowdfunding

For those familiar only with rewards- and donation-based crowdfunding, the debt crowdfunding process may feel alien. Before listing on a portal, applicants must submit tons of financial and personal information for review. In order to even receive a quote or verify your project’s eligibility, portals must retrieve your credit score and run an identity check, among various other things.

As can be seen, the process is much more complex and requires a great amount of forethought. Repayment periods, interest rates, portal fees, and myriad other details must enter into the equation early on. Those choosing to engage with debt crowdfunding must also be mindful of the economic environment around them. This is particularly true for startups in competitive markets. But putting the specifics aside, crowdfunders should know the types of debt crowdfunding loans available to them.



Types of Debt Crowdfunding Loans

Personal Loans

Different portals offer different loan opportunities. Prosper excels at connecting individuals with personal loans for nearly any occasion, including debt consolidation, home improvement, auto, medical/dental, vacation, baby, engagement, taxes, and more. These loans range from $2,000 to $35,000 with an amortization period of three to five years. The interest rates, processing fees, and loan options will change website-to-website, and even country-to-country, so research the market well before listing.

Business Loans

Similar to the personal loans, business loans come in many different forms. For instance, Assetz Capital, one of the UK’s fastest growing peer-to-peer lenders, allows startups to apply to one of three loans: property development, mortgage, or business. Like most other portal offerings, these loans require security and span the course of one to five years. The amount a business may borrow varies as well. Funding Circle, a leading debt crowdfunding portal in the UK, allows businesses to borrow £5,000 to £1,000,000. The fees are often transparent on such portals and right from the home page businesses can see the common lending rates.

As you ponder which type of loan best suits your project, read our past posts on debt crowdfunding investment opportunities and campaign management.



Location:Sycamore Dr,Lancaster,United States