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Capping it all off: After Equity Crowdfunding

Posted by AGORACOM-JC at 10:56 AM on Friday, June 17th, 2016

Every entrepreneur today is thinking of ways to manage their company from a sales and accounting perspective. Of equal importance is corporate recordkeeping, an aspect of business management that’s often overlooked – to a company’s detriment.

One of the crucial corporate records that needs more attention is the capitalization table, or cap table as it’s frequently called. Microsoft Excel has been the leading platform for cap table management for years. However, it’s becoming increasingly evident that old solutions like these are unable to match the pace of modern entrepreneurs and their recordkeeping needs.

What is a cap table?

Simply put, a cap table is a breakdown of a company’s equity ownership among shareholders. It reflects the percentage of equity ownership for founders and investors, as well as changes to equity value and dilution over time.

That’s just the simplified version. A cap table is much more than a list of transactions; it includes legal documents, sales, stock issuances, transfers, debt-to-equity conversions, and many other data. Sometimes, the term is applied broadly, and used to describe all records pertaining to company stakeholders: in other words, a lot of vital information.

How should the contemporary company track all of this crucial data?

How to manage a cap table in the Twenty-First Century

 

As a CFO I’m often responsible for the cap table management of the companies I work with. As a custodian I have a responsibility to make sure the information contained in the cap table is up-to-date, secure, and accessible to relevant parties.

Now, there’s a great tool that not only manages my cap table but also connects me to all the important documents in my company minute book. This tool offers an efficient management system that helps me keep track of all company shareholders in one secure environment. As my company grows, it saves me time and money that I would have wasted filling out paperwork, making hard copies, and sending digital files through unsafe email servers.

KoreConX is a FREE corporate management tool designed to facilitate the process of raising equity capital by bridging the communication gap between businesses and shareholders in a secure and transparent way. With KoreConX, I can release the contents of my cap table to shareholders looking to access their private holdings from investments. I can grant them access to relevant company reports and other information as needed.

The Four Cs

At the heart of it all, a cap table should be clear, comprehensive, current, and compliant. Clear to all those who need it for reference; comprehensive in its contents; current as of the latest development; legally compliant.

The great thing about KoreConX is that it is an all-in-one solution that ensures my cap table checks all the four Cs.

Clear: I can keep everyone on the same page without compromising the integrity of my records. With KoreConX, I can share as little or as much as I like, preventing staff from being bombarded with information not directly relevant to them and restricting access to confidential documents.

Comprehensive: Without a storage limit, I can store all my detailed information with KoreConX and work with collaborators in a secure digital environment.

Current: I can update the cap table virtually without having to make photocopies of the latest version, or without having to send everyone a revised spreadsheet through a risky email system.

Compliant: By law, members of the company’s Board of Directors must be able to access the minute book. KoreConX allows all members of the board to see the contents of the minute book. It also offers integrated tools to schedule meetings and assign tasks. The platform also saves time and money by reducing excess legal fees by taking a proactive approach to record management.

KoreConX is truly a tool for the modern entrepreneur. As companies of all sizes evolve and adapt to the pace of business today, our recordkeeping and information-sharing technologies should always be one step ahead.

The U.K.’s Mature Financial Disruption: What the Rest of Us can Learn

Posted by AGORACOM-JC at 2:30 PM on Thursday, April 7th, 2016

I’ve spent a lot of time in the UK lately, and it’s been on my mind even more.I was just there for the AltFi Europe Summit, and for the launch of The World’s First Fintech Book (I happen to be one fo the authors), and while I learned plenty, what stick with me now wasn’t something I picked up in a summit or book launch.I think there’s something that we in North American alternative finance and equity crowdfunding fans could learn from UK alternative finance companies, and it’s regarding the degree to which alternative finance is becoming mainstream.

For those of you who have been to London. I hope you have taken the time to ride the “underground” subway system, it’s totally amazing.I do all my travelling in London on the tube, and one thing that really stuck out in my mind while waiting at the stations and on the tube itself the amount of advertising.It’s extensive in any major city’s transportation, but the advertising in the London tube holds a particular place in my fintech-obsessed heart, because of the place of equity and debt portals in daily mainstream advertising.

As I saw the ads on the tube, I would ask people: “do you know what that is?” and 10 out 10 people knew about equity crowdfunding and how it helps start-ups and companies access capital.This was surprising to me, partly because equity crowdfunding isn’t even the dominant sector of alternative finance in the UK, peer-to-peer lending is.

The two most notable brands I saw were Crowdcube and Seedrs.These two platforms clearly understand their role evangelizing equity crowdfunding and helping to grow the sector as a whole.They know that they need to get noticed, be seen and heard over and over again to be successful.

According to the 2015 UK Alternative Finance Industry Report, both the number of funders and fundraisers is increasing year over year.There is no doubt that as an alternative finance market and a market for equity crowdfunding, the UK is far more mature than the US, and competition exists to an extent that the US market has yet to see.Besides working to drive general market awareness, UK equity crowdfunding platforms are pursuing both public and private sector partnerships. They’ve seen increasing involvement from institutional investors, according to the report, but aren’t staying insular, they’re actively pursuing new funders and fundraiser.

By far the UK is much more advanced on adoption. If you’re wondering why, my observations are as follow:

Transparency

They truly practice it.They are visible. They provide market data. Equity crowdfunding portals in the UK are early adopters espousing transparency as a business fundamental.And it goes beyond that.The industry as a whole is testament to the value of transparency, the data it collects and publicizes relating the state of the market, including the successes and failures of the companies it’s helped fund.

Aggressively Seeking Out the Crowd

There’s no “wait and see” approach for UK equity crowdfunding portals and ecosystem members, or even an “if you build it, they will come” mentality.They’re seeking out the crowd, and doing it actively. My own company, KoreConX, recognized a long time ago that if we wanted to be successful as a company, then we needed to help grow the equity crowdfunding ecosystem by seeking a public audience and evangelizing entrepreneurs and potential investors.

The Brand of the Industry

UK-based equity crowdfunding portals understand the importance of stressing success.One of the well-understood industry-wide risks is a loss of investor trust, and counteracting this with stories of success, as well as pursuing rigorous due diligence practices helps safeguard the reputability of the sector as a whole.
The world needs to look at the UK model and how great its working so time is not wasted on re-inventing the wheel.

Crowdfunding is the CROWD.They need to see you the portal, lets not forget how it all works.

Happy Equity Crowdfunding.