Confidentcrowd

Last updated
Confidentcrowd
Confidentcrowd logo.gif
Type of business Crowdfunding
HeadquartersPhoenix, AZ, USA
IndustryFinance
URL http://www.confidentcrowd.com

Confidentcrowd was an equity crowdfunding portal based in Phoenix, Arizona. The company was associated with the Jumpstart Our Business Startups Act (JOBS Act) of 2012 and was identified as one of the earliest Crowdfunding portals launched in the United States [1] [2] [3] after the JOBS Act made crowdfunding for equity permissible under US law. The company is also noted for its unusual crowdfunding approach which requires investment seekers to undergo screening by FINRA-licensed Broker-Dealers before they can access potential funding. [1] [2]

Contents

Crowdfunding approach

Confidentcrowd's portal acts as a “meetingplace” for FINRA-registered Broker-Dealers, individuals seeking to invest, and companies & individuals seeking investment. [2] The company's portal is based upon a “membership base of broker dealers”., [2] who register Investment opportunities to the site to get access to investors. The Confidentcrowd site requires entrepreneurs to posting a listing of their opportunity and to be screened by a FINRA-member broker-dealer before a funding offering can occur. [1] The company's founder cites this process as a means to mitigate risk by “evaluating and structuring’ investments before offering. [4]

JOBS Act

Signed on April 5, 2012, the JOBS Act has been identified as one of the most influential changes to US securities law since the 1930s [5] and is reported as having the potential to dramatically reshape the financing landscape of American business. [6] One of the JOBS Act's widely reported provisions is that it exempts crowdfunding from many of the SEC regulations that restrict the raising of capital through private equity exchange. [7]

Market

After the JOBS Act was passed, it became possible for US companies to offer company equity in exchange for financial backing via Crowdfunding. To make this offering, companies can offer their equity through a licensed Broker-Dealer or via a Crowdfunding portal which also must be licensed via the SEC. In 2012, several portals have launched to pursue this market. [8]

Crowdfunding is functionally similar to a private placement, [2] but the crowdfunding structure makes it more attractive to those seeking smaller investments. Investment banks have reported that crowdfunding makes it economically feasible to raise smaller amounts of capital than with other methods [1] [7]

Partners

Confidentcrowd is associated with Phoenix, Arizona, investment bank Dinan & Company. [2] and [1] Crowdfund Intermediary Regulatory Advocates (CFIRA), and Crowdfunding Professional Association (CFPA).

See also

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An investment company is a financial institution principally engaged in holding, managing and investing securities. These companies in the United States are regulated by the U.S. Securities and Exchange Commission and must be registered under the Investment Company Act of 1940. Investment companies invest money on behalf of their clients who, in return, share in the profits and losses.

<span class="mw-page-title-main">United States securities regulation</span> Law and regulations that relate to Securities

Securities regulation in the United States is the field of U.S. law that covers transactions and other dealings with securities. The term is usually understood to include both federal and state-level regulation by governmental regulatory agencies, but sometimes may also encompass listing requirements of exchanges like the New York Stock Exchange and rules of self-regulatory organizations like the Financial Industry Regulatory Authority (FINRA).

<span class="mw-page-title-main">Financial adviser</span> Professional who renders financial services to clients

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<span class="mw-page-title-main">Jumpstart Our Business Startups Act</span> United States federal law

The Jumpstart Our Business Startups Act, or JOBS Act, is a law intended to encourage funding of small businesses in the United States by easing many of the country's securities regulations. It passed with bipartisan support, and was signed into law by President Barack Obama on April 5, 2012. Title III, also known as the CROWDFUND Act, has drawn the most public attention because it creates a way for companies to use crowdfunding to issue securities, something that was not previously permitted. Title II went into effect on September 23, 2013. On October 30, 2015, the SEC adopted final rules allowing Title III equity crowdfunding. These rules went into effect on May 16, 2016; this section of the law is known as Regulation CF. Other titles of the Act had previously become effective in the years since the Act's passage.

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References

  1. 1 2 3 4 5 "FA Magazine: Funds From the Madding Crowd" . Retrieved 2012-11-16.
  2. 1 2 3 4 5 6 "AdvsorOne: Kickstarter for Wall Street? Broker-Dealers Get Into the Crowdfunding Game" . Retrieved 2012-11-16.[ permanent dead link ]
  3. "Crowdfunding Herausforderungen und potentiale" . Retrieved 2012-11-16.
  4. Asset Management Banking News| 11/16/12
  5. "Crowdsourcing Dot Org". Archived from the original on 2012-12-16. Retrieved 2012-11-16.{{cite web}}: CS1 maint: unfit URL (link)
  6. "Breaking Down The JOBS Act: Inside The Bill That Would Transform American Business". Forbes. April 5, 2012.
  7. 1 2 "Financier Worldwide" . Retrieved 2012-11-16.[ permanent dead link ]
  8. "The Fight For Funding Portal Supremacy" . Retrieved 2012-11-16.