Case study: Shyp, USA This case study was chosen because the company used equity crowdfunding, which is gaining in popularity and is subject to financial regulation. Shyp provides logistic services using a smartphone app. Shyp is available to download in iOS or Android formats but the service is only available to customers in San Francisco, New York City, Miami and Los Angeles. Shyp has been experiencing 20 per cent month-over-month growth, with online returns representing 15 per cent of its business. A large part of Shyp’s business depends on the growth of the e-commerce industry, e.g. delivering packages for online shops and easing online returns for consumers. As a start-up, Shyp did not have the funding required to launch its business. The entrepreneurs behind Shyp wanted their business to be featured on AngelList, a crowdfunding platform, so they could raise their visibility to potential investors. Shyp succeeded in being featured and raised USD 2.1 million from two syndicated investors. The investment risk for investors was high, as Shyp was a start-up when it initially received funding support, and funding was sought at an early seed stage.Financial regulators have an important role to play in making equity crowdfunding an attractive alternative funding source. The requirements enforced upon crowdfunding platforms protect the consumer and the market’s growth as a result. In February 2015, the Financial Conduct Authority, the UK’s financial services regulator, introduced rules to regulate equity-based crowdfunding. These rules were designed to allow investors to assess the risk and to understand who will ultimately borrow the money. In the UK, the rules also applied core consumer-protection requirements to firms operating in this market. For example, client money must be protected and firms must meet minimum capital standards. Finally, firms running these platforms must have resolution plans in place so that if the platform collapses, loan repayments will continue to be collected and lenders will not lose out.1.6.2 Pension funding This financing approach allows entrepreneurs to use their own pension funds to secure a loan. The pension manager acts as the \"investor\" by granting a loan secured by the pension funds or the entrepreneur’s business assets. Alternatively, the pension fund manager can also buy an asset from the business and lease it back. The amount that entrepreneurs can raise depends on their loan collateral and the fund manager’s risk aversion. For the pension fund managers, this approach allows them to generate additional revenue from existing assets. Businesses use pension funding at different stages of maturity. Some entrepreneurs use it to fund start-ups, while others use it to fund business expansion. People dissatisfied with their pension fund’s performance and unwilling to give up any ownership shares in their business to outside investors may find this approach appealing. As a preliminary step, entrepreneurs need to transfer part or all their pension savings into a self-invested personal pension or a small, self-administered scheme. These pensions give their owners investment powers such as the ability to invest in their own businesses. Only then can the fund Trends in Telecommunication Reform 2016 33 Chapter 1 Box 1.15: Key lessons: Pebble • Pebble used crowdfunding to finance the product development of its smart watch. The funds raised met the company’s target, allowing it to proceed with the development of the new version of the smart watch.• Using a crowdfunding platform allowed Pebble to target the people most interested in its products. These investors are likely to be “early adopter” consumers that follow the industry closely and are keen to have possession of the latest “must-have” gadget. Attracting early adopters is essential to any start-up company’s business, as they wil be the most honest critics and will provide essential product improvement feedback.