In the early 1990’s online trading of public stocks was introduced. Now in 2015, online buying and selling of listed stocks is universal. The JOBS Act of 2012 set in motion changes that can have a much broader impact than online trading.
We now have a complete shift in the capital acquisition process for start-ups and small to medium sized enterprises (SMEs). It’s possible for an individual investor to participate in the seed round of a high tech start-up or help fuel the growth of a pre-IPO emerging growth company; this presents unprecedented opportunities for both issuers and investors.
Now 1.3 million U.S. SMEs have the ability to exchange ownership for cash with 50 million potential investors. The infrastructure that will support and facilitate this new market is in the formative stage. Will there be hundreds of “websites” offering company and investors memberships in their “community” hoping to find the “perfect match? Perhaps. Will the transactions all be self-directed and automated? Maybe.
Here’s what we know today; this is NOT like Rewards Crowdfunding where the worst thing that can happen is for the “donor” to overpay for an ill-fitting t-shirt or an ugly coffee mug (the average donation is $57). Like online trading, this is an SEC regulated environment where the average investment is a quantum level higher than $57.
We also know we have two parties engaging in a transaction with entirely different motivations. Companies need capital to expand and grow. Investors need their capital to grow and/or produce income or hopefully both.
This is an Industry in a very formative stage. This is exactly at the point that can generate extraordinary returns for the early participants.
An Innovative Approach
CMG determined a hybrid and evolving approach was necessary to successfully complete capital raises for private offerings utilizing public solicitation. “Hybrid” means to combine some “old” with some “new” techniques.
The “new” means a multifaceted digital inbound and outbound marketing program to build awareness and interest for a specific offering addressed to a potential market upwards of 50 million individuals.
“Old” means once there is a significant indication of interest, an SEC/FINRA registered rep works with the prospective investor to complete the transaction. In parallel, over time, CMG would continue to “evolve” the process towards a more self-directed and automated model comparable to online public stock trading sites similar to eTrade, Ameritrade, and others.
For the individual investors CMG determined two core services are required, Access and Education. The JOBS Act provided a revision of SEC regulations facilitating the ability of small and medium sized enterprises to build awareness and interest among the “Crowd” for private debt and equity offerings.
Since the barrier to create a “website” is relatively low, scores of companies introduced match.com like websites for companies and investors to “meet and mingle.” This early development launched the birth of the “Equity Crowdfunding Industry.”
The “Industry” to date is primarily based on a “Field of Dreams” approach: post a deal and they will come. Now there are over 60 “Sites” by definition that do NOT provide “the Crowd” comprehensive access to the world of private offerings. One would have to visit and sign-up at 60 sites in order see what is available in “the Market.”
CMG is committed to developing an investor service which provides a comprehensive aggregation of ALL current private offerings. This would be complemented with a series of tools to search and select from a 6,000+ company database.
Searches would be created with an easy to use but comprehensive filter tool narrowing results to offerings that best fit investor specific requirements. CMG believes this will achieve an industry leadership position by providing for the “Crowd” comprehensive “Access”.
Investor Education that assists individuals in learning how to make informed decisions in private companies is almost nonexistent.
What was once only the wheelhouse of investment professionals such as venture capitalists, private equity firms and angels, is now augmented by almost 20% of the US population, that in many cases, will have access to the same private offering investment opportunities.
CMG intends to introduce in the first quarter of 2016, the first in a series of online multi-media educational programs.
The primary objective is to expand an individual’s investment knowledge on how to select and analyze private offerings. Topics will be both general and industry specific, ranging from high tech, med tech, real estate and consumer products, to media and entertainment.
CMG believes with this balanced and unique approach to provide substantial services to both issuers and investors, the Company is well positioned to be a leading and trusted brand in this new and fast growing industry.
In drawing out the blueprint for a 21st Century Investment Bank, post JOBS Act 2012, CMG determined a new mix of skill sets and backgrounds would be necessary.
Requirements: investment marketing, securities background, digital marketing techniques and technologies, new business development experience, corporate finance, website design and development, database technology, etc.
Building on almost 40 years of delivering new investor acquisition and investment marketing services, Mike Casson, President, CEO, and founder of CMG recruited John White.
The expanded CMG team possesses a rare combination of the technical, tactical and strategic experience needed to build the infrastructure and channels necessary to support the interaction of 1.3 million companies with 50 million investors.
As CMG moves forward, we become increasingly convinced that this “new way” of raising capital will not only stimulate economic growth, but at the same time provide a democratization of wealth creation, previously not available.