In a few years, analysts may very well consider 2015 as the actual year the traditional investing landscape became truly disrupted. At the very least, it has a high likelihood of being the year that investable assets expanded via equity crowdfunding platforms to levels that signify a “no turning back” point for the sector.
The increase in equity crowdfunding platforms has opened the door for mass amounts of angel investors to connect quickly and more efficiently with potential investments in the startup sector. Previous hurdles that created a long vetting process for both sides became streamlined thanks to platforms like AngelList, SeedInvest, OurCrowd and several others.
As you probably know, the Jumpstart Our Business Startups Act (JOBS Act) of 2012 blew the doors open for this era. With the act passing, FinTech began to revolutionize investing and financial services. While taking slower than some expected to gain traction, the movement took off and the results started pouring in. By 2014, startups were averaging 2.2 new hires post-crowdfunding. New jobs and new equity flourished under the regulations.
2014 Was Just the Beginning
Some in the industry consider 2014 to be the actual year that the status quo was disrupted. However, if you look at the numbers, there is quite a bit more room to prosper before this can be a full-on disruption. Numbers from this past year were strong for the new platform endeavor. While these numbers are nothing to scoff at, there is a high probability that those numbers will be dwarfed in 2015.
As of April 2014, the world comprised of 500,000 active angels. Of those, only 10 percent invested through equity crowdfunding. Sure, 50,000 angels funding startups is a great statistic. But there is more out in the landscape. Much more.
When KPMG announced its Top 50 FinTech Innovators of 2014 list, the aforementioned companies were present–as were several other equity crowdfunders and direct lenders. Considering the attention heaped onto the growing platforms, it remains to be seen how many more of the 450,000 other angels will enter the fray in 2015.
For example, in the United Kingdom, equity crowdfunding has been in operation since 2011. It took two years to gain significant traction. Then, 2014 saw 30 percent of equity funding come from crowdsourcing. In 2015, that number should be around 50 percent. Globally, 2015 investment numbers should come in around $20 billion–100 percent more than 2014. This growth is expected to reach $300 billion in 2025.
Adapting to Change
The landscape is sure to continue shifting to adhere to legal compliance. With it expected that the Security and Exchanges Commission (SEC) will finalize title III by the end of the year, those platforms that adapt are likely to position themselves in a way where they could be home to the next great ventures in 2016.
Currently, the market continues to operate as mostly normal. With 2015 numbers surging, and 2016 expected to do the same, now may be the time to label the relatively new platform a disruption.