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News & Media

Scaling Up: When Equity Matters

Forbes Magazine quotes Kim Wales
September 9, 2016

Kimberly Crupi Dobbins recruited two knowledgeable but silent angel investors. Felena Hanson brought in an investor and partner who would play a key role in her operation. Lucy Postins sold minority stakes to established, expert investors who would protect her sustainability values.

Securing equity investment while female can seem daunting, but these three women and many more are doing it. And with careful thought, research and determination, they’re finding the equity investors and setting the terms that are right for them and their growing businesses.

Most entrepreneurs use personal savings and reinvest business profits to expand. But a truly ambitious plan to scale up usually requires tapping outside capital. For most, that means getting a loan, according to the U.S. Small Business Administration (SBA). However, about 2% of business financing comes from angel investors and venture capitalists. These investors provide what can be sizable sums of money to entrepreneurs looking to seize opportunity in competitive, fast-moving industries, and sometimes supply expert advice and connections too. In exchange, they get a share of ownership and future profits.

Women, though, are quite scarce in the elite equity world. Only one woman raises equity financing for every nine men, according to the National Women’s Business Council (NWBC), and women-owned businesses receive just 2% of all equity dollars, while men-owned businesses receive 18% (equally owned and public companies get the the rest). One reason: Few women are in leadership roles at investment firms — in 2014 only 6% of their top management was female.

It can be a challenge to be the only woman in the room in equity negotiations, said Kim Wales, the founder and CEO of New York management consulting firm Wales Capital, at a recent NWBC public meeting. And women often hold back. “We scale back the vision, we scale back the dollar amount that we’re asking for when we’re raising the capital,” she says. “We should have the biggest idea at the table… We should be very confident in our ability to succeed. We should be asking for the capital up front to really make our visions come live.”

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BY kimwales
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TAG equity, equity crowdfunding, Equity investment

Opportunities and Challenges in Online Marketplace Lending U.S. Treasury Report

On Tuesday, May 10, 2016 the United States Treasury Department published a white paper entitled “Opportunities and Challenges in Online Marketplace Lending.”

“There is a clear need for greater transparency in the market for borrowers and investors,” Treasury Counselor Antonio Weiss said Tuesday in a call with reporters. He said Treasury recommends that regulators form a group to examine oversight needs for the industry and figure out “where further regulatory clarity could benefit the market.”

This report and call to action comes on the heels of the resignation of Renaud LaPlanche, the founder and now former Chief Executive Officer and Chairman of Lending Club, the largest global marketplace lender.  An internal review found a failure to disclose a personal interest in an investment fund the company was considering investing in. The review also found that he was among managers who had knowledge of abuses that were tied to the sale of some loans.

It has become clearer that marketplace lenders need to be more transparent about their business practices and some should be subject to additional oversight from U.S. regulators, according to a Treasury Department study released as the industry grapples with market turmoil and a scandal involving one of its leading firms.

The Treasury department said today in the released white paper/ report (attached) that companies in the burgeoning industry need to develop a public database for tracking data on their loans, and firms that lend to small businesses in particular should be subject to more federal consumer protection laws.

Treasury sought public comment on the marketplace lending industry to help government officials better understand the different business models and products being offered in July 2015.  Treasury outlined six recommendations, including calling for online lenders to improve how transparent their products are to borrowers as well as investors and the need for them to employ consistent standards and disclosures.

You can read the full report here.

BY kimwales
COMMENT Off
TAG jobs act, Kim Wales, Loans, Marketplace Lending, P2P Lending, P2P Marketplace Lending, Renaud LaPlanche, Securities Crowdfunding, Treasury, wales capital

Crowdfunding 2.0: Even You Can Invest in the Next High Growth Startup

A new legal framework changes the rules of the game for U.S. crowdfunding

By Andrea Hayley, Epoch Times | April 26, 2016Last Updated: April 27, 2016 10:21 am

Crowdfunding—an online method of soliciting money from the general public for a business, project, or cause—is about to go through a seismic shift. And it could mean insane profits for some investors—profits that were previously unattainable due to government regulations.

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BY kimwales
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TAG crowdfunding

House Bill Would Increase Cap on Equity Crowdfunding

By Gregory Roberts, Bloomberg News

March 24, 2016 — New online crowdfunding Web portals won’t go live until mid-May, but a key House Republican is already renewing efforts to ease existing restrictions on how much money companies can raise via the innovative technique.

Rep. Patrick McHenry (R-N.C.) introduced legislation (H.R. 4855) that would lift to $5 million the amount that an individual venture can raise under the crowdfunding exemption from securities law in the 2012 JOBS Act. That represents a fivefold increase on the $1 million cap now in the law.

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BY kimwales
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TAG crowdfunding, Kim Wales, wales capital

The University of Cambridge and University of Chicago 2015 Americas Alternative Finance Benchmarking Survey

The study is supported by the Inter-American Development Bank (IDB), Business Development Bank of Canada (BDC), KPMG and a number of leading industry research partners

The Cambridge Centre for Alternative Finance at Cambridge Judge Business School and the Polsky Center for Entrepreneurship and Innovation at Chicago Booth School of Business are jointly launching the 2015 Americas Alternative Finance Benchmarking Survey. This survey will be a comprehensive and empirical assessment of crowdfunding, peer-to-peer lending (marketplace lending) and other forms of alternative finance across North, Central and South America and scheduled to be available in April 2016.

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BY kimwales
COMMENT Off
TAG Chicago Booth, crowdfunding, Kim Wales, P2P Lending, Polskycenter, wales capital
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Recent Posts:
  • Scaling Up: When Equity Matters
  • Opportunities and Challenges in Online Marketplace Lending U.S. Treasury Report
  • Crowdfunding 2.0: Even You Can Invest in the Next High Growth Startup
  • House Bill Would Increase Cap on Equity Crowdfunding
  • The University of Cambridge and University of Chicago 2015 Americas Alternative Finance Benchmarking Survey

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Recent Blog Posts

Scaling Up: When Equity Matters

September 10, 2016

Opportunities and Challenges in Online Marketplace Lending U.S. Treasury Report

May 10, 2016
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