Liquidity – A New Twist for Equity Crowdfunding

While true equity crowdfunding remains an unfulfilled promise in the US as the SEC grapples with the JOBS Act mandate and its mission to protect individual investors, the concept is alive and well in many other countries. What’s more important is that the equity crowdfunding idea is continuing to be developed and further refined in these markets which could provide valuable precedents for the process when fully implemented domestically. A prime example of this type of refinement is Bigcolors in Hong Kong. Bigcolors provides an equity crowdfunding platform for startup companies to use to reach investors. What’s unique about the Bigcolors program is that it takes the process one step further by facilitating a market in which investors can actively trade these investments in private companies. Bigcolors believes that this liquidity option will make these investments more attractive to potential investors by removing the concern that their funds will be unavailable for a lengthy period of time. Although it’s still too early to gage the success of this concept as Bigcolors was just launched last month it does demonstrate the type of innovation likely to occur in foreign markets that are ahead of the US in establishing equity crowdfunding mechanisms and these can and should provide an important test bed for new concepts in equity funding for startup companies.

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