ConfidentCrowd Launches Accredited Investor Access for Broker-Dealer Members In Accordance with Title II of JOBS Act
Dinan & Company today announced that its unique crowdfunding platform ConfidentCrowd will offer small and mid-sized businesses the opportunity to participate in much larger equity-based financings than available under the Title III crowdfunding provision of the JOBS Act. ConfidentCrowd’s FINRA-registered broker-dealer network will utilize the 506(c) provision in Title II of the JOBS Act to provide entrepreneurs with access to the deep pools of capital available within the accredited investor community. Most existing crowdfunding portals are not licensed as broker-dealers, and are therefore unable to raise money under Title II.
Title II amends Regulation D (“Reg D”), Rule 506 of the Securities Act, to effectively lift the ban on general solicitation and advertising connected with the sale of private securities. As a result, business owners that register with ConfidentCrowd will have better access to higher potential funding and the resources of accredited investors including high net worth individuals, family offices, pension funds, insurers, endowments and foundations, among others.
“While Title III Crowdfunding has drawn the early headlines, we believe Title II offers superior capital-raising opportunities, as well as a more compelling value proposition for both issuers and investors,” said Mike Dinan, founder of ConfidentCrowd and CEO of Dinan & Company. “The implementation of Title II of the JOBS Act will open the floodgates to larger, more sophisticated pools of equity capital funding and likely will occur well before the crowdfunding exemption under Title III becomes effective. The addition was in direct response to our broker-dealer members who indicated a need to underwrite larger equity offerings.”
ConfidentCrowd’s FINRA-registered broker-dealer platform will take advantage of both Reg D/Title II and Title III provisions, providing more flexibility than portals focused solely on Title III crowdfunding. As a result, the platform will be able to deliver tailor-made solutions that best fit the particular needs of its issuer clients.
“The amount of capital available for companies that issue Reg D offerings is immense,” said Dinan. “There are 6 million accredited investors in the U.S., and yet less than 10% have invested in Reg D offerings over the last three years.”
Dinan & Company research indicates that the amount of capital that was raised from Reg D offerings in the U.S. market in 2010 exceeded $900 billion. Issuers that take advantage of Reg D offerings will also be able to raise larger amounts of capital because the regulation does not include a hard cap funding limit. By the same token, investors that use ConfidentCrowd’s broker-dealer platform will also minimize their investment risk: businesses that obtain funding with Reg D offerings are typically more mature and well established than the start-ups that are expected to tap crowdfunding through Title III.
“ConfidentCrowd’s FINRA-registered broker dealers are the best qualified advisors to evaluate and raise equity capital, and to structure high potential investments”’ said Dinan. “By embracing both Title II and Title III, ConfidentCrowd will provide the users of its platform with the most complete range of equity-based funding options that exist today, while simultaneously reducing the risks to issuers and investors alike.”
ConfidentCrowd is the crowdfunding division of Dinan & Company, LLC, the parent company of a FINRA-registered broker-dealer with a 25-year reputation for providing premier investment banking services. Backed by the support of its roster of FINRA-member firms, ConfidentCrowd is uniquely positioned to connect entrepreneurs and investors with the industry’s most knowledgeable deal-making professionals. For additional information, please visit ConfidentCrowd.com.
About Dinan & Company, LLC
Dinan & Company was founded in 1988 with the singular purpose of providing the highest standards of professionalism, sophistication and execution expertise in Merger and Acquisition and Corporate Finance transactions to middle-market companies comparable to that afforded the Fortune 500 at full-service Wall Street investment banks. For additional information, please visit www.dinancompany.com.