Scott Jordan, founder of the equity-based crowdfunding portal HealthiosXchange (H/X), has published a White Paper titled “How Does Equity Crowdfunding Resemble the Discount Brokerage Revolution?” which explores how the Charles Schwab & Co. discount brokerage phenomenon has altered the financial services industry for individual stock-trading investors and makes a strong comparison about how crowdfunding is altering the private-equity investing landscape.
Mr. Jordan stated, “Schwab disrupted an insider-controlled financial services industry that layered fees on top of fees, and Crowdfunding is poised to achieve the same historic role for private equity investors. Crowdfunding improves investors’ returns by enabling ‘direct’ investing and by shortening investment cycles by improving liquidity—removing capital lock-up and allocating capital on an ‘as needed’ basis.
“It is a well-established fact that traditional fee/carry-based structures have proven to negatively impact returns, as evidenced by the findings of a Kauffmann Foundation study that evaluated the performance of their 100 fund-investments. Their conclusion, ‘The cumulative effect of fees, carry, did not enable us to achieve returns sufficient to reward us for patient, expensive, long-term investing.
“At HealthiosXchange, we too are committed to low fees as illustrated by our ‘No Fee, No Carry model.”
HealthiosXchange is an equity-based crowdfunding portal and broker/dealer that raises funds under Rule 506 (b) and (c). The member-only site offers private placements to accredited investors. Some 1600 accredited investors, emerging growth companies, investment professionals, and strategic buyers are registered members.
