View Full Version : Equity Crowdfunding May be a $300 Billion Market

08-09-2013, 11:35 AM
I find the potential of crowdfunding to be enormous. I am amazed when I read about the possibilities that crowdfunding could usher in, not only for investors and project creators, but for the entire economy. There are two parts of the JOBS Act which are about to change things in a dramatic way here in the United States. The first which, was approved by the SEC and will go into effect sometime next month, allows for the solicitation of investors for equity crowdfunding projects. The second part is the allowance of non accredited investors into the equity crowdfunding markets. Although much stress has been put on the second part, actually, the allowance of general solicitation is likely the more important rule change. Already accredited investors make up a HUGE percentage of total invested accounts here in the US. There are approximately 9 million accredited investors in the US, worth trillions of dollars. That in itself will mean huge sums of money flowing into the equity crowdfunding markets, within months, as project creators can not publicly promote their investment opportunities.

The second part of the JOBS Act which will allow people with a net worth of under $1 million, and who are making under $200,000 a year to invest anywhere from 5-10% of their annual earnings into the equity crowdfunding markets, should go into effect sometime before the end of next year, hopefully much sooner.

There is $30 trillion in total personal savings and investment accounts in the United States. If equity crowdfunding captures 1 percent, that represents $300 billion. This does not take into account the possible trillion dollar+ market in the rest of the world. The coming years ahead are going to be awesome for crowdfunding, innovation, and investment opportunities. Jobs will be created at a pace we have not seen in decades, and the playing field among investors will even out. What are your thoughts?

Salvador Briggman
08-09-2013, 03:42 PM
Personally, I'm hopeful, but at the same time skeptical with the whole "if it's only x% of $x." Like you, I do think it is a game changer and that it will be creative disruption. I just don't like putting numbers on the potential size because it reminds me of when people are trying to raise money from a VC and say "if we only get 1% of the marketplace, we'll have a hundred million dollar company" when in reality, it's much harder to change consumer behavior whether in terms of product/service consumption or investment activities.

Obviously, I hope the marketplace will be that large, but I wouldn't base my business decisions on it.

I feel like we're going to see a big surge as the media begins talking about it (and it's legal), and then the people who only invested once will leave the marketplace and we'll begin to see how many people are willing to invest sums on a consistent basis.

I have no idea what the breakdown will be like for idea companies (no product or basic prototype) vs. established companies. I can see reasons on both sides why they would or would not participate in the long run.

08-10-2013, 09:36 AM
You know I really feel it could surpass those numbers in the long run, however, I am remaining cautiously optimistic. Here is an example I think could really get people excited:

Stephen Speilberg decides to crowdfund his next blockbuster. He decides to go the route of equity funding and offers equity positions in his film for as little as $1000. Anyone owning shares will have rights to profits the movie generates. Speilberg could keep a 25% equity position, while selling the other 75% for $75 million in capital to produce the movie. The movie is a hit, not only because of his directing genius, but also because tens of thousands of people own a small stake in the movie, and spread the excitement. The movie brings in $500 million worldwide, meaning that the $1000 the average Joe invested is now worth $5,000. 500% in a matter of 2-3 years isn't bad, while the rights to the movie on Netflix, HBO, etc will generate residual dividends for all those involved for decades to come.

Just one example which could really excite people, but the same thing could happen with big time novels, shows, as well as products and services.

08-11-2013, 04:11 PM
I do agree that this industry will be a big one in the future. But my main concern is how will they collaborate with banks and credit bereuas to make sure that the Debit of a normal individual will not become overwhelming. I really thing that Equity crowd funding should be monitored closes as to not create another financial crisis and should be run by certified professionals.