SAN FRANCISCO, CA–(Marketwired – September 22, 2015) – FundPaaS, a San Francisco FinTech company started by a group of Financial Technology Entrepreneurs, Silicon Valley Engineers and Legal Experts, has just launched the “Lend Me” button, a simple web plug-in that can help any business raise capital from its own customers at the point of sale on and offline.
According to recent laws, businesses can raise up to $2MM per year when using most of the twenty-one intrastate equity crowdfunding (i.e. investing for financial gain) exemptions and up to $50MM at the federal level through the new Reg A+ law approved three months ago.The “Lend Me” or “Fund Me” button can be branded and pasted into a home page, e-mail newsletter, point of sale shopping cart, mobile app, tweet, text message, product brief, promotional video and just about any other form of digital media. With a simple click, anyone can invest in any business provided they comply with the new securities laws which FundPaaS has simplified and automated. The button, once clicked, pops up an easy-to-follow sign up, document review and funds transfer process. All funds are escrowed at a 3rd party US Bank and in compliance with SEC rules. All for as little as $5 per investor processed through its funding platform as a service (PaaS).
This financial technology and regulatory changes bring forth real social impact since they democratize investing in startups, municipal projects, commercial real estate, scientific research and entertainment to mention a few use cases. Using the web plug-in, a community can now raise funds to launch a new school or a tourist attraction like the New York Ferris Wheel. Similarly, a well known author or speaker with a strong followership can fund a global book tour through the issuance of a “crowdfunded note or IOU” that pays investors 5% per year and it’s financed by his or her followers. “Imagine investing in your favorite author right from your kindle!,” said Amilcar Chavarria, FundPaaS’ CEO. The Lend Me button can have many applications as seen in their ‘periodic table of social impact’ and already experienced by the first ten clients which include startups, merchants, nonprofits, municipalities and commercial real estate developers and brokers.
Through its proprietary technology and ten partnerships ranging from broker dealers, due diligence, accounting and legal experts; FundPaaS, has simplified and automated compliance with securities laws at the federal and state level so that a business owner spends less than 5 minutes on an online form in order to determine which type of fundraising campaign is optimal to meet their working capital requirements before launching his or her own equity or debt fundraising campaign. All packaged into the powerful “Lend Me” button.
These new developments also increase the amount that a business can borrow to $50MM while also reducing the cost of capital since customers and suppliers are a great source of due diligence and assessors of creditworthiness in order to draw investments from banks and retail investors to partially fund these customer-to-business loans. As Amilcar Chavarria says, customers turned investors or “custvestors” are the best type of investors yet since their loyalty and willingness to promote increases once invested in a business that they know and trust. They are also more likely to open up their network to find key partners and new clients.
Recent data published by CrowdValley, a crowdfunding portal builder, states that 90% of the businesses that raise $5,000 through crowdfunding turn into viable businesses and have on average added an additional 2.2 hires. Within six months of crowdfunding, more than 10% of businesses receive institutional bank loans and 28% close funding rounds with venture capitalists and angel investors. Furthermore, an analysis of 1,600 deals done on equity crowdfunding portals in 2014, suggests that while only a third of listed startups were able to raise money from strangers, 97% of those that did, were able to raise over $500K which is significantly higher than what most online lending portals can offer today. It remains to be proven if these amounts will be higher once the trust barrier is removed for a business raising money from friends, family, customers and suppliers. However, businesses only pay if they’re successful at raising funds, which signals a risk and conflict-free alignment of interests between customers, businesses and FundPaaS.
Source: Yahoo! Finance (link)