Is the Death of Equity Crowdfunding Upon Us?
Indiegogo Has Quietly Exited Equity Crowdfunding (CrowdFundInsider).
Indiegogo, the second largest rewards-based platform in the US, has quietly exited equity crowdfunding.
Indiegogo entered the securities realm in November of 2016. The platform partnered with Microventures, a Texas-based broker-dealer, to create First Democracy VC – a FINRA approved funding portal.
At the time of the launch, a few months after the Reg CF securities exemption became actionable (May 2016), Indiegogo CEO David Mandelbrot stated:
“Our mission has always been to make it easier for individuals to raise money for projects they are passionate about and this is the latest way we’re helping entrepreneurs access the financing they need while also giving backers the chance to invest in new companies. Since Indiegogo first launched we’ve wanted to offer these sort of investments, and we’re very excited to be officially giving the millions of people who visit our platform every month the chance to get involved with equity crowdfunding opportunities.”
The entrance by Indiegogo into the investment crowdfunding sector was viewed, by some, as a significant validation of online capital formation for smaller issuers and non-accredited investors.
To issue securities under Reg CF, created by Title III of the JOBS Act, platforms must be approved by FINRA or be a broker-dealer. The partnership between Microventures and Indiegogo created one of the earliest funding portals – a number that now stands at over 40 FINRA approved sites. The platform has since been removed from the list of FINRA regulated funding portals and discontinued. While Microventures continues to offer Reg CF securities as a broker-dealer there is no need for the funding portal license.
Indiegogo was always envisioned as a securities platform. Founder Slava Rubin frequently mentioned this fact when he was championing the company’s mission. He would tell an audience that it was only when they discovered that rules that allowed for online securities offerings did not exist that Indiegogo followed a path of perk-based offerings.