Private Markets and Equity Crowdfunding expected to soar in 2022

Rick Steves

December in the US now looks like it may have matched or exceeded November, which sets the tone for a buoyant 2022.

Global crowdfunding exploded from $8.61 billion in 2020 to $113.52 billion last year – a 1,021% increase, according to Pitchbook data, which also found the US market alone doubled year on year through Regulation CF and A+.

After another record year in 2021, crowdfunding activities are forecast to soar even higher in 2022, according to analysts.

Private securities market set to grow from $7 trillion in 2021

US private equity crowdfunding platforms showed their top 50 most invested Regulation CF (fundraisers of up to $5 million) crowdfunding offerings raised more than $171 million in November alone from over 113,000 investors – an average of $1,315 per investor.

In the Regulation A+ category – where private companies can raise up to $75 million annually – filings have shown 343 US-based high growth private issuers raised $8.6 billion in 2021.

Since that the peak months for Regulation A+ capital raises were November and December, the figures suggest that 2022 could double the amount raised last year.

Regulated alternative secondary market trading platforms, known as ATSs, have also seen a surge in volumes as they start to offer more potential liquidity in a private securities market set to grow from $7 trillion in 2021 to $30 trillion in 2030.

Rialto Markets, a US–based broker dealer and a leading ATS provider specialising in private securities, sees the trend continuing as more private companies in the US and worldwide apply this approach to their fundraising.

Joel Steinmetz, Chief Operating Officer and co-founder at Rialto Markets, said: “There were record months in the US crowdfunding sector during the first half of 2021 – with May being the highest – but there was a much steeper growth curve in the second half of the year, with record investment levels in the final quarter.

“We see Regulation CF and Regulation A+ public offerings complementing each other and while April was the lowest capital raising month, the sector surged in late summer, and November closed as the highest month. December in the US now looks like it may have matched or exceeded November, which sets the tone for a buoyant 2022, according to our research, and data coming from the major crowdfunding platforms and authorities like Pitchbook.”

“We are seeing this pattern ourselves with over $730 million in signed contracts for Rialto Markets at the start of 2022 alone from high growth private companies in the primary market, using our broker dealer infrastructure and technology. Additionally, in the secondary market we are being swamped with requests from high growth private companies and marketplaces that offer fractionalized securities wishing to offer regulated trading to their investors through our SEC and FINRA regulated ATS secondary trading platform.”

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Rialto Markets launched ATS secondary market platform in August

In August, Rialto Markets launched its Alternative Trading System (ATS) secondary market platform after years of empowering companies to raise money via crowdfunding and institutional investment.

Operating a fully compliant secondary market trading platform for buying and selling shares in private companies, the SEC-recognized ATS offers clarity and simplicity to a complex marketplace.

According to its own research, firms looking to raise between $5 million and $25 million have a 90% success rate using crowdfunding.

Rialto Secondary, its ATS approved by the SEC, facilitates the trading of private securities including those issued as a Digital Asset Security.

Rialto Primary is the FINRA-registered broker-dealer which supports companies issuing equity and debt securities through Reg A+, Reg CF, and Reg D exemptions. Rialto Markets is registered in all 50 states including those requiring a broker dealer to issue Reg A+ securities.

The new Regulation A+ and Regulation CF securities status allows private companies to raise up to $75m or up to $5m respectively from anyone – everyday citizens, through high net worth accredited investors, and right up to large financial institutions.

According to reasearch from Technavio, the global crowdfunding market is expected to grow by $196.36 billion during 2021-2025, at a Compound Annual Growth Rate (CAGR) of over 15%. Regulation CF investment in the US doubled in 2020 YoY with over 358,000 retail investors, according to Crowdwise.

Reg A+ issuers enjoyed a 90% completion rate when raising between $5 million and $25 million in capital, according to Rialto Markets.

The newly launched secondary market ATS run by the broker-dealer delivers various options – buy more, hold, realize – for anyone investing in Regulation A+ and Regulation CF private placement securities.

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