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emerging technology

SMALL COMPANY IPOS AND EQUITY CROWDFUNDING: THE IMPACT OF THE JOBS ACT

By | emerging technology, funding, startups

Without funding, even the best ideas can’t scale up.

Back in 2012, the Jumpstart Our Business Startups (JOBS) Act was passed to facilitate funding innovation in the United States. On the JOBS Act’s 5th anniversary, we wanted to explore two of its major areas of focus: small company IPOs and crowdfunding.

Going Public in the United States

One part of the JOBS Act was intended to facilitate IPOs, but five years later it seems that measuring its impact on IPOs is far from straightforward.

On the whole, IPOs in the United States trended downward in the years after the JOBs Act was passed, with the average number of IPOs per year in the United States hitting a 7-year low in 2016. Experts typically do not cite the JOBs Act when discussing the factors of the IPO drought, which include an active mergers and acquisitions market, events like Brexit and the US election, and a public skeptical of sky-high tech valuations. A surge in IPO activity in Q1 2017 has this year pulling ahead of 2016, a revival that experts at EY credit to the post-election market rally.

According to Joseph Hall, a former Managing Executive at the U.S. Securities and Exchanges Commission, the JOBS Act has made the steps to becoming a public company simpler, but expressed doubt that it had any major impacts on overall IPO levels.

“I think if a company was ready to go public, they were [already] a good candidate… the JOBS Act came along [and] made that a little bit easier,” Hall stated in an interview with the Financial Executives Research Foundation in early 2017.

That answer seems unsatisfying – shouldn’t the JOBs Act have had some kind of effect?

The JOBs Act and Small Company IPOs

The answer is that it has – but the impact is mainly related to Title IV, the provision that helps small companies file for an IPO more easily. The impact is focused on small company IPOs versus traditional IPOs, rather than on overarching IPO trends.

The JOBs Act provided a mechanism, Regulation A+, allowing small companies to pursue “mini-IPOs” – raising up to $50 million from the general public. In August 2017, the division of economic and risk analysis at the Securities and Exchange Commission published a report that indicated the Regulation A offerings jumped significantly in the 18 months after the new rules went into force.

The number A+ offerings relative to traditional IPOs has grown.

No company needs to IPO just for the sake of it. With industry collaboration platforms like seedsprint, emerging technologies may find themselves find themselves partnering with existing companies that help them scale. But the more possibilities that are out there to support tech companies, the better.

And small company IPOs aren’t the area where the JOBs Act has had an impact.

A New Funding Strategy for Startups: Equity Crowdfunding

The more pronounced impact of the JOBS Act seems to be on equity crowdfunding, a much-hyped approach to financing new technology in its earliest stages.

Though the Jobs Act was signed in 2012, its crowdfunding provisions (Title III: Regulation Crowdfunding) did not take effect until May 16, 2016. This part of JOBS Act allows ordinary Americans making less than $200,000 a year ($300,000 for married couples) – the ability to invest directly in the equity of a startup. The Act also authorized the use of third party portals for this kind of crowdfunding.

Even before the JOBS Act made it possible for this type of investor to take equity, “family and friends investors” had purchased billions of equity in US technology companies. Equity investing may now tempt even more first-time or small-scale investors.

Crowdfunding Versus Venture Capital

What will happen to traditional venture capital as crowdfunding expands?

Eileen Burbidge, from VC Firm Passion Capital, says that she is glad the ecosystem is getting larger – but that traditional VCs won’t suffer as a result. When Reuters asked Burbidge if she saw equity crowdfunding pulling business away from VC firms, she responded, “I don’t think so… the whole pie is growing bigger. We’re seeing more people start businesses, more innovation, more opportunities.”

There is disagreement on this count; reporters at both Forbes and TechCrunch have published articles predicting that VC firm could become destabilized by the rise of crowdfunding, as their funders pivot to direct investment via new crowdfunding platforms.

According to some, growth in crowdfunding is related to the decentralization of startups, beyond traditional hubs like Silicon Valley – where VC firms thrive.

“[Startup] proliferation has been global whilst the innovative companies and venture investors remained local,” writes TechCrunch. This implies that equity crowdfunding may come to serve innovators who have trouble securing venture capital in today’s tech ecosystem.

The Fate of Equity Investing

No matter its impact on VC as a whole, democratization of startup funding is likely to make a big difference for certain startups.

New technology drives the seedsprint community, and so changes to new funding approaches like crowdfunding are always of interest.

There may be cases where equity investing and crowdfunding can give a small company enough runway to tweak their technology, develop a proof of concept, or gather data – successes that they can then present to a major investor or corporate partner.

Both small company IPOs and equity crowdfunding unlock new possibilities for fundraising. Data shows us that the JOBS Act is having an impact on emerging technology companies.

 

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5 Startups to Scout in 2016!

By | emerging technology, startups | No Comments
Date: October 26, 2016 Posted by: Elysia Cooper In:StartUp Spotlight

 

Are you curious about the types of technologies and startups that are profiled on seedsprint? Below are five interesting startups that come from our member institutions. If you would like to see their full profiles, you can request a demo at the bottom of the page!

utilizes a proprietary cell culture system to create 3D cell clusters, or miniaturized organs, having applications in markets from drug discovery and development to cell-based transplantation and regenerative medicine. Likarda’s first product on the market will be a kit to cure diabetes in companion animals by transplanting Kanslets into diabetic dogs and cats. Likarda also conducts research and development with pharmaceutical and nutraceutical companies by testing new drug compounds on our 3D miniaturized organs, providing for better prediction of how drugs will work within the body.

Likarda was founded by researchers from the University of Kansas.

‘ technology enables a radical reduction in cost and energy consumption for removing carbon dioxide and other impurities from high-volume commodity chemicals, including natural gas, biogas, and hydrogen, through the development and manufacturing of high-efficiency metal-organic framework (MOF) adsorbents.

Mosaic Materials is incubated at Cyclotron Road, in partnership with Lawrence Berkeley Lab.

develops polymers that may be blended with any protein-based vaccine or therapeutics at any point in the delivery chain. The solution is composed of non-toxic particles that are custom synthesized for each vaccine. When the vaccine is combined with our polymer, the advantage is to prevent spoilage without refrigeration. The solution is portable, convenient, and reliable. It is designed to eliminate the difficulties associated with drug storage, transportation, and delivery.

Nanoly was founded by researchers from the University of Colorado.

‘s first product, the Vein-Eye, provides real-time video of veins and small tumors below the surface of the skin. This technology has been highlighted in over 250 research articles. NII’s technology both images and enhances visualization of near-surface vascular structures using the principle of polarization and depolarization of light.

NII was founded by researchers from the University of California, Los Angeles.

ShiftCool’s technology aims to dramatically and cost-effectively reduce the total demand on the electrical power grid during summertime afternoon peak demand period, using cost-effective and widely deployed Thermal Energy Storage (TES) technology coupled to air conditioning systems.

ShiftCool was founded by researchers from Arizona State University.

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SEEDSPRINT LAUNCHES PLATFORM FOR TECHNOLOGY STARTUPS & INDUSTRY

By | collaboration, emerging technology, open innovation | No Comments

seedsprint announces the public launch of its open innovation platform, bringing together industry partners and high-quality technologies spun out of leading scientific research at universities and laboratories. seedsprint is like a speed-dating service, quickly clearing the path for potential partners to figure out for themselves if there’s a fit.

Based on extensive testing with corporate tech scouts, seedsprint combines a searchable data base of highly-structured, non-confidential profiles with an internal messaging and work-process system. Users from either side can initiate contact, and move quickly and privately from reviewing non-confidential profiles, to private messaging, to secure exchange of due diligence materials.

 

seedsprint is free for institutions and young companies and available to corporate subscribers at a flat annual fee. Without transaction fees or intermediaries, seedsprint stays completely neutral.

 

In development for two years, seedsprint’s expanding network includes paid subscribers from industry such as CelaneseClariantDSMMerck GroupStryker and the fuel-cell JV of Daimler and Ford, AFCC.

 

Currently, about 60 leading university research centers, labs, incubators and accelerators, from the US, Australia, Europe, Israel and Mexico are platform members. US-based seedsprint is actively opening up to European membership and recently added Norway’s NTNU, whose Kavli Institute is home to Nobel-laureate couple, Drs. May-Britt & Edvard Moser, winners of the 2014 Physiology/Medicine prize.

 

To meet the high standards of corporate subscribers, startups and technology profiles are published by invitation only. With seedsprint’s profile-builder, users create and publish compact, actionable, and technically-informative summaries within minutes. Typically, members refer affiliated startups to profile themselves, and licensors can create profiles of selected technologies, available for development.

 

Jon Lillian, seedsprint’s founder, developed and launched the platform to respond to a basic challenge for industry technology watch: figuring out early on if a project is worth a deep-dive review. “Years of advisory engagements with industry clients kept revealing a big need: ability to have sufficient information to determine if a project looks to be worth a costly ‘deep-dive review.’” The key was to integrate non-confidential profiles with enough technical detail to be actionable, and link the directory to a streamlined process with secure communications and due diligence. You go from the profile review, to private messaging and NDA negotiation, to due diligence, with encrypted, online data rooms. We check profiles for sufficiency, but otherwise stay out of the way, so subscribers and technology teams can do their jobs and see if there’s a fit.

 

Free for startups and universitiescorporate subscribers pay a flat annual fee, and no per-seat charges.