Players in the crowdfunding space have a lot of headaches in order to maintain compliance, especially since the SEC requires that parties who invest in offerings on crowdfunding platforms must be fully accredited. That is, they must meet one of the following two requirements:
1) Have earned $200,000/ year in both of the past two years (or $300,000 with spouse) and expect to earn the same next year
2) Have a net worth of $1 million (excluding primary residence)
BancBox, a company known for its money-moving APIs, is seeking to remove this barrier for players in the crowdfunding industry with its new API that will verify the accreditation of investors.
The API is a part of the BancBox Invest service. It will enable crowdfunding platforms to determine if their investors are accredited and legally allowed to invest in the platform. In order to comply with the SEC’s 506(c) standard, the new API will:
1) Verify income. This includes a review of the investor’s IRS documents (W-2s, 1099s, K-1s, 1040s) for the past two years and an additional confirmation that they expect to qualify in the current year.
2) Have a third party verify income (releasing in April): Third party verification must be received from a CPA, attorney, broker dealer, SEC-registered investment advisor or an equivalent entity.
3) Verify assets (releasing in May): An investor must have a net worth of at least one million dollars, excluding the value of their primary residence.
Combined with other features that the Invest service offers, the API will give private placement and equity/debt-based crowdfunding platform owners a full suite of solutions.
Check out BancBox’s demo from FinovateSpring 2012 where it debuted its payments platform.
BancBox, a company that provides payment processing APIs, announced some metrics about BancBox Invest, its product that helps online crowdfunding portal companies manage payments.
BancBox Invest, which launched three months ago, targets debt, equity, and revenue share models. Here are some stats it shared, three months into operation:
- 18 companies are using the Invest API, including SeedInvest and Angel RoundUp
- It has processed $4 million on the platform
- Average investor funding totals $15,000
- Average escrow size totals $250,000
According to TechCrunch, the parent platform BancBox:
“manages $100 million in consumer deposits daily in nearly 200,000 individual accounts. Its transaction volume has increased 100 percent to nearly $2 billion annually.”
BancBox demonstrated at FinovateSpring 2012 where it showcased its payments platform.
The quickest path to the front of the pack is often to create a pack of your own.
That’s one way of looking at the recent announcement from BancBox CEO Sanj Goyle, whose company just built what they are calling the first online investment portal with an automated escrow service.
The idea behind the portal, BancBoxCrowd, is to provide a platform for creating independent escrow accounts for crowdfunded projects. The money collected from investors is either returned if the project is not completed, or distributed accordingly if the funding goal is reached.
BancBoxCrowd is fully SEC and FINRA compliant, and works by copying and pasting the relevant code to the destination page or solution. Users can monitor funding and escrow status, as well as get investor information, all in real-time.
Founded in 2008 and based in San Mateo, California, BancBox began as a way for non-financial institutions to collect, store, and send money in a secure, compliant, and integrated way. The platform has opened more than 100,000 consumer accounts, and processed billions of dollars in payments.
BancBox demoed their technology as part of FinovateSpring in 2012. See their presentation here.
Earlier this week, payment services platform, BancBox launched its new platform. While still in private beta, BancBox signed up 6 customers, including:
In fact, it uses its own payments platform to process its payments.
TechCrunch reports on the startup’s future plans:
“In a few months, BancBox will roll out a prepaid debit card option in partnership with Discover, which will allow a mobile app to create a debit card on the fly. The virtual debit card can be then be scanned via QR code at checkout. (Customers can still swipe its plastic counterpart at more traditional merchants, however.)”
Here’s the pricing structure: