FinTech & Alternative Finance

Raising Capital Today

Cyprus and Crowdfunding.

Looking at the history of Cyprus and how far it has grown economically and socially over a relatively short period of time shows what a remarkable nation it is. Since gaining independence in 1960 and then having been invaded in 1974 (which lead to the illegal Turkish occupation in Northern Cyprus), Cyprus has risen from its ashes and gone from being an agricultural society to industrial and even a service-oriented society in the span of approximately 50 short years.

Perhaps what Cyprus is most famous for is its favorable tax regime for corporations- legislation that has allowed Cyprus to not only financially prosper tremendously but also to attract hundreds of thousands of international businesses to a small European island.

With all these corporations located in Cyprus it is natural to increase capital flow and encourage the growth of new companies by entering the crowdfunding arena. Crowdfunding has been (and continues to be) successful in Europe, Asia and especially in the United States. The latest statistics have shown that the transaction value of crowdfunding in the U.S. has amounted to $959 million in 2017 and the highest transaction value of crowdfunding globally was $5,505 million (which was achieved by China).

Crowdfunding is becoming even more popular among the European Union members as well. It was reported that the transaction value of the crowdfunding segment in Europe was $436 million in 2017 with a projected annual growth of 10.8% per year until 2021.

Such growth rates mean that Cyprus can benefit tremendously from implementing crowdfunding regulations and encouraging entrepreneurs and small to medium enterprises to grow. The greater growth and business investment can lead to the creation of more jobs as well as more wealth which can in turn certainly act as an economic stimulus for the small island nation attracting even more investment in other sectors of its economy. Should crowdfunding prove to be as successful in Cyprus as in other nations then Cyprus even has the potential to expand into a tech nation.

#Cyprus #crowdfunding #alternativefinance

Reg A+ for Community Banks and Credit Unions.

By now, everyone has heard of crowdfunding as a new source of funding businesses of all sizes instead of resorting to big banks. But crowdfunding can be a major source of financing for community banks. In 2012 alone 51 banks failed and 35 of them had less than $250 million in assets. Since 2008, 1 in 4 local banks have ceased to exist. According to FDIC statistics, more than 2,500 banks failed from 1984 to 2011 and the majority have been small banks.

Community banks and credit unions are vital components of every small community because they help the community grow through financing small businesses and people. When small banks fail then the average person and small and medium enterprises can only go to big commercial banks for financing.

Community Banks don’t have to fail for lack of funding and they can use crowdfunding to grow as a business. Since community banks are already registered with broker-dealers and with FINRA the process for conducting Regulation A+ financing (in which the bank conducts an IPO to raise up to $20 million from the crowd) is much simpler than not having filed with the regulators at all. It’s also less expensive to crowdfund because the background checks on these institutions has been done.

Furthermore, as crowdfunding becomes a more popular means of obtaining finance SME’s are resorting to crowdfunding portals rather than banks. If community banks were to embrace crowdfunding then they could compete with crowdfunding portals and close this widening gap.

Women in Crowdfunding.

In the world of crowdfunding women entrepreneurs are essentially an untapped market although that’s starting to change!  A study from the University of Pennsylvania released July 2016 found that of 61,654 successfully funded Kickstarter campaigns that raised over $1,000, 41% of them were created by women.

There are crowdfunding sites dedicated to helping women crowdfund. One such site is iFundWomen which was created by three female entrepreneurs in the United States who successfully raised money through crowdfunding. This site not only encourages women to crowdfund but also coaches them before they launch their campaign to ensure that these female entrepreneurs reach their crowdfunding goal. As if coaching women wasn’t enough, iFundWomen also pays it forward by reinvesting a portion of their fees into crowdfunding campaigns that use their site.

Other sites, such as Vera (the first Dutch organization aimed at female entrepreneurs), help women entrepreneurs find the capital they need to grow their business and offer advice. VERA helps women with businesses that make an impact in society- much like benefit corporations in the United States. 

Plum Alley Investments, founded by female entrepreneurs Andrea Turner Moffitt and Deborah Jackson, is also dedicated to ensuring an increasing amount of capital goes to female entrepreneurs.

As the world of venture capital expands we hope to see more and more women using crowdfunding to break into the business world. 

 

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