Early Stage Funding Models and Methods:
A History of Disruption

  • 2016

    Title III of the JOBS Act is set to take effect in May 2016, providing a significant expansion of equity crowdfunding opportunities for non-accredited investors, and increasing the total potential early stage investor pool from 8.8 million to roughly 240 million.

  • 2015

    Title IV of the JOBS Act, known as Regulation A+, is implemented, allowing both accredited and non-accredited investors to participate in “mini-IPO’s.”

  • 2013

    Title II of the JOBS Act goes into effect, lifting the ban on general solicitation and advertising of securities to accredited investors.

  • 2012

    As VC’s seek less-risky investment further upstream where their capital strength and power to “signal” the market will be more advantageous, crowdfunding platforms gain popularity and the Jumpstart Our Business Startups Act (JOBS Act) is passed with bipartisan support.

    15_t

  • 2010

    AngelList is founded, democratizing and adding significant transparency to the early stage investment process by allowing angels to engage directly with, perform due diligence on, and independently fund or pool capital to back early stage companies - all on a public platform.

    14_t

  • 2009

    Indiegogo and Kickstarter are launched and quickly become the premier rewardbased crowdfunding platforms, benefiting from the rise of social networks and a large pool of dynamic entrepreneurs otherwise constrained by the early stage funding gap.

    13_t

  • 2008

    The financial crisis of 2008 causes banks and large institutional investors to pull back from financing early stage businesses, leading to a significant funding gap for higher risk, early stage ventures.

    12_t

  • 2005

    Kiva launches as the first online peer-to-peer microlending platform, allowing individuals to lend directly to underprivileged, undercapitalized individuals seeking to launch or grow a business.

    11_t

  • 2001

    ArtistShare launches as the first documented online donation crowdfunding platform, focused exclusively on the music industry. Donors receive first access to artists’ work as reward.

  • 2000_1

    9_t

  • 2000

    The dotcom bubble bursts, destroying significant investor value but not otherwise impeding the growth and reach of the Internet.

    10_t

  • 1997

    Modern day crowdfunding is born when British rock band, Marrillion, runs the firstever online donation crowdfunding campaign, raising $60,000 from their fans to fund a US tour.

    8_t

  • 1996

    CreditSource USA (later rebranded as LendingTree) is launched as the world’s first online platform that allows banks to compete to fund debt. CreditSource initially focused exclusively on mortgage lending – a tangible, asset-backed investment with a steady stream of cashflow – but later expands into personal and business loans.

    7_t

  • 1992

    Arthur Fox launches Royalty Capital Funds, providing investors with a novel channel to invest in securitized royalty payments derived from revenues produced by the catalogues of David Bowie and the Beatles.

    6_t

  • 1990’s

    5_t1

  • 1980’s

    Institutional investors shift their focus away from early stage deals due to declining returns - a trend that quickly reverses itself in the 1990’s as the dotcom boom takes hold

  • 1976

    Dr. Muhammad Yunus of Bangladesh initiates a research program designed to evaluate the feasibility of providing credit for the rural poor, thus laying the groundwork for Graneen Bank and originating the modern microfinance model, further democratizing access to capital.

    4_t

  • 1970’s

    Silicon Valley becomes a hub of early-stage technology development due to the success of large technology companies and significant government funding and incentives programs, as Dariot’s model is utilized to provide an engine for growth and innovation.

    3_t

  • 1946

    The American Research and Development Corporation (ARDC) is founded by Georges Dariot, former dean of Harvard Business School, establishing the model for the modern Private Equity / Venture Capital firm

    2_t

  • 1933-1934

    The Securities Acts of 1933 and 1934 enact federal rules on the offer and sale of securities, completely banning the marketing of non-registered securities to the public and severely restricting access to financing for early stage companies

  • Pre-1933

    Largely unregulated market conditions lead to the stock market crash of 1929

    The Wild West

    1_t