Financial Technology (FinTech) is revolutionizing the financial services industry, including the way investors participate in alternative investing. From Ally (online banking) to eTrade (online discount brokerage) to Prosper (peer-to-peer lending), to HealthiosXchange (equity crowdfunding), technology is redefining the way we bank, trade stocks, lend money, and invest in companies. Fueling the transition to online marketplaces are tech-savvy Millennials who find visiting banks and participating in offline investment groups an inefficient use of resources/time and more costly than online alternatives.
“Highly catalytic news and events…….are increasingly benefiting from improvements in the quality of filtering, contextualizing, and sentiment scoring that text analytics are now bringing to the table.” – Paul Rowady, “Inner Voices”
By its very nature, Crowdfunding defines the potential of Big Data. Those participating in such platforms rely on building social networks to identify investment opportunities, conduct due diligence, and keep informed of investments over time. All of these activities generate massive of amounts of sentiment data or indications of positive, negative, or neutral feelings towards a particular topic. By tagging this data (i.e., Metadata) and applying scoring algorithms, Crowdfunding platforms generate a guidepost for investment decisions.
Within this wave of innovation resides an engine fueling capital market efficiencies similar to the proliferation/impact of decimalized trading in the public markets, and it’s called “Text Analytics.” This term, often used in concert with “Data Mining,” refers to leveraging technology to identify patterns in unstructured content (i.e., social media), measuring meaning behind data (contextualization/sentiment analysis), and making the data productive via tagging/matching (i.e., buyer investment preferences to deal flow).
Why is sentiment analysis important? It has the potential to assist investors with making better decisions, leading to higher investment returns and subsequently more capital reinvested in the space.
Personalization of data or “getting the right information to the right person in the right place at the right time and in the right format” will be the future of the capital markets and Crowdfunding will play a major role in that transformation.
Video: With the rise of peer-to-peer lending, “financial” and “technology” are coming together perhaps for the first time, says Ron Suber, president of Prosper. Technology and new business models are reshaping the types of business funding available, the ways organizations source it, and the investor base that gets to back it. While P2P lenders initially attracted retail investors, the returns have lured big institutions and hedge funds.
See Ron Suber’s Keynote – Lendit 2014:
Schwab’s disruption of the status quo and commitment to low fees resemble the equity crowdfunding revolution.
Before laws changed in 1975, brokers were a necessity for buying stocks. In 1975, Schwab was one of the first companies to launch discount stock trading. Their “you can do it yourself” corporate mission statement undercut traditional broker-dealer trading costs by 30% or more. Similar to the legislation that reshaped stocks trading in the 1970’s, the JOBS Act is also watershed legislation for investors seeking to invest in private equity at lower costs. Title’s II and V of the JOBS Act will increase the amounts of capital available to companies from non-traditional sources (~accredited investors) given the ability to generally solicit while remaining private up to 2,000 investors. Regardless of the outcome of Title III of the JOBS Act (Crowdfunding, non-accredited investors), the dam has been cracked, impacting the establishment who have leveraged financial regulations to amass huge fees from investors and companies for over the past 70 years.
Rory Eakin, Founder and COO of CircleUp, and Scott Jordan, Founder of HealthiosXchange, provided insights about crowdfunding trends in a unique and informative session hosted by Pensco Trust Co.
Equity crowdfunding has a large and growing base of global supporters and advocates. Some call the recent rise in popularity “a revolution” in early-stage finance. The presentation covers:
- Differences in crowdfunding platforms
- Regulatory Implications
- Investment Trends
Scott Jordan will be speaking at the 3rd Oncology Partnering & Deal-Making conference July 7-8, 2014 at the Hyatt Regency in Boston, MA, presented by Global Technology Community.
This event is a partnership and business development conference that provides an opportunity to network with high-level executives from top pharma and various biotech/pharmaceutical companies, as well as explore potential collaborations and learn about relevant issues in oncology that will affect the industry. Experts in the field of oncology will present on the latest discoveries, novel technologies, business development trends, markets, partnership opportunities, alliance management, value maximization vs. capital efficiency, and the rebirth of IPOs.
Sessions include 1) Investments, Partnerships & Acquisitions: Trends & Recent Deals; 2) Innovative Partnering & Deal-Making (Panel Discussion); 3) IPO: The Rebirth of Access to Public Capital; 4) Value Maximization vs. Capital Efficiency (Panel Discussion); 5) Advances & Technologies in Oncology; and 6) Novel Players in Oncology.
Scott Jordan spoke at Growth Capital Expo 2014 at Caesars Palace, Las Vegas, NV.
Growth Capital Expo 2014: Ideas for Investors and Executives of Micro-cap and Pre-IPO Emerging Growth Companies
The Growth Capital Expo brings together the best ideas, the most promising companies and the top deal makers in emerging growth finance for three days of education and networking in the nation’s premier destination for meetings and entertainment. The show has two full days of general session programming, networking and one-on-one meetings for investors, pre-IPO private and early-stage public company management, and capital markets advisers. Jordan spoke in the session “Institutional Equity Crowdfunding: Early Movers Prove the Case.” Learn more here.
Scott Jordan spoke in Boston on March 25 at the Harvard Business School Association’s event Crowdfunding Healthcare: Secrets from Industry Insiders (co-hosted with HBS Healthcare Alumni Association).
Two years has passed since the congress approved JOBS act, which would allow small businesses to raise capital from ordinary people. The long-anticipated September 23, 2013 repeal of the ban on public advertising of private securities offerings will help to usher in a new era of transparent, information-rich, and crowd-vetted capital markets. Now thousands of healthcare and life science emerging companies can take advantage of new mechanism to raise funds from accredited investors. For this event, Harvard Business School Association assembled some of the most active and respectable crowdfunding practitioners that specialize in healthcare and life science:
Moderator: Daniel Gorfine, Director, Financial Markets Policy, Milken Institute.
Panelists were Andrew Farquharson, MBA 1999, Managing Director, InCube Ventures; Scott Jordan, Founder, HealthiosXchange; Howard Leonhardt, Inventor & Entrepreneur; Greg Simon, Chief Executive Officer, Poliwogg; and Sean Schantzen, JD, Co-founder & COO, Healthfundr.
Attendees learned the secrets of the crowdfunding process, the latest industry news, and different practices for interested parties (e.g., entrepreneurs, investors, financial services). See Scott Jordan’s slide deck here.
Feb 27, hosted by San Diego Venture Group: Equity Crowdfunding, where you trade shares for cash, is finally here and the clutter in the market can make an entrepreneur crazy. What can you say, where can you say it, how do you reach all those accredited investors? Scott Jordan, founder of HealthiosXchange, will explore how life science companies can use equity crowdfunding.
Date and Time: February 27, 2014 | 7:00AM-9:00AM; Location: Del Mar Marriott, 11966 El Camino Real, San Diego, CA 92130. Visit the event website for more information.
Feb 10: Scott Jordan, founder of HealthiosXchange, will speak at the roundtable discussion Regulation A+ and the Mini-IPO, which delves into the potential market impact and SEC’s proposed rules regarding Title IV of the JOBS Act. The event will be hosted by The Milken Institute Center for Financial Markets in partnership with the Georgetown University Law Center, and the conversation will be held from 9:00am to 3:00pm on their campus in Washington, DC.
A group of diverse stakeholders will be convened to discuss how Reg A+ may impact issuers, investors, and the overall capital access landscape. The Reg A+ proposal would enable an issuer to raise up to $50 million, deal in unrestricted securities, allow for testing the waters, and permit general solicitation and sales to retail investors. The roundtable will explore how Regulation A+ (and related changes to Regulation A) may impact issuers from diverse industries looking to raise capital, investment funds and financial intermediaries, investors, and capital markets. They will also work through the SEC’s proposed rules on issues including blue sky preemption, eligible issuers, development of secondary markets, disclosures and ongoing reporting, and changes to existing Regulation A.
Following the discussion, The Milken Institute Center for Financial Markets will publish a white paper on the impact and regulation of Regulation A+, and will draft an SEC comment letter to help inform the rule-making process.