Fayetteville-based EquityNet finding success with crowdfunding effort

EquityNet is a Fayetteville-based company that has operated a leading crowdfunding platform since 2005. The company’s platform membership has grown to more than 120,000 including entrepreneurs, investors and companies throughout North America.

The company has been featured in top media publications such as Forbes, Entrepreneur, The Wall Street Journal, The Chicago Sun Times and The San Francisco Chronicle.

Recently, EquityNet announced that its platform has surpassed raising $300 million in funding for thousands of entrepreneurs “making EquityNet one of the industry’s leading business crowdfunding platforms.”

Talk Business & Politics’ Todd Jones recently had the opportunity to ask the company’s CEO, Judd Hollis, about the state of crowdfunding.

TB&P: What is the state of crowdfunding from your company’s perspective?

Judd Hollis: We’ve seen a real evolution in crowdfunding over the past few years, and there doesn’t seem to be any signs of it slowing down. In fact, the global crowdfunding industry grew 167% in 2014 with $16.2 billion raised in funding. That’s up from $6.1 billion in 2013. Many within the crowdfunding industry predict that the global crowdfunding industry will reach $34.4 billion this year, and there are expectations that it will surpass the global venture capital market, which invests around $50 billion annually, within the next two years.

TB&P: What are you seeing in Arkansas and how has it changed over the past 10 years?

Hollis: While EquityNet is a company that serves North America as a whole, we do have a large amount of activity from Arkansas-based companies. We’ve seen a tremendous amount of growth within the state since we started 10 years ago. During that time, Arkansas really has become a hotbed of entrepreneurial activity.

The Arkansas Science and Technology Authority and the Arkansas Development Finance Authority’s Arkansas Venture Capital Investment Trust funds, as well as organizations like Innovate Arkansas, Startup Arkansas, and Startup Junkie – to name a few – have all been essential to that growth. Arkansans have an innate entrepreneurial spirit and now have a well-developed ecosystem to nurture that. It’s one of the reasons the Northwest Arkansas region, for example, is recognized as a top area for business and careers by Forbes and a “best small city for startups” by Businessweek.

TB&P: Where do you see EquityNet evolving in the next several years?

Hollis: Well, there are several different flavors of crowdfunding, but EquityNet is – and will stay – focused on helping entrepreneurs raise capital for their startups and small businesses as opposed to, say, charities or donation crowdfunding for something like disaster relief. In that regard, we will maximize our market share and presence within the business crowdfunding industry as we continue to grow.

We also plan to take advantage of upcoming rules and regulations that will make business crowdfunding more accessible to the average American. Title III, for example, will take the number of investors in America from around 5 million to 50 million controlling trillions in capital. This will of course have a direct impact on the entrepreneurs here in Arkansas as it will allow Arkansans to invest directly in companies within their communities.

TB&P: The Securities and Exchange Commission (SEC) is considering final rules on crowdfunding that would allow smaller companies to offer and sell up to $50 million in securities over a 12-month period to fund startup activities. Essentially, the unanimous vote by the SEC commissioners opens the door for equity crowdfunding ventures to offer investment opportunities to anyone willing to put up to 10% of their net worth in a startup, without being an accredited investor. Do you have an opinion on where this is headed?

Hollis: It looks like this is referring to Title IV of the JOBS Act. We think Title IV is a great step in the right direction, but ultimately, Title III (which rules have yet to be issued) is really what will help a lot of companies find success in crowdfunding as opposed to what Title IV and previous rules from the JOBS Act have done in the past. Title IV is great, but it’s really better suited to a certain segment of businesses. In short, we think Title III will affect a broader range of companies and investors.