FundAmerica Acquired by Prime Trust

From “key vendor” to acquirer, Prime Trust has just purchased crowdfunding regtech specialist FundAmerica. Terms of the deal were not disclosed.

In an email, FundAmerica CEO Scott Purcell emphasized the deep relationship between the two companies (Purcell is CEO of both firms and is Chief Trust Officer of Prime Trust). He wrote “Prime Trust (is) developing a massive amount of proprietary software on top of FundAmerica’s code-base, so the acquisition is symbiotic for everyone involved.”

FundAmerica builds SEC-compliant solutions for technology-based securities offerings. The company’s platform provides AML screening and bad actor checks, payment acceptance solutions for both fiat and cryptocurrencies, online investing, escrow management, and broker-dealer compliance and syndication tools. To date, FundAmerica has raised more than $750 million from 150,000 investors in more than 1,000 offerings.

Prime Trust is a blockchain-driven trust company that sees itself disrupting the traditional trust industry in the same way PayPal disrupted merchant processing. The firm serves as a custodian and trustee for personal and corporate trusts, as well as for crowdfunding platforms. It holds cash and non-cash assets including stocks, bonds, and cryptocurrencies.

Combining the two companies provides capital markets participants with a one-stop-shop in terms of both regulatory and custodial services. And Purcell pledged that there would be no disruption for clients and partners of FundAmerica or Prime Trust. “The APIs, the technology, and the services all continue without interruption,” Purcell wrote. “They will just get better and better.”

He added, “The important thing is that Prime Trust and FundAmerica are now unified and even better positioned to deliver best-in-class technology, compliance, trust, and custodial services to everyone involved in online capital markets; including ICOs and SCOs.”

Based in Las Vegas, Nevada, FundAmerica demonstrated its API for crowdfunding platform compliance at FinovateSpring 2015. Previous to its acquisition, the company had raised $2.3 million in funding.

Finovate Alumni News

On Finovate.com

  • Algomi Picks Up Investment from Euroclear.

Around the web

  • YUKKA Lab selected to participate in the Swiss Kickstart Accelerator.
  • Finicity announces integration with SimpleNexus’ enterprise digital mortgage platform and mobile app.
  • Diebold Nixdorf teams up with Progress Systems to bring self-service cash withdraw and deposit services to credit unions in Ireland.
  • Lending Club appoints Ronnie Momen as Chief Lending Officer.
  • Kabbage appoints Scott Rosenberg as CFO.
  • BeSmartee integrates with Equifax to automate service options.
  • Crowdfund Insider: OurCrowd celebrates 5 years with $750 million raised, 160 companies & 21 exits.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

FundAmerica Unveils New RegTech Tools

FundAmerica_homepage_March2017

Regtech may be hot in the U.K. But the flame of regtech innovation is burning brightly in the U.S., as well. FundAmerica, builder of compliance solutions for crowdfunding platforms, rolled out a series of “new tools and upgrades” this month. “Technology (and our engineers) never sleeps,” FundAmerica CEO Scott Purcell announced in an email to subscribers. The enhancements enable users to:

  • Allow potential investors to “test the waters” with plug ‘n’ play buttons and at-launch support
  • Quick-launch escrows
  • Issue investor statements using FundAmerica’s registered transfer agent
  • Levy fees and commissions as part of the transaction
  • Record partial funds received for more accurate reporting

The upgrades also include new APIs and Invest Now dashboards, as well as administrator integration “so traditional fund admins can still perform services to direct-to-crowd funds but offload the ‘crowd’ reporting and statement stuff to us,” Purcell wrote. Another major addition to the platform is the ability to customize the automated emails sent to investors during the streamlined Invest Now process. This flexibility, the result of “countless requests and man-hours in engineering,” enables issuers to add legal disclaimers, modify the language to better align with marketing copy, or simply provide additional information about a deal.

FundAmerica_stage_FS2015

Pictured: FundAmerica founder and CEO Scott Purcell during the demonstration of his company’s platform at FinovateSpring 2015.

Founded in 2011, FundAmerica demonstrated its API for crowdfunding platform compliance at FinovateSpring 2015. The company’s backend solutions cover AML, escrow, and payment processing, enabling broker-dealers, listing services, and platforms to remain compliant to relevant laws and regulations, such as Reg A+ and rule 4(a)(6), when operating their crowdfunding business. FundAmerica’s Invest Now transaction engine keeps capital raising smooth and efficient for the investor, as well, leveraging APIs and copy ‘n’ paste functionality to make it possible for investors to complete the process in a single sitting.

Since inception, FundAmerica has processed more than $400 million in investments from more than 75,000 investors in more than 300 offerings. Having managed the back office work for the industry’s first successful Reg A+ offering, Elio Motors, last year – en route to handling the back office for more than a dozen additional Reg A offerings in 2016 – FundAmerica anticipates both more hiring and more solution-building in 2017. “2016 was a great start, as we finally have Reg’s D, A & CF, and 2017 will see an acceleration of capital rising using those new tools,” Purcell noted in a year-ending post on the company blog.

FundAmerica was featured in our “RegTech Reality Check” post last fall, and profiled in our Finovate Debuts series of new Finovate alums. The company has raised more than $2 million in funding courtesy of a seed round in 2013.

Finovate Alumni News

On Finovate.com

  • FundAmerica Unveils New RegTech Tools.
  • Qapital Raises $12 Million, Adds Debit Card Functionality

On FinDEVr.com

  • Check out these previews from upcoming FinDEVr New York presentations:

Around the web

  • OutsideIQ teams up with Genpact to bring better risk management, KYC, and AML compliance solutions to banks.
  • Ixaris Technologies unveils its Open Payments Cloud platform for developers at upcoming hackathon.
  • Top 10 global bank deploys mobile capture technology from Kofax.
  • IBM forges strategic partnership with Salesforce, connecting AI platforms IBM Watson and Salesforce Einstein.
  • Bluefin Payment Systems joins forces with The Pinnacle Corporation, bringing point-to-point encryption (P2PE to the latter’s Palm POS platform.
  • CB Insights lists NetGuardians on the regtech map.
  • WeInvest piloting roboadvisory service with OCBC Bank.
  • eWise to power customer loyalty app for Gini.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

Fintech Trending: RegTech Reality Check, Blockchain Bandwagon, and IBM’s New Wallet

makecompliancegreatagain_redhat

Hat, courtesy of Alloy, a customer-onboarding specialist that debuted at FinDEVr in October.

The dream of RegTech is alive at Finovate

Deloitte recently asked what we should make of regtech in a new report titled, “RegTech is the new FinTech: How agile regulatory technology is helping firms better understand and manage their risks.” To the extent that regtech represents technologies, strategies, and solutions designed to help firms better meet regulatory obligations, remain compliant, and/or secure their processes, there may be less new here than meets the eye. Compared to insurtech, regtech firms have been prominent players in the fintech firmament for years.

To its credit, Deloitte is aware of the “old-is-new-again” aspect of regtech. The report notes that “while the name is new, the marriage of technology and regulation to address regulatory challenges has existed for some time with varying degrees of success.”

Indeed. Consider companies like Gremln (F14), which demonstrated a social media platform specifically for regulated industries, and Finect (F13), which unveiled a compliant communication platform for financial professionals. Qumram (F16) provides software that helps ensure complaint communication by recording digital interactions from web, social, and mobile channels.

My Virtual Strongbox (F14) introduced the kind of secure document-storage technology that can help FIs better manage customer documentation. Global Debt Registry, another F14 presenter, provides compliance and risk-management solutions to the account-management industry. OutsideIQ (F16) enables FIs to uncover regulatory risk using a combination of machine learning and human analysis. FundAmerica (F15), arguably one of the most explicitly regtech companies to demo at Finovate, provides crowdfunding platforms with APIs for a wide variety of “mission-critical, back-end regulatory requirements.”

Additionally, there are a sizeable number of credit risk analysis innovators such as QCR (F15), CreditHQ (F16), and FICO (FD16); companies like Avalara (FD15) that help merchants recognize and satisfy sales-tax requirements (or by that token, even a VATBox (F15) that helps recover VAT fees for international travelers); and cloud-based auditing technologies like those available from Auvenir (F16), whose identity as a fintech company was a topic of our deliberations.

And all of this is to say nothing of the even larger number of security and authentication specialists whose technologies—at least by Deloitte’s definition—can be considered regtech. Note that Deloitte’s Ireland-based rundown of regtech companies includes Finovate alum Trustev (F14), whose online ID-verification technology is very much in the same category as dozens of other security, authentication, verification, anti-fraud innovators.

The question as to whether regtech as a “thing” (as the millennials say) can be separated from the broader fintech discussion is likely more of a marketing decision than anything else. Clearly regtech has the ranks; the issue is to what degree does distinguishing them as a type of innovator apart from the larger fintech world make it easier for these companies to attract top talent, develop necessary solutions, and raise the capital to drive and grow their businesses. From the perspective of fintech in general—and Finovate/FinDEVr in specific—we’re happier having regtech innovating from “inside the tent,” as opposed to being outside the tent trying to find a way in.

See also:

Blockchain bandwagon

Two more major players jumped on the blockchain bandwagon. IBM (FD16) showed its Hyperledger at FinDEVr last week and Visa (FD14) announced its cross-border payment system built on blockchain-like distributed ledgers, an apparent challenge to Swift. The technology is powered by Chain (FD15) which counts Visa, Capital One (FD15) and Citibank as investors. According to Javelin Strategy, banks will invest $1 billion this year in blockchain initiatives.

Mobile payments gets another huge player

Speaking of IBM, one of the more surprising announcements at Money2020 was the launch of IBM Pay, a private-label mobile payments and POS system. Details are sketchy, but in the IBM video below, it appears to be a Starbucks-like QR code system. It’s part of IBM’s Watson Commerce initiative.

FundAmerica Shares Growth Metrics, Plans for 2016

FundAmerica_homepage_Jan2016

This week, crowdfunding compliance solution provider FundAmerica gave us an inside look at some of its top metrics from 2015. Near the top of the list was the $102 million processed by FundAmerica’s platform customers. And of that only $3.5 million was refunded to investors for deals that didn’t close.

FundAmerica founder and CEO Scott Purcell said he was “surprised” at the low refund figure. “It shows offerings using FundAmerica’s services and methodology are overwhelmingly successful,” he said.

FundAmerica_stage_FS2015b

From left: FundAmerica General Counsel Scott Andersen, with founder and CEO Scott Purcell, demonstrated FundAmerica’s platform at FinovateSpring 2015.

Specializing in providing back-office tools ranging from escrow, AML, and payment processing, FundAmerica gives investment advisers, broker-dealers, and platform operators the technology to make sure their crowdfunding businesses run efficiently and remain compliant.

Some 2015 metrics from FundAmerica:

  • Number of escrows (506b, 506c, and Reg A): 228 offerings
  • Average investment (506b/c): $50,000
  • Average investment (Reg A): $2,800
  • Total number of platforms: 325
  • Platforms launched in 2015: 85

FundAmerica says it has investors from all 50 states plus the District of Colombia, with most investors coming from California, Texas, Florida, and New York. The vast majority of investors are from the United States (95%), with other participating investors from countries such as China, New Zealand, South Korea, United Kingdom, and Canada.

In addition to the metrics from last year, Purcell highlighted what to expect from FundAmerica in 2016.

  • Grow staff from 21 to 50
  • Launch EB-5 services
  • Support Title III crowdfunding portals
  • Provide APIs for venture exchanges, aggregators, and research firms

Purcell says FundAmerica will continue to improve its back-office solutions for 506b/c and Reg A offerings, and provide more compliance tools for broker-dealers. “Writing software is nonstop for us,” Purcell said.

FundAmerica made its Finovate debut at FinovateSpring 2015, and launched its Invest Now button in May. Learn more about how the company helps crowdfunders stay compliant in our August 2015 profile.

Finovate Alumni News

On Finovate.com

  • Soundpays Appoints Steve Doswell as CEO”
  • Backbase’s 2015 Metrics Report Cites 35% YoY Revenue Growth”
  • FundAmerica Shares Growth Metrics, Plans for 2016″
  • LoanNow Secures $50 Million Credit Facility”

Around the web

  • Billhighway awarded National Best and Brightest Company to Work For for fourth year in a row.
  • CloudLock and Check Point Partner to attack hybrid cloud shadow IT and malware through detection, quarantine, and eradication.
  • InComm acquires TibiDono, Austria-based marketing and gift-card-distribution company.
  • Cachet Financial Solutions to power RDC solutions for Illinois-based Algonquin State Bank.
  • Roostify appoints Iyad Darcazallie CFO and COO, names Scott Stein VP of sales.
  • GMC Software named leader in Gartner Magic Quadrant for Customer Communications Management Software for third consecutive year.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

FundAmerica Shares Growth Metrics, Plans for 2016

FundAmerica_homepage_Jan2016

This week, crowdfunding compliance solution provider FundAmerica gave us an inside look at some of its top metrics from 2015. Near the top of the list was the $102 million processed by FundAmerica’s platform customers. And of that, only $3.5 million was refunded to investors for deals that didn’t close.

FundAmerica founder and CEO Scott Purcell said he was “surprised” at the low refund figure. “It shows offerings using FundAmerica’s services and methodology are overwhelmingly successful,” he said.

FundAmerica_stage_FS2015b

From left: FundAmerica General Counsel Scott Andersen and Founder and CEO Scott Purcell demonstrated the FundAmerica platform at FinovateSpring 2015.

Specializing in providing back-office tools including escrow, AML, and payment processing, FundAmerica gives investment advisers, broker-dealers, and platform operators the technology to make sure their crowdfunding businesses run efficiently and remain compliant.

Some other interesting metrics from FundAmerica:

  • Number of escrows (506b, 506c, and Reg A): 228 offerings
  • Average investment (506b/c): $50,000
  • Average investment (Reg A): $2,800
  • Total number of platforms: 325
  • Platforms launched in 2015: 85

FundAmerica also noted that it has investors from all 50 states plus the District of Colombia, with most investors coming from California, Texas, Florida, and New York. The vast majority of investors are from the United States (95%); also participating are investors from countries such as China, New Zealand, South Korea, United Kingdom, and Canada.

In addition to the metrics from last year, Purcell highlighted what to expect from FundAmerica in 2016.

  • Grow staff from 21 to 50
  • Launch EB-5 services
  • Support Title III crowdfunding portals
  • Provide APIs for venture exchanges, aggregators, and research firms

Purcell added that FundAmerica will continue to improve its back-office solutions for 506b/c and Reg A offerings, and provide more compliance tools for broker-dealers. “Writing software is nonstop for us,” Purcell said.

FundAmerica made its Finovate debut at FinovateSpring 2015, and launched its Invest Now button in May of that year. Learn more about how the company helps crowdfunders stay compliant in our August profile.

Finovate Alumni News

Around the web

  • Wipro appoints Abidali Neemuchwala, CEO and member of the board, and names TK Kurien as executive VP.
  • Top Image Systems announces quarter-million-dollar eFLOW5 upgrade project of Hong Kong subsidiary of a top-ten Chinese bank.
  • Let’s Talk Payments interviews Peter Burridge, Hyperwallet CRO and president.
  • PYMNTS interviews WePay’s Global Vice President of Sales and Success Kurt Bilafer about customer intimacy in online commerce.
  • Fortune: How Venmo plans to make money.
  • PayPal and Aramex partner to create www.ishoptheworld.com, a one-stop cross-border marketplace.

This post will be updated throughout the day as news and developments emerge. You can also follow alumni news headlines on the Finovate Twitter account.

Finovate Debuts: FundAmerica Helps Crowdfunders Stay Compliant

FundAmerica_homepage_Aug2015

 

Ask FundAmerica founder and CEO Scott Purcell what his company’s services are and who they are for, and his answer is refreshingly simple: “Anyone raising money online needs to use our services,” Purcell says with a smile. “We’re the guys that keep you from going to jail.”

Put a little less colorfully, FundAmerica provides an API- and browser-based compliance platform for crowdfunders. FundAmerica’s back-end compliance solutions include everything from AML and escrow services, to payment processing and state dealer representation; in short, all that is needed by investment advisers, broker-dealers and others to raise capital pursuant to 506(c), 506(b), Reg A+, and rule 4(a)(6) crowdfunding regulations.

FundAmerica_stage_FS2015

FundAmerica founder and CEO Scott Purcell demonstrated FundAmerica’s API for crowdfunding platform compliance at FinovateSpring 2015.

At FinovateSpring 2015, FundAmerica demonstrated its API for crowdfunding platform compliance. Purcell noted that in a few years “every business, every real estate developer, anyone looking for capital will be doing so online. And that presents a very complex set of problems so it can be done effectively and safely.”

Fortunately for crowdfunders, there’s FundAmerica.

Company facts:

  • Founded in November 2011
  • Headquartered in Las Vegas, Nevada
  • Raised $2.25 million in angel investment
  • Signed 125 crowdfunding platforms
  • Opened more than 40 escrows in the first three months
  • Scott Purcell is founder and CEO

How it works

FundAmerica’s platform ensures that crowdfunders are doing everything correctly and in a compliant manner. This begins with collecting issuer information, and associated persons such as executive officers, directors and major shareholders. This ensures that the AML process is off to a compliant-start, including background “bad-actor checks” with the SEC.

Details of the offering can be recorded on the platform for ready provision to the registered transfer agent. This takes account of both basic information, legends or restrictions, as well as whether the offering is equity or debt.

InvestNow_ART1

Once all the information is entered into the system, the subscription and escrow agreements are generated for investors to sign. At this point, Purcell explained, “The transaction is in the system, it’s registered, AML has been run, due diligence has been looked at. Everything is ready for this issuer to now conduct a compliant online fund-raise—either by themselves or through a crowdfunding platform.”

Potential investors visiting the crowdfunding platform see information about the company, its leadership, background, metrics, and so on. The difference is that with FundAmerica, each offering will include an “Invest Now” button that, when pressed, fast-tracks the process.

InvestNow_ART2

A pop-up menu allows investors to enter in their name, contact details, amount of investment and payment method. Then, relevant documents to facilitate the transfer, such as an electronic ACH debit-authorization form and a substitute 1099 form, appear automatically for completion and electronic signing.

All completed documents are stored online for compliance and emailed to the investor for their records.

InvestNow_ART3

“The idea is to make it as easy and as friction-free as possible for the issuer to get the money into escrow,” said Purcell. “For the back-end service providers to do the AML checks [necessary] on the issuer; to [ensure] the funds that are going to transfer, are settled and cleared; and that all of the blocking and tackling on the banking ecosystem is able to happen.”

On the issuer side, the system provides an alert that lets him or her know both when new funds have been pledged as well as when they actually arrive in escrow. Simultaneously, the back-end processes ensure everything is happening in the proper sequence: AML is conducted before the securities are actually sold, and funds are settled and cleared before anything is released from escrow and transferred to the issuer.

“That’s what FundAmerica does,” Purcell said. “We package the ecosystem—the plumbing—for the crowdfunding industry.”

The future

“People are excited that someone is doing what FundAmerica is doing,” Purcell said. “There’s no one else doing it.” FundAmerica combines technical knowledge with a strong compliance-oriented management team, a good place to be “when a company’s security attorneys come to us,” Purcell says. “We’re good, authoritative people for them to talk to. We give out a lot of free advice.”

Since its Finovate debut, FundAmerica launched its “flex” payment-processing feature, which allows platforms to separate their share from an issuer payment and forward the rest to investors. The feature is available through both the online portal as well as the API, and serves as a boon for platforms that earn revenues from the difference between the rate a sponsor or developer pays and the rate paid out to investors.

InvestNow_ART4

June 2015 marked the month FundAmerica unveiled its FundAmerica Stock Transfer (“FAST”) service, a registered transfer agent for Reg A+ and 506b/c. Using RESTful APIs to make it easy to integrate into crowdfunding platforms, FAST helps with investor records management and other tools to manage changes in ownership, payment histories, vesting details, and more.

New initiatives aside, FundAmerica has just begun a Series A funding round, so the company is actively looking for and talking with investors. Beyond that FundAmerica is eager to make strategic partners. “We are the Intel Inside for crowdfunding platforms,” Purcell said. “We build solutions to help crowdfunders conduct a compliant operation with the least amount of investor friction.”


Check out the FinovateSpring 2015 demo video for FundAmerica below