http://crowdfundbeat.com/pwc-and-uli-published-report-on-trends-in-real-estate/ PWC & ULI Publish Report on Emerging Trends in Real EstateRead More →
Boostable doesn’t have to sell its ads. Marketplaces sell them for it. Ticket, crowdfunding, and ecommerce marketplaces make money when their users sell things, so they’re incentivized to route traffic to the listings they host, which is exactly what Boostable’s easy-peasy ad-buying tool does for marketplace sellers do. So the marketplaces do the legwork of recommending… Read More
Folio Investing has a lofty goal: it wants to make the management of private securities as simple as public ones. If the company succeeds, it can have drastic effects on the private placement and the emerging equity crowdfunding industries by filling a number of clear needs.
Since the first days of equity crowdfunding, the need for various support services has been widely recognized.
Making crowdfunding legal (for accredited investors, for now) was the all-important first step. But aiding issuers and investors in the investment process is also key to ensuring the industry can thrive.
The multi-step funding process involves everything from filing the right documents, publicizing the deal, screening the investors, actually selling the securities, and enabling investors to manage their shares.
Companies like CrowdCheck have stepped in from the earliest days to help issuers with Bad Actor checks, for example, and BancBox with escrow services. But very few firms, if any, have sought to truly tackle the problems around share management for all parties involved.
Enter Folio Investing. A clearing brokerage, the company has 15 years of experience in helping clients manage their investments, both in public and, to a lesser degree, private companies. Companies like ETrade and Charles Schwab have allowed clients to easily manage their public investments for years. Folio Investing, however, has sought to set itself apart from the competition by offering the same services for owners of private securities that are available to holders of listed securities.
Among many other services, Folio Investing’s Private Placement Platform helps investors with online trade confirmation, provides an online statement, enables customers to see the private security in their ordinary brokerage account, sends updates and information provided by the issuer, pays out dividend or other distributions, and provides tax reporting.
“What that means for the end user is that now you can actually have a diversified portfolio that includes these new asset classes, without running off into the netherworld of paper certificates, and escrow banks, and paper applications, and just complete opacity as to what your investments are, and what they might be worth,” said Folio Investing’s vice president Blaine McLaughlin. “Now you can have the transparency you’re used to in your online brokerage account.”
Folio Investing supports 26 different account types, from individual investment and trust accounts to retirement accounts like IRAs and Roth IRAs, to corporate, LLC, and limited partnership accounts. The company’s private placement platform allows customers to add private securities to their portfolio. While investing in private placements has been possible for some time, automating the process makes it much more convenient for potential investors, and more cost-effective for issuers and their financial intermediaries.
The company announced the private placement platform in August 2013, and has been improving it since then, primarily by building out a full set of REST API end points that allow for fast and easy implementation among clients.
Companies that would most benefit from Folio’s platform include online intermediaries that allow users to invest in private companies — including crowdfunding portals, peer-to-peer lending platforms, and companies relying on other private placement exemptions. (For example, The Private Capital Market, whose owner, Tom Vass, is a regular contributor, and is already using Folio Investing.)
For these firms, there are a number of potential benefits in using the Folio Investing platform.
“Folio Investing [is a] revolutionary new way to do a closing: to streamline backend infrastructure, potentially reduce costs, definitely improve service level, and give the opportunity to have a real, lifetime customer relationship,” McLaughlin enthused, stressing that an online brokerage account was much stickier than signing a piece of paper and getting a paper security certificate back.
So far, Folio Investing is keeping mum on the number of companies that have expressed interest in the private placement platform. McLaughlin said a “few” companies are implementing using the backend infrastructure, but he expects more to join when the company begins to market the offering, something it hasn’t wholeheartedly done yet.
That doesn’t mean that Folio Investing is peddling an unproven technology. The brokerage has been servicing tens of thousands of clients over its 15 year history, and is already working with both Lending Club and Prosper — two of America’s largest peer-to-peer lending platforms — by enabling the companies’ respective lenders to trade notes they already have.
The prospect of a well-established secondary market is arguably the most intriguing part of Folio Investing’s private placement platform. Today, the lack of a secondary market is tapering interest around equity crowdfunding (for both accredited and unaccredited investors), who may be worried about being stuck with a relatively illiquid asset until the company they invested in makes an exit. While there are potential limits on how soon an investor could sell his or her share of a company — depending on what exemption was used by an issuer to raise cash in the first place — the fact that there is a potential way to get the cash back sooner than later may be enough to convince some hesitant individuals to invest.
McLaughlin didn’t specify the fees Folio Investing charges private companies and funds for using its backend system, but he did say that the company expects to charge a small percentage of the transaction amount.
“We want to charge in ways that work for our clients,” McLaughlin said. “If we did a fixed dollar amount and the client is doing a transaction based fee, there could be a conflict.”
Folio Investing’s services can be a real boon to the equity crowdfunding and private placement industries. The prospect of investing in startups by, essentially, reviewing the offering documents and clicking a button is attractive — and the ability to then manage the investments and list them on a secondary market is even more alluring. Folio Investing has the experience, and seems to have the desire, to make this happen.
No project of such ambition, however, could come without at least some hurdles. McLaughlin pointed out that having the process done in an automated, book-entry form from front to back end is relatively simple and straightforward. But transferring existing paper securities into an online database presents a host of headaches for both Folio Investing and its potential clients. If the latter judge that the process is too complicated and costly, Folio Investing may not be able to generate enough interest in its platform — that is, unless newcomers embrace it with open arms.
The brokerage account costs, which are likely to be passed along to investors and issuers, are another potential impediment. While the level of customer service would improve for a company that used Folio Investing for its backend operations, the price may simply be too high for some startups that are focused on micro-investing. McLaughlin suggested that investors could use Folio Investing’s public security investing services to broaden their relationship and spread costs out that way. But a firm that’s focused solely on, for example, small-dollar Title III crowdfunding, offering other services may not be feasible or sensible.
Folio Investing has already built out the technology, and it has the expertise to ensure that the investment process is painless for those involved. Now, it has to convince potential customers that the service is worth it. If you build it, they will come, indeed.
Update: A previous version of the article stated that CrowdCheck does investor accreditation, but it’s not a service the company offers. Our apologies.Read More →
A new venture is hoping to ride the coattails of the Kickerstarter ecosystem by offering a way to get your crowdfunding campaign in front of a community of Kickstarter power backers — for a fee. Read More
The crowdfunded fitness tracker Moov, built by former Apple engineer and HALO game designer Nikola Hu, Microsoft Research vets Meng Li (now Moov CEO) and Tony Yuan, has raised $3 million in new funding in a Series A round led by Banyan Capital. The additional capital follows Moov’s earlier raise of $1 million via a crowdfunding page on its own website.
There was early buzz around… Read More
Tilt has a grand vision: it wants to be for crowdfunding what WordPress is for blogging.
That is, the San Francisco-based company wants to make it simple and free for people to have a crowdfunding campaign up in minimal time, for anything they think is worth funding.
“We think crowdfunding is going to become an everyday thing, it’s not going to be only something you think about when you want to launch a cool new hardware product,” co-founder and CTO Khaled Hussein told Crowdsourcing.org in a recent interview.
Tilt, a Y Combinator grad that only launched two and a half years ago, has made a series of moves to put its ambitious goals well within reach. Indeed, in multiple major ways, the company has already delivered. Whether Tilt’s bet that crowdfunding will become as ubiquitous as blogging pays off, however, remains to be seen.
The Customer Is Always Right
The company’s success till now may not have happened if the founders, Hussein and CEO James Beshara, stuck to their original plans of making Tilt, originally known as Crowdtilt, a crowdfunding platform for non-profits and charitable causes. After launching the platform, the duo saw that many of the early adopters were funding tailgates, birthday presents, and fantasy sports leagues, and decided to roll with their customers. So, Tilt became a place to “group fund anything.”
From the earliest days, the founders’ focus was on building out technology that would allow Tilt to be versatile enough to keep adjusting to the customers’ needs and desires. Naturally, then, the founders set out to form a team made up primarily of software developers who were keen on making the platform adaptable and secure, and who could build out new features and products quickly.
“That allows us to iterate a lot, it allows us to innovate a lot, it allows us to experiment with a lot of different tools,” Hussein said.
Features, Features Everywhere
Tilt has, indeed, put the developers’ prowess into action. This comes across even on the most standard campaigns, where there’s flexibility around the goal and contribution amounts. Unlike most crowdfunding platforms, for example, Tilt offers users two funding thresholds — the ‘tilt’ and the target. The tilt (at least in theory) is the minimum amount a project creator needs to deliver on the promises made in the campaign; once that point is reached, backers can keep funding until the campaign expires. Project creators can also set fixed and minimum payment amounts, if that best suits their campaign.
The team has also been busy with a number of other projects. In August 2013, the company rolled out the beta version of CrowdHoster, a white label solution that allowed project creators to set up their customizable crowdfunding pages, for free. In February of this year, the company renamed the product to CrowdTilt Open, and launched it to the public. (Since the company’s rebrand to Tilt, the name accordingly changed to Tilt Open.) The product has caught on, and the recent hiring of Freeman White, previously at Launcht, should help Tilt Open continue to grow.
Tilt was also one of the first to roll out an app for its platform. The app is highly intuitive and it makes creating a crowdfunding campaign as easy as setting up a Facebook Event. There is a split cost feature to make it simple for people to collect an even amount of funds from each person, useful when collecting money for a gift, for example.
Along the way, the company created a ‘Sell Something’ feature tailored specifically for those who do want to use the platform in a more ‘traditional,’ product pre-sales capacity. Project creators set the minimum number of sales required to reach the goal, and decide on the price per item. The company’s most recent offering, which went live just last week, is a pre-order widget. Tilt promises that by simply “dropping in two lines of code,” the users are able to give any page the ability to pre-sell items. The new feature makes use of Tilt Logistics, the company’s fulfillment service that helps creators ship out goods to the backers.
Tilt Scores a Key Partnership
Tilt’s versatility was bound to pique the interest of a large, high-profile company sooner or later, and that’s just what happened. In August, the startup revealed that it partnered with ESPN to power the company’s Fantasy Football dues collection and payouts. The two firms, Hussein said, clicked early on in talks of partnering. But, Tilt didn’t want to take on the responsibility until it was ready.
“The biggest [difficulty] was going back and forth and making sure that our technology meets their requirements,” he explained. “Once we got to the point where we felt comfortable about taking on very, very heavy traffic from ESPN, we closed the deal.”
The partnership is already paying off for Tilt from a marketing perspective.
“People create their leagues, and then they start planning their tailgates after that, they plan their football watching parties, and that’s exactly what Tilt is about,” Hussein said. “It’s not something you’re going to use only once, it’s something you come back to.”
Later in August, the company took a serious step forward in realizing its mission of enabling anybody, anywhere to crowdfund anything: Tilt made its core features free of charge. While there are fees for the more elaborate, support-heavy fundraising options, a user who needs to collect money from a group of people can do so for free (as long as the backers pay with debit cards — credit card fees do still apply).
Dropping the campaign fees, Hussein suggested, shows that Tilt is looking to disrupt the (already disruptive) crowdfunding industry.
“Our motivation, very much, is innovating on the whole crowdfunding space,” he said. “We’re changing the mindset completely, where you just think more about the social aspect of bringing people’s ideas into reality.”
He continued: “It needs to be a lot easier than, ‘I have to go out of my way and convince companies to accept my project, and then I have to go create a video, and write all these paragraphs, think about all these rewards…’ No, it just needs to be a lot easier than that.”
While Tilt is clearly offering features and products that other crowdfunding platforms aren’t, it’s not unfair to ask whether Tilt is still really a ‘crowdfunding platform’ in the way the term is used today. Unlike its more traditional competitors, like Kickstarter and Indiegogo, there are no explicit reward tiers to create — unless a creator only offer pre-sales of a specific product via a ‘Sell Something’ campaign. And Tilt doesn’t allow visitors to browse its list of campaigns, since so many are personal and are unlikely to attract outsider donations, anyway.
I asked Hussein whether Tilt was morphing more into an online payment processing company like, say, Venmo, with added crowdfunding features; he rejected the idea.
“What Tilt is about is turning ideas into reality, it’s about using collective action to get to critical mass, to gauge demand, to excite people to do something new that hasn’t happened before,” he explained. “We’re a platform that enables things to happen, we’re not a platform for collecting dues after the fact, even though we see those use cases a lot on our site. We’re [for] the early phase, where you’re still planning and want to see the feasibility of something, you want to see the demand.”
Tilt’s vision and aspirations for the crowdfunding industry have caught the eye of prominent investors. The company has raised over $35 million from angels and VCs like Andreessen Horowitz, Sean Parker, and Naval Ravikant, among others.
Now, Tilt wants to turn its victories with early adopters and investors into more mainstream success. As part of that, the company has created a campus ambassador program, which has representatives preaching all things Tilt at 60 campuses in the US. The demographic on college campuses — young, tech-savvy, and open to new experiences — makes it the perfect place for the startup to find new users.
And while the company has already made its international debut in Canada, it’s looking to expand its further further across the globe. Hussein said that what makes the expansion process slow is finding the right partners to work with, both on a technological and visionary level, and navigating each country’s laws. But, he said, Tilt learned a lot from its experience in Canada, and it will use the lessons learned to make the process smoother in the future.
Tilt has figured out how to offer its services under a freemium model, made it simple for users to create crowdfunding campaigns in seconds on their phones and computers, and fostered a committed early user base. That’s not bad for a company that has yet to celebrate its third birthday. But, Tilt’s aims are set higher.
Will crowdfunding really break through and become “an everyday thing?” Perhaps; and if so, Tilt will be well positioned to reap the rewards. But if not, Tilt is likely to do once again what it has done to get to its current position as one of the leading platforms around: listen to its customers, and build out products that they need.Read More →
Yoshitomo Imura, an employee at the Shonan Institute of Technology in Japan, was arrested last may for printing and firing a 3D-printed gun called the ZigZag. He printed three guns in total and was arrested for running afoul of Japan’s strict gun laws. The prosecutors warned that Imura’s actions were a threat and felt he was “flaunting” his skill. They wrote:… Read More
For the first time since acquiring Songza this summer, Google is integrating the technology into its Google Play Music service. The updated service gives you access to expertly curated playlists based around date, time, weather, and what Google thinks you might be up to. Read More
If you’re hoping to provide home care for a sick or elderly family member, startup CareZapp is building a technology platform to help.
The company just took the stage as part of the Startup Battlefield at Disrupt Europe. Co-founder and CEO Andrew Macfarlane told me that his interest in the field began with his mother’s death from cancer more than two decades ago, and the… Read More
Selling itself as “Big data processing. Simplified.” the Tel Aviv-based Xplenty, which has developed technology to make data processing possible for professionals who aren’t versed in the arcane arts of Hadoop programming, has raised $3 million in a Series A round of financing. Hadoop, the open-source software project that’s used to process large data sets in… Read More
We are entering an exciting period for Artificial Intelligence. We’re seeing more consumer impacting developments and breakthroughs in AI technology than ever before. And as Nova Spivack recently argued, it’s reasonable to expect that major players like Apple, IBM, Google and Microsoft, among others, will lead a fierce consolidation effort for the AI market over the next 5 years. Read More
When it comes to corporate IT, revolution is in the air. The way companies buy, build, manage, optimize and secure information technology is changing dramatically. From cloud computing to big data analytics to ubiquitous mobile connectivity, corporate IT systems are getting faster, more efficient, cheaper to operate and easier to use. In the process, a new wave of tech companies has emerged… Read More
FBI Director James Comey had some choice words this week for startups and technology companies about their increasing use of encryption and their responsibilities to law enforcement. Speaking at Brookings, Comey argued that “…if the challenges of real-time interception threaten to leave us in the dark, encryption threatens to lead all of us to a very dark place.” He… Read More
This week we discuss all the iPads and other announcements out of Apple, the shows we are excited to watch on HBO sans cable and that time we met will.i.am and when Arianna Huffington told us to do a “digital detox” at a technology conference. Our video producer Felicia Williams joins Kyle Russell and myself this week on Crunchweek for her second appearance on the show. Read More
We are done writing songs for our 3rd album! We hope you are willing to help us fund the album. If so, click the link below! DONATE HERE: …Read More →
A scientist at the Scripps Research Institute who is leading an international effort to find a cure for Ebola has turned to crowdfunding to raise money to buy equipment to speed her work. …Read More →
We as the team of TaKeTV want to go the next step: TaKeTV is moving into a new home! From 170 sqm to 2000 sqm: This is a huge project and we need your help to realize this! Support eSports…Read More →
Real Estate Crowdfunding 101: Introduction to Patch of Land* *Please Help Us Receive a Mission Main Street Grant By Voting For Us* https://www.missionmainst…Read More →
SUPPORT THE SANDMAN ON INDIEGOGO NOW: https://www.indiegogo.com/projects/dario-argento-s-the-sandman/x/8739695 Exclusive Interview with Rock Legend, Iggy Pop, about his upcoming …Read More →
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Ole Miss beat Alabama last Saturday and the fans went nuts … tearing down the goalposts and carrying them through town. Well, it proved costly as the school was fined $50K for the fans storming…Read More →
Click the link below to sign up for Dollar Shave Club and help support ReviewTechUSA: …Read More →