Article – Private Capital Market Update
This month, The Division of Economic and Risk Analysis (DERA) of the U.S. Securities and Exchange Commission issued a report to Congress regarding the impacts of the Dodd-Frank Act on the access to capital for consumers, investors, and businesses as well as market liquidity. The 315-page report addresses several impacts and includes notable statistics on unregistered offerings, including Title III, Regulation Crowdfunding.
From the enactment of the Dodd-Frank Act in 2010 through December 31, 2016, there was approximately $20 trillion in capital formation through registered offerings and approximately $11 trillion of capital formed through unregistered offerings.
The amount of capital raised through Title II amendments to the JOBS Act, under Regulation D, Rule 506(c) (i.e. the general solicitation rule), which was implemented in September, 2013, represents 5,374 issuers participating, 5,474 offerings, with $70 billion of capital raised as reported in initial Form D filings.
The amount of capital raised through Title III of the JOBS Act, under Regulation Crowdfunding, suggests pre-revenue growth firms are beginning to use Title III as a crowdfunding method of raising capital. Table 7 of the report details the amounts raised under Title III from effectiveness of the rule through December 31, 2016, which represents 163 in total offerings, 28 completed offerings, 156 issuers participating, with approximately $8 million of capital raised.
Of the Title III offerings over the observation period, the distribution of Title III crowdfunding securities types were:
Equity: 36%
Simple Agreement for Future Equity (“SAFE”): 26%
Debt 20%
Units: 7%
Convertible: 6%
Misc.: 5%
The amount of capital raised through Title IV of the JOBS Act, under Regulation A, from the initial 18 months post effectiveness, DERA estimates that 56 issuers participated with approximately $314 million of capital raised.
Please see the report that can be accesses here for complete and accurate information. https://www.sec.gov/files/access-to-capital-and-market-liquidity-study-dera-2017.pdf
