has announced it has launched in collaboration with a division of AXA, , a new insurance product for issuers and investors that safeguards new online capital formation strategies, including equity crowdfunding and security token offerings (STOs). Numerous crowdfunding portals have already signed on, with a growing list of adopters to follow.
Until recently, in general, investment in private companies has been reserved for the wealthy (accredited investors with a net worth higher than $1m or earned income that exceeded $200,000 or $300,000 together with a spouse), leaving 92% of Americans locked out of these massive opportunities. New regulations around equity crowdfunding, especially , have democratised investments in private companies. The regulations change how companies access capital, opening it up to a wider investor pool. For all investor types, particularly the “Main Street” investor, it creates exciting opportunities to generate wealth and be an active stakeholder in private companies. This opportunity was not previously available to all investors, creating an untapped market.
“New economic markets, such as crowdfunding or online capital formation, create great new opportunities for the Main Street investor, but also pose new risks,” said David Carpentier, CEO, Assurely. “To combat new risks in new markets, investors look for a symbol of safety, validity, and trust. Online capital formation and crowdfunding – both equity and STOs – lack this symbol today. This marketplace needs trust, safety, and confidence among both issuers and investors to thrive; something that regulations and funding portals alone may not completely satisfy.”
Working with AXA XL, one of the largest property and casualty insurance carriers, Assurely now offers CrowdProtector™, a tailor-made insurance product specifically designed to protect new online capital formation strategies, such as equity crowdfunding and STOs. CrowdProtector™, communicated as part of capital raising efforts, symbolises increased trust, confidence, and safety to potential investors that the Issuer is insured. CrowdProtector™ provides Issuers protection against investor complaints and lawsuits as well as serve as a communication to investors that they may get their principal investment returned should the issuer misuse the funds, purposefully misrepresent information in their offering documents, or steal the money.
“Economic and technological trends create new opportunities but also create new risks that traditional insurance is not well placed to address,” added Ty Sagalow, President and Chief Insurance Officer, Assurely. “The adaptability of CrowdProtector™ is a great example of the future of insurance. Heavily focusing on our technology, we have been able to increase underwriting, adapt a new product to fit the need of an exciting new industry, and deliver the entire solution in a frictionless manner. Our underwriting and distribution process is application-free, completely instantaneous, and automated for the end user.”
“We are excited to partner with Assurely and their technology-based underwriting of CrowdProtector™ policies,” said Dan Kumpf, Chief Underwriting Officer, Global Professional Lines, at AXA XL. “This solution demonstrates the value of insurance in helping opportunities move forward. New crowdfunding practices are proliferating today. Without proper coverage, millions are at risk. Our work with Assurely is a great example of innovation in the industry. Collaboration between incumbents and innovative InsurTech startups such as Assurely, will yield a positive result for the industry and advance it as a whole.”