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Electronic marketing of securities & investments – aka crowdfunding

ZX_Spectrum SEISWhen you look closely at crowdfunding, you will quickly realise that it should be defined as the online marketing and management of securities and investments. It’s widely perceived as a fund raising technique for start ups, social enterprise and the cultural sector.  In reality these sectors have taken a lead and now everyone in the financial services sector and their clients are set to follow.

At Sapphire Capital we have been aware of this for some considerable time and are preparing for it’s rapid growth.

To this end we are delighted to be starting 2014 with a new partnership in place with Crowd Valley.  Crowd Valley is a USA based enabler of crowdfunding and online securities marketplaces. They provide the platform, back office and ancillary services for crowdfunding, peer-to-peer investing and online funding marketplaces. Crowd Valley is part of the Grow VC Group, which is the world’s leading, global pioneer of securities crowdfunding, peer-to-peer marketplaces and new investment models (the full press release can be viewed by clicking here).

This collaboration means that Crowd Valley and Sapphire Capital Partners’ customers can now start online marketplaces for new asset classes such as real estate properties, private companies at all stages and energy projects.

  It also provides environments online where sector, geographic, structure or other classification specific can be held together.  Authorised investors with similar interests can also come together in an online community.   

The importance of adhering to FCA regulatory frameworks and policy cannot be underestimated. The FCA are reviewing the regulation of this sector and we expect new rules to be published in April 2014. The industry hopes that it will be light touch but we expect them to more rigorous.  The FCA has focused on the distinction between peer to peer lending and equity sites.  The equity crowdfunding sites are causing concern because of their focus on start ups and their inevitable high failure rates. The perceived risk of lending is much lower.  There has been some controversy because they have identified debentures as a form of equity crowdfunding while they are actually a debt security.  It will be interesting to see what the April 2014 ruling is. 

The FCA has also confirmed that the rules will cover all online marketing of securities and investments.   This confirms what we already know, that the whole industry is moving in this direction. The importance of taking advice and partnering with technology and other specialists cannot be underestimated but there still remains an opportunity to embrace crowdfunding and not be left behind.  Investors, both qualifying individuals and institutional, expect to find information relating to an investment, identify others from across the world who they can build trust in, discuss the merits of an investment and finally, have the ability to make the investment - all online.  This is exactly what crowdfunding can do and Crowd Valley and Sapphire Capital are here to help with our crowdfunding services.

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