Study on Crowdfunding Portals Geared Toward Oil & Gas
By Jerri Nachman
September 27, 2017
The following resources paint a picture of several energy-related Crowdfunding portals and publications that focus on Internet investing. There are many links to websites and news articles below that give more in-depth information.
I interviewed Jillian Sidoti, Esq. of Crowdfunding Lawyers whose background includes securities in real estate, oil & gas, film distribution and biotech. Her bio: Jillian Sidoti
To better understand the parameters of Title III Regulation Crowdfunding (RC) (raise up to $1,070,000), Regulation A (raise up to $20,000,000) and Regulation A+ (raise up to $50,000,000) in any 12 month period, please review this:
Jillian, who spoke at my last Crowdfunding workshop on September 17th, suggested searching commercial real estate Crowdfunding portals as well as energy – both traditional and alternative. She also mentioned if an issuer wishes to raise more than one million dollars, might as well go all the way to a Reg A+ because the amount of paperwork, legal, marketing, costs and efforts are about the same as a Reg A.
When researching the Crowdfunding platforms below, the fee structures are all very different and some portals promise to bring investors to the deals and some do not. Some will not release their fees unless you sign up as a legitimate operator. The following displays information that I could find.
EnergyFunders manages the offering, they bring in the investors, and take a fee. There is an additional due diligence cost. It is worth registering as an operator to view other offerings on their portal.
Register to view offerings: https://www.energyfunders.com/app/user/signup
Wefunder fee structure:
For Reg CF investments, Wefunder charges investors up to 2% of their investment (the minimum is $7; the maximum $75). They also charge the company raising money up to 6% of their total funding volume (4% in cash, 2% in some flavor of equity or warrant to purchase equity).
For Regulation D offerings, Wefunder charges up to 20% carried interest.
Wefunder is the largest funding portal by dollars raised, number of companies funded, and number of investors. (or so they say). This portal is very expensive.
GridShare (Alternative Energy): https://gridshare.com/
GridShare is an independent online funding platform for renewable energy projects and cleantech companies. It is totally free to browse offerings and invest in a renewable energy project or cleantech company on the platform. Of the offerings I found, 2 were Debt, 1 was Equity, and 1 was Convertible.
Fee structure: Greater of 5% of net proceeds or $5,000.00, contingent on successful raise; GridShare may agree (but is not required) to accept partial compensation in securities.
For more information on their fee structure including legal filings: https://gridshare.com/pricing
“CrudeFunders is an innovative, technology enabled marketplace that provides a unique opportunity for all types of investors to participate in Oil & Gas deals based on their objectives and capability. You can invest as little as $1,000 on the completion phase of our projects.
With a network of investors ready to invest, we will work as your marketing, finance, and investor relations departments so that you can do what you do best…provide results in the field.
Projects are broken down into two phases and respective offerings: The well completion phase for beginners and investors looking to preserve their wealth; and for accredited investors, the drill & test phase, which has more risk, but provides you with the Oil & Gas IDC tax benefits and a higher proportionate return of the working interest. ”
CrudeFunders completes their first Reg CF (Crowdfunding) offer: READ ARTICLE
Browse Their Projects: https://www.crudefunders.com/page/investor
As long as minimums are at or under $2,200, anyone can invest. There are 5 projects listed on their portal in Phase I Drill stage and Test stages ranging from $5,000 p/unit – to $2,000 for Phase II Completion stage. The offerings were raising between $158,000 and $403,000 with 4 out of 5 offerings marked “Closed” or “Funded”. Here is one of the Offering Circulars for Aquinas-Polak No. 1 GP in Brazoria County, Texas: https://www.sec.gov/Archives/edgar/data/1708099/000170809917000001/Circular_CF0006.pdf
I have a connection to the CTO, Scott Bachman, through someone I have worked with in the past. He said to mention his name if you wish to get in touch with CrudeFunders. My contact’s name is David Strong – a securities broker.
David Strong was part of a Crowdfunding portal and understands the backend of this business. Here is his contact information: https://www.linkedin.com/in/dave-strong-7bb71238/CONTACT
StartEngine is a Title III Reg CF Funding Portal and they also operate an entity for raising money via Title IV Reg A+. StartEngine charges companies that raise money on their platform 6-8% of the amount raised plus credit card processing fees.
In their StartEngine Index blog I found this article:
The following data (and charts) cover Regulation Crowdfunding raises between May 16, 2016, and August 31, 2017. Data is sourced from all publicly disclosed Form C filings with the SEC.
The index has increased by 17.7%. Since August 2016, the compounded annual growth is now at 27.7%, showing accelerated growth in the recent months.
Total Capital Raised
Across all platforms, companies have raised nearly $61M through Reg CF.
Most companies raising through Reg CF are corporations with 74.4%. The rest are, for the most part, LLCs. The share toward corporations has slightly increased from 68.4% in July 2017.
Type of Securities Offered
- Common shares outrun SAFEs
- Common shares are still the most popular security offered at 35.5%, which is a sharp increase from last month which was 28.5%
- SAFE securities decreased this month, although they’re still in second place at 24.1%. Last month they were at 28.2%. This is probably due to the SEC’s warning about the complexity and issues with SAFE securities
To read the complete article: https://blog.startengine.com/august-2017-10a11ad5df3d
In the article, also review “Top Ten Closed Campaigns”. The following graphs have been extracted from this article.
Links to Portals In The Graphic Above:
First Democracy VC: https://equity.indiegogo.com/
Next Seed: https://www.nextseed.com/offerings/
NetCapital Funding Portal: https://netcapital.com/
Crowdfunder – bigger ticket items: https://www.crowdfunder.com/
I found everything from an electric personal aircraft creator who raised $10,227,500 of a $10,000,000 equity raise to the Mine Shaft Craft Brewing company raising $9,400,000 giving 8% annual interest on investment in addition to equity. The minimum investment of Mine Shaft Brewing is $25,000.
Query of Crowdfunding portals that include Oil & Gas offerings: (grab a cup of coffee and scroll down this page)
The following online publications are focused on the energy market and online investing.
Top Crowdfunding magazine: CrowdFund Insider: https://www.crowdfundinsider.com/
RigZone Magazine: http://www.rigzone.com/
Oil and Gas Investor: https://www.oilandgasinvestor.com/
Sign up for their Oil & Gas database.
READ THIS ARTICLE: Shale Producers On Spending Spree…
Mineral Drilling Company: Releases New Mining Project
Last, but not least, I want to introduce you to NioCorp Superalloy Materials: http://niocorp.com/.
I worked with one of the owners for a brief time and researched updating their website. They have raised money in the past and will be continuing to do so. My work with them was confidential.
Watch their presentation: https://www.youtube.com/watch?v=i52g1uhrH-8&feature=youtu.be
Follow their progress since 1997: http://www.sedar.com/