With the burgeoning global crowdfunding industry, American International Group (AIG) has launched a product to protect investors against issuer fraud on equity crowdfunding platforms. Crowdfunding platforms, such as SeedInvest.com, offer a unique way for innovators to jumpstart their business ideas through the investments of smaller net-worth individuals, rather than traditional institutional investors, such as venture capital and equity firms. AIG hopes to help grow this new class of investors by instilling a sense of safety and confidence through their new insurance product.
“As a sector, still in its infancy, equity crowdfunding platforms are only as strong as the confidence they instill in their investors,” stated AIG President of Liability and Financial Lines, Lex Baugh, “This new product will help provide that confidence and help to support this asset class as it matures.”
The product, Crowdfunding Fidelity, is designed to protect this new sector of individual investors against theft of issuer assets by issuer directors, officers or employees which results in a direct loss to the investor. Albeit, while there have been very few instances of crowdfunding fraud thus far, Crowdfunding Fidelity will help to build investor trust in this flourishing sector by ensuring issuer trustworthiness on the crowdfunding platforms which subscribe to this coverage. Currently, the coverage is only available to platforms based in the United Kingdom and Canada, but will shortly become available in other countries as crowdfunding regulations are finalized.
Eureeca, a crowdfunding platform registered in both Dubai and the United Kingdom, is the first crowdfunding platform to step forward and purchase AIG’s Crowdfunding Fidelity. “We are looking forward to building similar relationships with other platforms across the world and to expanding our offering to this sector,” claimed President Baugh in regards to AIG’s deal with Eureeca. “The Success of the ecosystem depends on collaboration between all stakeholders,” stated Chris Thomas, Founder of Eureeca, “AIG has demonstrated its commitment to being a valued insurer to this new industry by engaging the crowdfunding space at such an early stage.”
