SME Bonds Launched

CrowdFundInsider spotlighted the rising popularity of SME Bonds in a July 10th article authored by JD Alois. The article included commentary from Anthony Puls, Founding Director & Chairman of ASSOB and one of the trailblazers in the investment crowdfunding space. SME Bond are already available in Australia and New Zealand and target startups and early stage companies seeking to raise capital through crowdfunding. Puls expects SME Bonds to be available in the United States and Canada soon.

According to Puls, ““Entrepreneurs often require some initial seed funding to cover consultant’s fees; investment offer documentation; promotional videos; crowdfunding platform listing fees, etc. This is where the SME bond fits in.”

As outlined in the article, SME bonds have several advantages:

  • As a debt/equity hybrid, SME bonds are a cost-effective method to raise capital of up to $150,000. The bond is a debt interest that may include an interest rate but instead of paying cash – it delivers equity to the investor once it is “converted”.
  • An SME bond is a private treaty between an entrepreneur with an early-stage business and an early supporter who wants to back that entrepreneur. It can also be suitable for an investor that finds an entrepreneur with a great idea or business opportunity. It’s a one-on-one transaction.
  • An SME bond starts off as a loan/debt and is only converted when the issuing company undertakes a share (stock) issue.

“SMEs have witnessed traditional sources of funding dry up since the 2007–2013 financial crisis and are seeking financing through alternative methods such as peer-to-peer loans, securities based crowdfunding, Enterprise Investment Schemes and mini-bonds.  The capital market needs initiatives such as SME Bonds to provide leverage to the stifled economy,” said Ms. Wales.

Click here to read the full article.


Capco Insights: Journal of Financial Transformation, Issue 41

July, 1, 2015;

Issue 41 of the Capco Journal of Financial Transformation released. In this issue Capco focuses on the existential crisis embroiling finance. The lead article, by Kim Wales, Regulation and Cyberfinance: A new economic revolution liberating financial markets? Seeks to answer some of the questions driving this debate: What is currency? What is value? What is a business? What is a bank, even?

You can read the lead article in Issue 41 here.

ESMA issues Q&A on anti-money laundering and investment-based crowdfunding platforms

July, 1, 2015, Originally posted by ESMA,

the European Securities and Markets Authority (ESMA) issued today a Questions and Answers (Q&A) solicitation in order to promote the sound, effective and consistent application of rules on anti-money laundering and terrorist financing to investment-based crowdfunding platforms. The Q&A aims to promote common supervisory approaches and practices in the application of anti-money laundering rules to investment-based crowdfunding. It provides responses to questions posed by national competent authorities in the course of ESMA’s work on investment-based crowdfunding, drawing on expert input from the Joint Committee sub-committee on Anti-Money Laundering.  The Q&A is aimed at national competent authorities to support them in ensuring that their supervisory approach is effective, taking into account the characteristics of and risks associated with different aspects of investment-based crowdfunding platforms.

Not all invstment-based crowdfunding platforms have the same regulatory status. Some are within the scope of the Markets in Financial Instruments Directive (MiFID); others fall within the optional exemption provided by Article 3 of that Directive where they may be regulated under specific national regimes; others may fall outside the scope of MiFID and of those some are regulated under national law, while others are not. There are also other EU rules potentially relevant to investment-based crowdfunding platforms, such as the Payment Services Directive (PSD).

Those platforms which operate within MiFID are automatically subject to rules designed to combat money laundering and terrorist financing under the Third Anti-Money Laundering Directive (3AMLD). ESMA has sought to clarify the status of the other platforms, by analysing the potential risks and issues arising in different cases and their treatment under the applicable EU rules.