At the core of any new industry are new companies. These companies require capital to grow. Capital that typically comes from the founder’s pocket, friends and family, angel investors, institutional investors, strategic investor, and the public markets, usually in that order.
Henry Ford raised $15,000 to crank up Ford Motors. Steve Jobs sold his VW for $750 to boot up Apple computer. Mark Zuckerberg and Facebook accepted a $500,00 Friend Request from Peter Thiel at Clarium Capital. These initial capital investments paved the way for subsequent funding events for these companies.
Every week we hear from young companies with a product or service in the drone space looking for capital. One or more of these companies may become the Ford, Apple, or Facebook of the rapidly developing drone market, a market that PwC projects will be a $127 billion-dollar industry by 2020.
And every week we also hear from readers looking to invest in drone companies. These requests were the the driving force for DroneLife’s collaboration last April with PureFunds, Reality Shares, and others to introduce the Drone Economy Strategy ETF, IFLY. IFLY is an exchange traded fund that allows individuals to invest in a portfolio of publicly traded companies involved with drone technology.
Some of our readers are looking to invest in early stage drone companies that are not publicly traded. Early stage investments have been unavailable to the average investor. Historically, only individuals who met the criteria of an “accredited investor” could invest in these start ups. In the United States to be an “accredited investor”, you must have either 1) assets of greater than $5,000,000; or 2) assets of greater than $1,000,000 (excluding your primary home) and annual income of $200,000 for the last two years.
This changed on May 16th 2016 when new crowdfunding legislation took effect under the Jobs Act. With this legislation, individuals can now invest relatively small amounts in private companies via funding portals that are registered with the SEC.
The limitation on how much you can invest depends on your net worth and annual income:
● If either your annual income or your net worth is less than $100,000, then during any 12-month period, you can invest either $2,000 or 5% of the lesser of your annual income or net worth.
● For example, if your annual income is $75,000 and your net worth is $95,000, then you can invest $2,000 OR $3,750 (.05 * $75,000, your annual income) OR $4,750 (.05 * $95,000).
● If both your annual income and your net worth are equal to or more than $100,000 then, during any 12-month period, you can invest up to 10 percent of your annual income or net worth, whichever is less, but not to exceed $100,000. (Source: Financial Industry Regulatory Authority)
Last week, DroneLife announced its collaboration with Netcapital, a SEC registered funding portal. With this alliance, DroneLife will introduce our readership to these investment opportunities at Netcapital, as well as introduce drone companies seeking funding to the DroneLife/Netcapital collaboration. Although Netcapital serves many markets, the alliance portal will be limited to companies in the Unmanned Aerial Vehicle (UAV) ecosystem. We are excited to bring this funding portal directly to our million readers. These readers understand the vast opportunities associated with the emerging drone ecosystem. The next Henry Ford may be working with the professionals at the alliance portal right now to prepare to raise capital.
Drone companies interested in raising capital click here.
Individuals interested in buying private securities can see current offerings here. Given the relationship was just announced, there are no drone companies currently selling securities at this time.