In 2004 Aubrey Chernick sold his Candle software business to IBM for an impressive $641 million. Since then the entrepreneur has grown that fortune into more than $1.29 billion through his holdings in NC4 – National Center for Crisis and Continuity Coordination. Now Mr. Chernick is setting out on a new endeavor to launch a crowdfunding service that will take a unique approach to helping startups gather the funding they need to succeed.
Introducing NextGeneration Crowdfunding
Instead of simply serving as a platform for consumers and entrepreneurs to find investors, the site will also be a resource for anyone researching the new crowdfunding rules from the Securities Exchange Commission (SEC) allowing non-accredited investors to begin owning equity in the companies they’re investing in. This could motivate new investors to enter the field, being that all previous crowdfunding sites have never given investors an opportunity to own equity in the businesses they’re putting their money into.
New SEC Rules Paving the Way for More Crowdfunding
At first glance, one might be concerned that the SEC could be hindering crowdfunding with a new set of rules and regulations. However, upon closer examination it is apparent that the organization is actually helping startups and entrepreneurs solicit more investors by providing extra incentive in the form of equity.
Previously, people investing in companies through crowdfunding could hold no stake or equity in the business, and would instead have to look forward to receiving some sort of one-time reward for their investment, such as a free copy of the startup’s flagship product.
Thus, the new SEC crowdfunding rules are good for both startups and investors because the latter will finally be able to reap long-term returns through crowdfunding, giving them more of a reason to want to be involved, and ultimately opening the gates for crowdfunding to become a more mutually beneficial form of funding.
Crowdfunding the Billionaire Way
We’ve yet to see a crowdfunding service launched by a billionaire, so it should be interesting to see how the new NextGeneration Crowdfunding platform will compare to existing competitors who are taking a much less investor-oriented approach. Aubrey Chernick is one of the first to turn the SEC’s recently introduced crowdfunding rules into a new kind of funding service that will offer investors more benefits than similar sites like Kickstarter and Indiegogo.
Investors More Likely to Flock to an Equity-Based Crowdfunding Service
With investors receiving some equity in the company in exchange for their investment, it is likely that the new site will attract an abundance of non-accredited investors who may be willing to contribute larger amounts per investment than you would see on a typical crowdfunding site.
On the other hand, startups that aren’t willing to give up any of their equity might see the new site as less-than-ideal. Still, losing a bit of equity in exchange for much better funding early on can be a very wise decision if the funding results in the business becoming highly successful in a matter of months.