In this week’s King’s Crowd Investment Roundtable, Brian, Léa, and Teddy dive into the top crowdfunding raises from Q3 2024 and share essential insights on how investors can spot potential red flags in campaign pages. From misleading pro forma revenue charts to non-disclosed company valuations, the team breaks down what investors should be cautious of and emphasizes the importance of transparency in financials.
What are the key insights from Q3 2024 investment crowdfunding data?
Teddy shares that Q3 saw strong performance with top companies like AtomBeam and Liquid Piston raising the most capital. The equity crowdfunding market raised close to $1 million per day, with the year expected to close around $350-$400 million for Regulation CF.
What are some red flags investors should be cautious about when analyzing campaign pages?
Brian points out revenue charts where issuers lump multiple years together, making declining revenues less visible. Léa highlights the issue of non-GAAP financials being presented as pro forma revenue, which can mislead investors about a company’s actual performance.
How do non-disclosed valuations impact investors?
Léa emphasizes that not disclosing valuations is a major issue, leaving investors in the dark. Teddy expresses frustration with platforms that fail to disclose valuations and urges the SEC to make it mandatory for all companies to publicly state them, as it’s a crucial factor for investor decision-making.
What should investors be aware of regarding financials in crowdfunding campaigns?
Brian reminds investors that Regulation Crowdfunding requires financials to be in GAAP format, making it essential to cross-check SEC filings and not rely solely on non-GAAP figures. Teddy adds that even though presenting pro forma revenue isn’t illegal, transparency and explanation are vital for investors to trust the data.
