Andrew Dix, Founder & CEO of Crowdfund Insider

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This past decade has seen a huge amount of change in finance. We began the decade with a handful of startup companies beginning to apply new technology to finance and we ended with fintech becoming a major force.

For our first show of the new decade, episode 228 of the Lend Academy Podcast, the CEO and founder of Crowdfund Insider, Andrew Dix (also known as JD Alois), reviews where we have come from and gives his perspective on the trends that will be most important going forward.

In this podcast you will learn:

  • The idea that led to the founding of Crowdfund Insider.
  • Why he decided to use a pseudonym when he started writing.
  • How the content has evolved over time.
  • Why equity crowdfunding has not taken off in this country.
  • The problems with Reg CF and Reg A+ today.
  • Where the promise of fintech was realized and where it fell short in the past decade.
  • The fintech trends that will dominate this decade.
  • Andrew’s view on the digital banking space and how it plays out.
  • Why no digital banks have received a charter yet in the US (unlike the UK).
  • When and how Andrew started covering cryptocurrency.
  • Why the digitization of securities is coming.
  • The most interesting topic that Andrew is following today.

Read a transcription of our conversation below.


Happy New Year, everybody and welcome to the first episode of 2020, Episode 228, of the Lend Academy Podcast. This is your host, Peter Renton, Founder of Lend Academy and Co-Founder of the LendIt Fintech Conference.


Today’s episode is sponsored by LendIt Fintech USA, the world’s largest fintech event dedicated to lending and digital banking. It’s happening on May 13th and 14th, 2020, at the Javits Center in New York. Lending and banking are converging and LendIt Fintech immerses you in the most important trends of the day. Meet the people who matter, learn from the experts and get business done. LendIt Fintech, lending and banking connected. Go to to register.

Peter Renton: Today on the show, I am delighted to welcome Andrew Dix, he is the Founder and CEO of Crowded Media Group which is the publisher of Crowdfund Insider. Now, Andrew’s been covering the space for many, many years and I wanted to get him on the show to give a little bit of a retrospective of the first show of 2020 and also looking ahead at the coming year and the coming decade.

We touch on many interesting topics here, we talk about equity crowdfunding and the challenges that it’s faced, we talk about digital banking, we talk about Big Tech and Embedded Finance and crypto and much more. It was a fascinating interview, I hope you enjoy the show.

Welcome to the podcast, Andrew!

Andrew Dix: Good to talk to you, Peter.

Peter: Okay. So, let’s get started by giving the listeners a little bit of background about yourself. We all know… everyone reads Crowdfund Insider, but why don’t you tell us a little bit about what you did before you started that.

Andrew: Yeah. That’s actually an excellent question because I have kind of what I think is a good background to be covering fintech. Back in my youth which was some decades ago (Peter laughs), actually worked in Washington DC and I was in the political and policy realm and I’ve always had an interest in policy, in general. So, I was in DC for a while, that kind of exposed me to the workings of legislation and politics and that is, of course, a very important aspect of fintech because financial services is a highly regulated industry, so that helped.

And then I worked in the media. I was in traditional media working in a small closely held company that owned print, it owned broadcast and at one point in time had television and I ended up doing running the digital operations. So, at that time media, specifically print, was going through it’s own digitization and it was really, really difficult to kind of watch what was happening with traditional media. I’m kind of a news and information junkie, I could see how the wheels were falling off and how the Internet was impacting traditional media and it was a bit of a struggle for me because I was engaged on the digital side and creating applications to manage news and working with the technology.

Meanwhile, it was kind of a circle the wagons approach with the traditional side, so that kind of gave me the perspective of digital media. At the same time, I always had an interest in playing it so my bachelors is in economics and when I had moved to the Cleveland area, which is where I’m located now, I took some classes in finance at Weatherhead because I’ve just always had a profound interest in finance.

So, I think in a different life, I probably would have been a banker (Peter laughs). In this life, I ended up being a kind of a news and media guy that had a deep interest in financial services and policy and that’s kind of how it all comes together in fintech, in covering fintech.

Peter: Right. So then, was there one particular thing that was the impetus to actually start Crowdfund Insider? Was there some particular aha moment?

Andrew: So, another good question. There was a period in the US….there was a discussion about the JOBS Act, the JOBS Act of 2012 and how this was going to transform capital formation. It had shifted from, you know, traditional capital formation to online capital formation, or crowdfunding.

I had a friend who was an investment banker and he said, hey, do you know about this. I’m like, yeah, kind of and he said, well, I’m kind of curious about this, this may be interesting. I said, well, you know, I know two events, I happen to know two events that are taking place where they’re going to discuss that piece of legislation. One was a law firm, a big corporate law firm in downtown Cleveland; another one had to do with a presentation, somebody from a second market which at that time was a platform I thought would get into the space, but did not.

So, I went to these two events and I realized that the platform side was going to be very crowded, very competitive, but I thought to myself, gee, this has been really an interesting subject area to cover from a news side and that was kind of the aha moment, the genesis.

I’ve always had a thesis that emerging sectors like these are opportunities for news. Now, I don’t consider it as a blog site, or blog, I consider it to be news because we cover news in a more traditional fashion. And so, that was kind of the moment where I said, you know, this something that I want to pursue because I had that whole digital background and it was really easy for me to, you know, get a site up and live quickly and start doing some coverage of the subject.

Peter: So, when did you go live exactly?

Andrew: I can’t remember the exact date, but it was after the JOBS Act of 2012 was signed into law and things take time, as we all know, when it comes to financial regulation. It was within months of that taking place and it took place in, I think, the summer of 2012, so it was either late 2012, or 2013. We started with the first domain which was and that really had to do with the fact that there was a lot of focus on facilitating capital formation and this act of legislation which was hugely bipartisan because that was the Obama administration and we got support from both the Republicans and the Democrats. It’s one of the standout acts of legislation that saw people from both sides of the aisle support and it was kind of an exciting period which obviously has taken a lot longer than most people expected.

Peter: Yeah, we’ll get into that in a little bit, but before I do so, I wanted to maybe touch on one question that I think many people have because a lot of people might not know your name, but a lot of people know your pseudonym. So, I want you to tell us about what your pseudonym is and why you decided to use a pseudonym in the first place.

Andrew: So, it’s another good question. So, when we started, I hired my first employee and most of it had to do with the content creation, that’s really what we needed somebody to do and that person did that. After running the platform for a while, we need to augment this, we need, you know, more content and in traditional media it’s very common to do a stock report. And so, what I would do is at night when I came home, I would do some stock reports which is pretty easy to do, but there was a following conversation about how Google liked to see by-lines, liked to see an individual’s name.

I was still in my day job at that time and I thought, well, okay, I’ll just do a pen name for this and I would just continue to do, you know, a couple of articles in the evening and just augment a little bit because this other person was doing a good amount of the content. So, that’s kind of how it came to be and once you go down that path, you know, it’s kind of difficult to put that genie back in the bottle, you know, how do you do that. And, I think that, over time, hopefully my prose has improved, but I do believe that I’m at a point where I’m probably the most prolific fintech writer in the world.

Peter: Yeah, I would agree with that. Just tell the listeners what your pseudonym is.

Andrew: My pen name is JD Alois and there is a reason for that name, but I’ve never shared it with anybody. Nobody knows why, but it’s a derivative of something and it actually has to do with, you know, part of my history and past experience. Anybody who can figure it out, I’ll give him a thousand dollars of free advertising. (Peter laughs)

Peter: Okay, that’s a challenge for everybody. So then, you started off covering the crowdfunding space and then the content has evolved over the years and you now cover a much broader sort of swath of content, So, tell us, has this been a conscious decision, or has this just evolved naturally? What’s been the evolution there?

Andrew: So, it was definitely a conscious decision. When we first started covering the ecosystem, we focused a lot of attention on the UK. The UK was first out of the gate and creating a regulatory environment that was robust and functional who worked on my capital formation and that was both debt and equity.

As you know well, peer-to-peer lending really got it’s start in the UK, they have the first really effective equity crowdfunding platforms, or investment crowdfunding platforms in the UK and so they had a head start on the US. I looked at the UK and said this was an opportunity to learn and see how they’re evolving because they’re ahead in the game. Over time, in the US, you have kind of the growth of the online lending sector and marketplace lending.

You have the Lending Club, you have Prosper, you have Funding Circle and these platforms became more prominent. And so, we started to get outreach from those platforms and we started to pay more attention to those platforms. There was a certain point in time and I said, there’s two sides of the coin. While equity can be kind of sexy, it’s kind of small. While debt is not necessarily as sexy, it’s huge, it’s enormous and that’s the way it’s been in public markets since I don’t know how long. I said, okay, it’s just part of that financial stack and really, in my opinion, online capital formation was the catalyst for all of fintech because I think it should have a lot of people that were young, you know, finance executives, or they’re going to Wharton or some place.

They’re looking at traditional finance and they’re looking at the way they have things have resulted in the past, or say, wait a minute, with technology I can do things differently, I can do things better. And so, first, you had online capital formation, debt and equity and then everything is saying, I can do this, I can do that. And then you just have this kind of creative boom of platforms, ideas, services, you know, from banking, to lending, to trading, to crypto and it’s really been amazing, the amount of creativity that I have seen and you have seen in the fintech sector for the full stock of financial services. So, that’s kind of the genesis of the site.

Peter: So, let’s get back to equity crowdfunding and as you say, it’s……I remember, I actually wrote about it as well in 2012, when Obama signed the JOBS Act and there was a lot of optimism and, you know, I think if we had said, let’s look ahead in seven plus years and no one will expect…it’s still a very small industry. Why do you think it hasn’t taken off in this country? Obviously, it’s taken off at the UK, Israel with OurCrowd, they’re very active, why has it not taken off in this country?

Andrew: Yeah, it’s got a multifaceted explanation there because as we know, regulations in the financial services industry is byzantine at best in the United States. You have to deal with 50 individual states and the new ones is dealing with state regulators, there are also around a dozen federal regulators that touch financial services. That’s hard. If you are a startup, an early stage company that wants a challenge in trans finance, there’s a significant hurdle that is costly to complete and that’s just part of the environment in the United States.

The rules that were created under the JOBS Act of 2012 were not the best. Now, I give a lot of credit to people that fought to get those rules done. In effect, you had three forms of investment crowdfunding had Reg D to succeed for credit investors, you have Reg + which requires $50 Million from both the creditors and non-accredited investors. We had Reg CF which initially integrates up to $1 Million via funding for all broker deals for both non-accredited and accredited investors, but in the infinite wisdom of our policy (inaudible) who always seem to air on the side of investor protection, the rules have been so stringent that they actually have put to the opposite side.

When you look at Reg CF, that regulation has been good, but it’s been a hobble by the strict regime. In fact, it’s kind of like … creates an environment of negative selection where some issuers and some platforms they do it because they can’t raise money anywhere else. That’s no what you want, you want, in my opinion, to have your smallest investors have access to the very best deals, that’s what you want to create, but that’s not what the regulations actually did. So, it’s been hobbled, it can only raise a million….$1.07 Million right now, there’s several aspects of the rules that really need to fixed.

Reg A + has been a bit of a disappointment because of deal quality, it’s been described as a mini IPO type structure. The cost to do a Reg A + is hundreds of thousands of dollars, depending on who you talk to. I think some of the issuers have not been that great. I think the clear winner in the full stack of crowdfunding exemptions is Reg D 506(c), basically, a Reg D that you can generally solicit or advertise. I am optimistic that some of these things can be fixed and can be changed.

I’m an Adviser to the Association of Online Investment Platforms (AOIP) and that’s one of the things that Dan Lucas is pursuing, is a regulatory fix for Reg CF. There are some people who like to see it raised to $20 Million, some people want to see it to $10 Million. I think the lowest amount that people are advocating for is $5 Million AOIP, the association, they have asked for a $10 Million cap and that would also kind of bring into line with what you’re seeing in the UK because under existing laws in the UK, there is a prospectus requirement once you raise 8 Million Euros or more. Creating a prospectus is a significant undertaking and what it does is it creates a bit of a speed bump, but under that amount you can raise as much as you want without a prospectus.

You can still crowdfund as much as you want, but you have that speed bump and that has seemed to have worked well in the UK. You regularly see issuers raise, you know, multi million pound offerings, you regularly see very high quality issuers raise money on these platforms where they are frequently doing side by sides with big VCs, a lot of the digital challenger banks which have achieved unicorn status.

I think just about all of them have, you know, pursued online capital formation like Monzo, or Revolut and they view it as a way to not only raise a little bit of money, but also to garner some earned promotion and to enlist the whole, you know, region of people that will advocate and utilize their services which is smart, if you think about it.

Peter: Right, right, yeah, I know. It’s really been, I think, one of the unique things about the UK fintech scene is that so many people now own slices of these neo banks and the challenger banks. They’ve seen the paper valuation of their investment increase dramatically which, obviously, helps future fundraising.

Anyway, I want to sort of move along here and just talk about…maybe we can start…we’re recording this a week before Christmas, but it’s going to be published first Friday in January, so it’s the first one of the new decade. First, maybe you could take a step back and look back to 2010s, a lot has happened in fintech in this last decade and fintech wasn’t really used as a term ten years ago. So, from your perspective…’ve been writing and covering the space for most of this decade, as you look back at the 2010s, where do you think the promise of fintech was realized and where did it fall short?

Andrew: Well, I think, the promise of fintech is ongoing and I think that really we’re talking about the digitization of finance, it’s really applying the Internet to financial services. One area where the Chinese got it right is what they call Internet Finance and similar to what happened in the newspaper industry where the Internet just totally disrupted them, that is happening and will continue to happen in the financial services industry at an accelerated pace. So, I think, that’s all good, but as we all know, innovation and change is never a straight line.

Everybody wants to see the hockey stick where you’re getting low and ends up usually successful, that’s not reality. Anybody really understands that it’s a roller coaster with many ups and many downs and many of these companies will end up failing which is fine, that’s part of the process. So, I look at….from the early part of the decade and I look at some of these things as platforms that only did these, or only did that, they tried to excel at these areas and at the time, I think, everybody, including myself, I thought this is great, it’s really going to change the world, but, I think, that, you know, maybe they overshot that hype a little bit.

Some of these platforms, they realize that doing this one thing really well is not necessarily the best path. I think what you’re seeing today and you’re going to continue to see is you’re going to continue to see these platforms that have some tractions in certain sectors either way and they’re going to continue to iterate and provide services and look at their consumers or customers and say, well, I’m already doing this, I can do this as well and I can drive incremental income and scale more effectively.

So, if you look at the equity side, you’re going to see platforms that do other things besides Reg D, Reg CF, Reg A +, but they’re also going to provide management services, they’re also going to provide advisory services, they’re also going to provide a whole host of investment banking type service, it’ll just be digital and that kind of makes sense. I think for platforms as they earn their stripes and they toughed it out wanting to survive, it’s going to make sense to do that. I think the same thing is going to happen on the lending side.

I think that if you look at a Lending Club, a publicly traded company, there’s a lot of debate as to whether they went public too soon. I think their idea about shifting into becoming a marketplace bank, provide additional banking services totally makes sense. They have the touch point of the consumer, they have the data, they have a lot of services they can already offer, to provide a few more services is not that much of a weep because it’s all digital, whether they’ll be successful or not, we’re going to find out.

I think that is kind of the pinnacle, or the transition that we are in now where the people, the platforms, they have captured certain amount of transactions, they have to continue to iterate to see how they remain competitive and to be able to compete, or partner with traditional finance. Taking that step further, I think these pieces about Big Tech and fintech is huge. So, I think, as we go into the 20’s, that is going to continue to gain more traction, it’s going to be bigger than what most traditional financial services firms think will be today.

Peter: Okay, okay. So, that’s interesting. You’ve already sort of started to answer my next question which is …as we look ahead to this decade you touched on Big Tech, what are some of the other key trends you see as really being a huge part of a fintech going forward?

Andrew: So, I believe that technology is at its best when it’s ubiquitous, it’s everywhere, but it doesn’t get in your way. It’s something that’s there when we need it, but, otherwise, it doesn’t bother you. I think that’s what you see happening for financial services. When I need to pay something, I point my phone at it, when I need to access credit, the credit is there, it’s working for me now. It doesn’t matter what platform I am on, I have access to it.

So, I no longer need to drive to my corner bank branch to do whatever I need to do with financial services, I’ll be able to access it anyway, anytime as long as I’m digitally connected. And, I think, that that is a theme and a transition that is multi-decade, it’s going to be, you know, years and years in the making, but it’s inevitable, right?

Peter: Yeah, that’s where we’re starting to talk about Embedded Finance which I think is a super interesting trend which we’ll be covering in depth at LendIt this year, I feel like it’s one of many. So, tell me about this thing, what do you think of the digital banking space in this country, specifically. You know, we’ve got some very fast growing operations here, we’ve got some of the Europeans arriving, none of them have worked out how to make money yet, so very few, I shouldn’t say none, a few of them have, how does the digital banking story play out this coming decade do you think?

Andrew: So, I think that traditional finance has always moaned and groaned about the regulatory environment to operate within the 50 states and across the country. I think, today, they’re looking at it as maybe something that’s a little bit better than bad because it’s created a bit of a moat for looming competition. One thing about traditional finance is it’s very effective with lobbying, they have a great voice in Capitol Hill and you can see that manifest itself from time to time in some of the things that happened inside the beltway.

I think that for traditional finance, the policy attempting to innovate and adapt and change by building their own platforms, acquiring platforms, or partnering with platforms which is absolutely what they need to do. For the emerging founders, the fintechs, again, because of the regulations, it’s been kind of a tough road to follow in the US because we have….. how many digital only banks have received a federal banking charter. Well, we have Varo lMoney which has a provisional charter, I believe, and they’re still waiting on that FDIC and that process is taking God knows how many years. It’s crazy, it’s taking so long.

Now, we have Marcus which bought a bank and that was probably a very smart move and we have a lot of other digital banks that have applied for, or are looking to apply for, or looking to finesse the regulations to offer bank-like services. I don’t think a regulatory environment was meant to make it so difficult. Do these entities need to be regulated? Absolutely, Yes, we have to have high standards as traditional finance? Absolutely. But should there be a path where these vigilant challenger banks to become regulated at the national level? That’s obvious. When you look at what happened in the UK and the number of challenger banks that have emerged and that are growing rapidly in leaps and bounds, that’s what should be happening in the United States.

Unfortunately, it’s been a bit of a slow go there that’s why you have banks like Revolut and Monzo coming into the United States to set up shop because they kind of cut their teeth in a different market and they’ve learned a lot of things. And they’re saying, well, I can just apply that here and I’ll do what everybody else is doing, I’ll use regulatory arbitrage and partner with a chartered bank to optimize services and then at some point in the future I’ll get a charter, maybe not. That’s kind of a convoluted process to do that. When you start, you should have a clear bright-lined path to be regulated at the federal level. So, I disagree with the regulatory approach.

I think that the OCC has made an attempt to pursue that path that you know as well as I do, legal challenge and battle from traditional finance in entrenched stakeholders has been enormous. I just wish that wasn’t the case. It’s also for legislators, you know, it’s not necessarily a priority for them, it’s not something that’s going to get them a lot of votes, it’s not something that they necessarily understand, you know, really well.

So, there’s not a whole lot of interest in fixing some of these issues which is unfortunate because in the end, the losers is always the consumer, right, because once you have more competition within the financial services industry, the people who will benefit are the consumers because class go down and the quality of services move up. And, if you are a congressman or senator that’s what you should want, you should be pursuing that, but, unfortunately, that’s not the case, outside a few exceptions, right.

Peter: Yeah, now that’s dead right. I feel like there isn’t enough push in Washington to change the status quo and I think it’s going to take a long time for that to happen, if ever, and it’s certainly going to hold innovation back.

Anyway, we’re almost out of time and there’s really a couple of things I wanted to get to. You know, we spent this entire interview, so far, and we haven’t talked about crypto. You’ve written about this a great deal, and blockchain, in general, but maybe just give us a minute, or so thoughts on the crypto space and what are the things you’re watching right now there.

Andrew: When bitcoin was kind of emerging, we really didn’t cover that, but then, all of a sudden, ethereum came along and ethereum enabled the smart contracts and ICOs and really we started covering it because people started sending us information about things we weren’t doing and I’m like, what is this, I don’t understand this. I mean, I need to spend some time researching this and you could see that it was a form of online capital formation that was kind of like, you know, cocaine-fueled crowdfunding offering that was highly illegal.

And so, you has this whole ecosystem develop where people would raise money and it was all speculative, it was breaking existing securities law and a lot of people predicted it was inevitable disruption which is what happened. One thing it did do was it showed how technology can help remove some of the friction in financial services if you do it in a regulated and in a compliant fashion.

So, I think, that ICOs will be kind of a footnote in history, it was a crazy, weird time and place with a lot of very interesting and colorful people, many of them doing things that they probably shouldn’t have been doing, but I also think that now you’re in this point where you have this transition to digital assets which in the United States means digital securities. I think the digitization of securities is coming, it’s just going to happen.

You know, I remember back in the day when I can call my broker and say, hey, send my certificate to me, I’ve got to hold on to my certificate, put it in the mail. Well, I really can’t do that anymore. There’s a lot of back office stuff that’s still kind of analog-ish that can be pulled out of the system to drive efficiencies. You look at Cagney’s new startup and I’ve heard him the other day where he is able to pull, I think, a hundred basis points out of a securitization process.

If you’re in traditional financial services, you’ll say, wow, that’s huge because at scale that makes me a lot of money. So, I think if you see that similar streamlining taking place in back office operations, it is really not that sexy, right. But, I think, that’s where we are now, people are just trying to figure it out, visual studies are going to happen, how that manifests itself, I don’t know, I just think it’s going to happen.

The other thing that I think may be of interest is a sector I call “esoterics,” and that’s because, all of a sudden, the technology you can securitize things that really we were not able to do in the past. This was not cost effective to do in the past and I think you’ve seen a little bit of this where people are kind of dabbling in real estate transactions. You some real estate transactions this is going to be managed on distributed ledger technology.

I think people are going to start to experiment with other assets and other asset classes. When is it going be, I have no idea. We’re going through a concept of utility token as opposed to security. You know, the juries out in the United States, or some jurisdictions in Europe that have facilitated that and in other countries, it’s happening, I don’t know whether it’s going to continue to happen, or whether it’s going to go, but in the United States, pretty much, if you’re doing a digital asset, a security with a couple of exceptions.

Peter: Okay. So, last question. You know, we’re starting the year, we’ve talked about a lot of different things in this interview, what is the most interesting topic that you’re following most closely right now?

Andrew: So, beyond the regulatory stuff…I think I have a generic flaw because I actually enjoy reading about regulations (Peter laughs)….you can’t take me out in public, my wife knows. She gets scared when we go out, I start talking to people and they have no idea of what I’m talking about, but beyond that I go back to the Big Tech in fintech. I just see that the pace has already happened in China where you have Big Tech like Tencent and Alibaba, Alipay and what you’re seeing happen there…..I think they’re ahead of us in many respects, I think you’re going to continue to see that happen within the US and elsewhere.

Do I want Apple to be my bank? Absolutely. I trust them with all sorts of information that I wouldn’t trust with anybody else and I’m already using them to pay for things. Is it a leap for them to provide more financial services to me, not at all. Is it dicey for them to go down that path due to the convoluted regulatory environment which is really, you know, kind of Jurassic? Yes, but I think over time they are going to continue to go down that path alongside other Big Tech firms like, you know, Google, Amazon, Facebook. I’m not a huge fan of Facebook, but I figure you will continue to see here in the United States and I think you’re going to see it globally around the world and you’ve actually seen actual examples of that.

Peter: Okay, it would be interesting to see. On that note, we’ll have to leave it there. Andrew, I very much appreciate your coming on the show today.

Andrew: Excellent, it was good talking too.

Peter: Okay, see you.

Andrew: Bye, take care.

Peter: The continued encroachment of Big Tech into finance, the movement towards Embedded Finance, the crazy fast growth of the digital banks, these are all important trends, I think, we will continue to be paying attention to, continue to evolve our thinking on as this decade progresses and it’s going to be a very exciting time. One thing I’m certain, I obviously don’t know, I don’t have a crystal bowl, I don’t know how it’s going to play out, but one thing I am certain of is that finance in 2030 is going to look very different from finance in 2020.

Anyway on that note, I will sign off. I very much appreciate you listening and I’ll catch you next time. Bye.

Today’s episode was sponsored by LendIt Fintech USA, the world’s largest fintech event dedicated to lending and digital banking. It’s happening on May 13th and 14th, 2020, at the Javits Center in New York. Lending and banking are converging and LendIt Fintech immerses you in the most important trends of the day. Meet the people who matter, learn from the experts and get business done. LendIt Fintech, lending and banking connected.