Confidentcrowd was an
equity crowdfunding portal based in
Phoenix, Arizona
Phoenix ( ; nv, Hoozdo; es, Fénix or , yuf-x-wal, Banyà:nyuwá) is the List of capitals in the United States, capital and List of cities and towns in Arizona#List of cities and towns, most populous city of the U.S. state of Arizona, with 1 ...
. The company was associated with the Jumpstart Our Business Startups Act (
JOBS Act) of 2012 and was identified as one of the earliest
Crowdfunding
Crowdfunding is the practice of funding a project or venture by raising money from a large number of people, typically via the internet. Crowdfunding is a form of crowdsourcing and alternative finance. In 2015, over was raised worldwide by crow ...
portals launched in the United States
after the JOBS Act made crowdfunding for equity permissible under US law. The company is also noted for its unusual crowdfunding approach which requires investment seekers to undergo screening by FINRA-licensed Broker-Dealers before they can access potential funding.
Crowdfunding approach
Confidentcrowd's portal acts as a “meetingplace” for
FINRA
The Financial Industry Regulatory Authority (FINRA) is a private American corporation that acts as a self-regulatory organization (SRO) that regulates member brokerage firms and exchange markets. FINRA is the successor to the National Associati ...
-registered Broker-Dealers, individuals seeking to invest, and companies & individuals seeking investment.
The company's portal is based upon a “membership base of broker dealers”.,
who register Investment opportunities to the site to get access to investors. The Confidentcrowd site requires entrepreneurs to posting a listing of their opportunity and to be screened by a FINRA-member broker-dealer before a funding offering can occur.
The company's founder cites this process as a means to mitigate risk by “evaluating and structuring’ investments before offering.
[Asset Management Banking News, 11/16/12]
JOBS Act
Signed on April 5, 2012, the JOBS Act has been identified as one of the most influential changes to US securities law since the 1930s
and is reported as having the potential to dramatically reshape the financing landscape of American business.
One of the JOBS Act's widely reported provisions is that it exempts crowdfunding from many of the SEC regulations that restrict the raising of capital through private equity exchange.
Market
After the JOBS Act was passed, it became possible for US companies to offer company equity in exchange for financial backing via Crowdfunding. To make this offering, companies can offer their equity through a licensed Broker-Dealer or via a Crowdfunding portal which also must be licensed via the SEC. In 2012, several portals have launched to pursue this market.
Crowdfunding is functionally similar to a
private placement
Private placement (or non-public offering) is a funding round of securities which are sold not through a public offering, but rather through a private offering, mostly to a small number of chosen investors. Generally, these investors include friend ...
,
but the crowdfunding structure makes it more attractive to those seeking smaller investments. Investment banks have reported that crowdfunding makes it economically feasible to raise smaller amounts of capital than with other methods
Partners
Confidentcrowd is associated with Phoenix, Arizona,
investment bank
Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort.
In finance, the purpose of investing is ...
Dinan & Company.
and
Crowdfund Intermediary Regulatory Advocates (CFIRA), and Crowdfunding Professional Association (CFPA).
See also
*
Comparison of crowd funding services
References
{{Crowdfunding platforms
Defunct crowdfunding platforms of the United States