Crowdfunding had another record year in 2021 and is forecast to soar even higher in 2022.
According to Pitchbook data, global crowdfunding exploded from the sizeable $8.61 billion in 2020 to a whopping $113.52 billion last year – a 1,021% increase.
The US market alone doubled year on year through Regulation CF and A+, with much higher numbers being raised and over 32% oversubscribed, according to SEC filings.
Analysis of key US private equity crowdfunding platforms such as Wefunder and Republic, showed their top 50 most invested Regulation CF (raises of up to $5m) crowdfunding offerings raised more than $171m in November alone from over 113,000 investors.
An average of $1,315 per investor while December tracked at similar levels.
In the Regulation A+ category, where companies can raise up to $75m annually, SEC EDGAR filings for 2021 show 343 US-based high growth private issuers raised $8.6bn in total.
Regulation A+ capital raises predicted in 2022 and 2023
The peak months for Regulation A+ capital raises were November and December, suggesting that 2022 will double the amount raised last year.
The market is expected to expand in 2022 and 2023 as regulated alternative secondary market trading platforms, known as ATSs, start to offer more potential liquidity in a private securities market set to grow from $7Tn in 2021 to $30 trillion in 2030, according to Forbes.
Innovative leading ATS provider specialising in private securities, Rialto Markets, predicts this trend will continue as more ambitious private companies worldwide apply this approach to their fundraising, leading to future secondary share trading.
Rialto Markets’ COO and Co-founder Joel Steinmetz said, “There were record months in the US crowdfunding during the first half of 2021, with May being the highest but there was a steeper growth curve in the second half, with record investment levels in the final quarter.”
“We see Regulation CF and Regulation A+ public offerings complementing each other and while April was the lowest capital raising month, and November closed as the highest month.”
“December in the US now looks like it may have matched or exceeded November, which sets the tone for a buoyant 2022, according to our research, and data coming from the major crowdfunding platforms and authorities like Pitchbook.”
“We are seeing this pattern ourselves with over $730 million in signed contracts for Rialto Markets at the start of 2022 alone from high growth private companies in the primary market, using our broker dealer infrastructure and technology.”
“Additionally, in the secondary market we are being swamped with requests from high growth private companies that offer fractionalized securities wishing to offer regulated trading to their investors through our SEC and FINRA regulated ATS secondary trading platform.”
High-growth private companies contributing to surge
Digital Twin pioneer Cityzenith, a company with three successful crowdfunding raises in three years, saw a big upsurge in investment during December and early January towards the 1st quarter 2022 close of its final $15 million crowdfunding raise.
It will move onto funding from institutions that have followed the it’s rise during this process.
Cityzenith CEO and Founder Michael Jansen said, “Crowdfunding isn’t for the faint-hearted.”
“You must have a strong strategy, large following, and investors to back the offerings from the outset. But it’s also about positioning the brand to win potential larger investors due to the momentum built through Regulation CF and Regulation A+ investment offerings.”
Atlis Motors had one of the most over-subscribed Regulation CF raises of 2021, attracting its full $5 million in just a few weeks with 4,123 new investors, further illustrating the importance of building a community of investors and advocates for the future of your brand.
Shari Noonan, CEO and Co-founder Rialto Markets, the broker dealer for both Cityzenith and Atlis Motors, responded: “These are ambitious companies who know what it takes to build a community for either a smaller Regulation CF raise or a much larger Regulation A+ offering.”
“2022 is going to be a massive year for the private securities market, especially Regulation CF and Regulation A+ capital raising campaigns for high growth private companies.”
“We are especially excited about movement in secondary trading for private companies, and by providing a platform to potentially unlock value for investors much earlier through a regulated ATS such as our own Rialto Markets secondary trading platform.”
