In Part 1 of this series, 4 models of equity crowdfunding were examined along with the issue of compliance with SEC regulations. In this second and final part of the series we’ll take a look at additional tips for launching a successful Reg D platform.
Successful crowdfunding platforms not only operate within SEC regulations but also meticulously plan on how to attract potential investors. Many of the people we have talked with about starting their Reg D crowdfunding platforms think they have a technology problem. They don’t. We solve that for our clients very quickly. Then our clients start to realize the problem they really needed to be solving was their marketing problem. Deal flow is key.
Start planning now for how you will get deals on your platform. Good deals bring good investors and then the cycle spirals up. If you try to get good investors first and then they see sub-par deals or no deals on your platform, they will leave. Then the cycle spirals down. Start with good companies on your platform and plan now for how to market yourself to your two main customers, companies seeking investors and the investors seeking good investments.
Don’t Build. Rent!
The best way to stay focused on your customers and building your deal flow pipeline is to “rent” or license the software you need to get up and running. Launcht provides quality white-label platforms that you can tailor to your needs.
A major advantage of licensing your software from a white label provider is that your business does not have to manage a tech team. That allows you to focus more on attracting investors and getting deal flow. In the background, Launcht is dedicated to solving your technology needs, allowing you to stay focused on your clients.
You can only do so much as a startup running your own crowdfunding platform. Start thinking of partners now who can help you get the things you need and who you could help. Partnerships could provide you with legal counsel, accounting support, taxation guidance, PR, branding, and deal flow. It is important to note that partnering is especially important in the service fee model outlined in Part 1 of this post. In that example, there is a necessary partnership between the broker/dealer and your platform that allows you to collect service fee income from the broker/dealer for running the platform for them. At all levels, your partners can offer you increased credibility and the services you may not want to pay for just yet.
Predictions for the Future
The regulatory landscape for Regulation D crowdfunding platforms is continually changing. Many regulations are still being decided upon by the SEC, so even after September 23rd, expect further changes.
As many of our readers know, another aspect of equity crowdfunding that is currently in the works is the implementation by the SEC of regulations for Title 3 of the JOBS Act. This process could continue for potentially another 18 months. After we hear from the SEC and FINRA on this point, we look forward to greater public involvement in equity crowdfunding. Until then, stay focused on your options in the Reg D environment.
Click here to learn more about Launcht’s white-label crowdfunding packages and stay tuned to this blog for the latest information about equity crowdfunding.