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An Explanation of CrowdFunding? - - CFP

posted Apr 3, 2013, 1:02 PM by Andrew Manzo   [ updated Apr 5, 2013, 4:11 PM by David Khorram ]
    Crowdfunding is many things, but in the general sense it is the collaborative effort of individuals who network and pool their money, usually via online platforms, to support efforts initiated by other people or organizations. This concept is not novel; it has been used and proven effective with many avenues including non-profit cause models such as Kiva, Fundly, and Razoo and for-profit models such as KickStarter and IndieGoGo.

    Kiva, a U.S. 501(c) 3 organization has offered nearly 1 million individuals the chance to provide loans as little as $25 at a time to entrepreneurs in deprived areas around the world, fulfilling nearly half a billion U.S. dollars in loans to date. The model has shown validity as its overall rate of return has been greater than 98% comparative to the Dow Jones Industrial average in 2012 of just over 7%.

    From the for-profit spectrum there is Kickstarter; a funding platform for creative projects and since inception has funded more than 35,000 ventures sourced by $450 million from individual funders. Kickstarter collects a percentage of the funded amount per project. The power of crowdfunding continues to expand into other avenues allowing for new ideas, projects, and dreams to be funded.

How it Impacts Collaperty?

    Collaperty will play an evolutionary role by taking the strength of this concept and applying it in order to simplify how we invest in real. We allow investors to fund real estate deals and in return the investor can gain an equity interest. Though our platform is open for anyone to join and build their network due to Securities Act of 1933, not everyone can view and invest in deals online. Today, U.S. accredited investors and institutions along with foreign entities can see and invest in deals. We anticipate that President Obama’s signing of the JOBS Act on April 5th, 2012 will ease solicitation laws as soon as the SEC can put it into working order. In the recent months there has been strong lobbying to hustle the enactment of the act.

What to Expect Next?

    Collaperty will keep a watchful eye on the JOBS Act as it comes to fruition and will continually assess its importance in the crowdfunding real estate model. When fully enacted the JOBS Act has the capability to allow everyday retail investors, regardless of net worth or income, to have a piece of pie in real estate deals.

    While the fundamentals of crowdfunding are engrained in the Collaperty model, today we do not allow non-accredited investors to see and invest in deals. For the time being we like to call our current platform: Groupfunding for Real Estate. Our platform will not only be a superior networking enterprise, but it will also allow qualified investors to collectively fill funding gaps in quality real estate ventures. In the meantime, Collaperty will explore additional ways to expand sources for funding deals that stay within the legal limit.

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