Companies looking to raise cash got another option last week.
The long-awaited “Regulation Crowdfunding” went into effect, allowing firms to raise up to $1 million each year through a security offering in which less wealthy, unaccredited investors can participate. For example, anyone can invest up to $2,000 a year, and there are higher investment caps depending on one’s salary or net worth.
The new Securities and Exchange Commission rule also allows registered funding portals and broker-dealers to act as intermediaries and platforms handling such offerings and securities sales.
Los Angeles already has about a dozen such middlemen, according to Richard Swart, 49, chief strategy officer of NextGen Crowdfunding. Founded by billionaire Aubrey Chernick (No. 48 on the Business Journal’s list of Wealthiest Angelenos), the El Segundo firm showcases companies running equity crowdfunding campaigns and provides education on the topic.
“L.A. does seem to be a nucleus,” Swart said.
He cited FlashFunders and investor Howard Marks’ firm StartEngine, both in Santa Monica, as well as Century City’s Indie Crowd Funder, among others.
Swart noted Los Angeles might have become a hub for crowdfunding because people in the film, technology, and video-game industries, as well as other creatives, were early adopters of platforms such as Indiegogo and Kickstarter to raise capital for projects. Los Angeles also has a history of using equity crowdfunding to finance real estate.
“All these sectors create a perfect storm of opportunity in L.A.,” he said.
He explained that companies can now turn to customers or previous backers of crowdfunding campaigns to offer them an actual stake in their business. Granted, investors chasing large returns from early stage ventures could also be taking quite a gamble.
“Obviously, (early stage companies) are a higher risk,” Swart said. “Most companies that fail do so in the first five years.”
While NextGen doesn’t give investment advice, he said basic investing principles also apply to equity crowdfunding. Investors should diversify their holdings and make sure they can afford to have their capital in illiquid investments.
While bank branches are increasingly taking a back seat to online services, Long Beach-based Farmers & Merchants Bank is still investing in brick-and-mortar offices.
The lender recently finished a $1.5 million interior remodel of its Rolling Hills Estates outpost, opening up the layout. Tellers now sit at desks where they can also open accounts for new customers, among other services.
The bank was aiming to create a higher level of customer service at the branch, which is still vital even as more customers bank online, said Farmer & Merchants President W. Henry Walker.
“I work in one of the branches on a day-to-day basis, yet I do all my banking online, unless I need some level of cash from an ATM or teller,” said Walker, 50, great-grandson of the bank’s founder, C.J. Walker. “There’s still a need to come into the bank for something, and that’s an opportunity for us to engage from a personal perspective and create relationships.”
He added that consumers at every level, even technology-minded millennials, want authenticity and a human touch. That helped inform the renovation of the 12-year-old office, which Walker said was in need of updating.
Farmers & Merchants has two-dozen branches across Orange County, Long Beach, and the South Bay. That includes a temporary office in Redondo Beach on Pacific Coast Highway, which will be replaced by a permanent branch to be built across the street.
Boston Private will open a downtown L.A. office next month, which will serve as a base for the firm’s West Coast commercial lending and community investment teams. This will be Boston Private’s eighth office in Los Angeles County.
Simone Branigan has joined the Beverly Hills office of San Francisco-based MUFG Union Bank’s private wealth management team as vice president and a private wealth adviser. … Irvine-based Opus Bank has added Tricia Landry to its El Segundo office as managing director and senior client manager of commercial banking for the L.A. region. Opus also added Keira Rawlinson to its downtown L.A. office as director of fiduciary banking. … San Francisco-based Bank of the West has hired Spencer Gould as a senior client executive in its downtown office of family wealth advisers, part of the lender’s wealth management division. … Scott J. Donnelly, a partner at Torrance accounting firm PDM, has been elected president of the L.A. chapter of the California Society of Certified Public Accountants. … Long Beach accounting and advisory firm Windes has promoted Guy Nicio to partner in its tax and accounting services practice.
Staff reporter Marni Usheroff can be reached at email@example.com or (323) 549-5225, ext. 229.
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