Category Archives: Bitcoin

Setting Up an Efficient Crowdfunding Platform

BY Rachael Everly ,CrowdFund Beat Guest Post,

Crowdfunding platforms are a product of technological advancement. However at the end of the day they are a financial solution and their success is dependent on the economic situation at a given time. Many businesses prosper when the economy is booming and all is good. Crowdfunding on the other hand has always prospered when the economy is not doing well, and even during the worst recessions.

During the last recession of 2008, there was a great lack of confidence among banks. This led to a drying up of sources of finance for the small business owner and for individuals who were just starting out. Either their loan applications were outright rejected or they were given such high interest rate offers that they were forced to decline. But with the advent of digitalization came the much flexible option of crowdfunding that led smaller business achieving the necessary finances much cheaply and much easily.

crowdfunding concept. Chart with keywords and icons
crowdfunding concept. Chart with keywords and icons

 

Setting up a crowdfunding platform is an excellent business idea for it is something that the entrepreneurs need. However to be successful it has to meet the finance needs of people successfully.

 

 

  1. Initial set-up

Crowdfunding platforms are a place where investors and people looking for finance gather. So you need to be sure about how you are going to attract investors in your starting days. Your whole business is dependent on them.

You also have to ensure that you offer a “deal” that is both acceptable to investors and the people looking to borrow. The system has to be set up in a transparent way in order to induce trust from all the involved parties. In order to achieve this you will have to focus on a marketing strategy that delivers the maximum information. Information about how you operate, the charges for the borrowers and how are you going to handle the funds at your disposal. You will especially have to convince people that your platform is a secure place to invest. You will need to figure out your marketing channels. The most basic will be your own company blog and possibly even your own in-house developed app (which could be done via crowdfunding).

  1. Developing a brand

Once the crowdfunding concept was new and there were hardly any platforms on the scene. Now competition is arriving and the first mover advantage is long gone. You will have to differentiate yourself from your competition. In the simplest way, it could be by the way of focusing on the aesthetics on your website that is the logo and theme and the usability.

Secondly you should match the features being offered by the competition and where possible streamline your processes even more. You will have to communicate your “differences” via email marketing and company blog. The best way to do this is to provide content that is actually useful for the reader and yet brings your platform to attention.

  1. The technical expertise

At the end of the day customers prefer businesses that provide them with a superb quality service or product. Crowdfunding is essentially a fintech product and thus technology is its backbone. Your crowdfunding platform must not only be user friendly, but it also must be secure and have features that help you make better decisions. For example, Zopa has its own algorithm for deciding which borrowers are more likely to stick to repayment schedules.

In order to succeed it is very important that you analyze your existing competition and see what features you have to match in order to attract customers and what you can do better than them.

 

 

 

The Battle to Launch a Next-Generation Retirement Product & Control $14 Trillion in Investment Direction

By Dara Albright,CrowdFunding Beat Guest Editor, FinTechREVOLUTION.tv  , Dara Albright Media,

In the Fall of 2016, I penned an article entitled, “Modernizing the Self-direct IRA – The Trillion Dollar FinTech Opportunity” – the first in a new series of articles that focuses on next-generation retirement planning. The piece underscored how FinTech will mend America’s flawed retirement system and foster the growth of “digital” investing.

Retire1

This initial report drew attention to the growing necessity for a low-cost, high speed, autonomous retirement solution that would meet the demands of today’s alternative micro-investor. Most significantly, the piece summarized the two distinct individual retirement account prototypes – the Brokerage IRA and the Trust Company IRA – which are vying to become the self-directed IRA exemplar and dominate the $14 trillion retail retirement market.

Sometimes I feel like I am the only one sensing a war brewing in the retail retirement market. But then again, I am somewhat clairvoyant.

Perhaps the majority of America’s retail investors are too busy reluctantly allocating their retirement dollars to sanctioned bond funds – many of which yield more clout than performance – to even notice the race to create a next-generation retail retirement product that will economically custody coveted micro-sized alternative investment products and, in doing so, ensure that a greater number of Americans maintain more properly diversified retirement portfolios.

Maybe most old-school financial professionals are just too preoccupied chasing the “whale” to realize the imminent colossal impact of the rising micro-alternative investor.

No matter the rationale, the fact is that this battle to produce a next-generation retail retirement vehicle is likely to go down as the largest industry duel in the history of commerce – dwarfing the cola and software wars by trillions.

The victorious retirement product stands to inherit the power to redirect $14 trillion dollars of mutual fund assets and disrupt long-standing retirement asset monopolies – thus paving the way for a superior breed of investment products to emerge (download: http://www.slideshare.net/smox2011/the-trillion-dollar-fintech-opportunity).

Unlike previous corporate clashes, the winning IRA model is easy to predict. The frontrunner will be the one possessing the most optimum technological and regulatory framework to accommodate the needs of the modern retail investor. Today’s retail investor is not looking for another mutual fund. He is not begging for ETFs. Nor is he interested in day-trading stocks. Instead, he is craving yield, and he is demanding access to the same level of returns that institutions have been enjoying for years through alternative asset diversification. Simply put, modern investors are looking for a self-directed retirement vehicle that enables them to readily, easily and affordably spread tiny increments of retirement capital across a broad range of asset classes.

Except for the possibility of a sudden legislative change, hands down, the trust company based model will emerge as the clear victor. The Brokerage IRA is bound by too many compliance constraints to enable it to efficiently and cost-effectively facilitate micro investments into alternative asset classes such as P2P notes or crowdfinanced offerings.

The Trust Company IRA, by contrast, operates under a much more favorable regulatory scheme, and any technological shortcomings are presently being addressed and conquered (see: http://www.prnewswire.com/news-releases/ira-services-launches-p2p-lendings-first-cloud-based-api-driven-retirement-investment-solution-at-lendit-2016-300247413.html).

Because it is faster and easier to overcome a technological deficiency than it is to amend regulations, the Trust Company IRA will continue to amass a significant advantage. This is especially true as technology becomes less and less of a commodity and the political climate becomes more and more contentious

There are simply too many compliance-related obstacles that FINRA-regulated BDs would need to surmount in order to formidably compete with the trust company based model. Perhaps one of the most pressing is the Department of Labor’s fiduciary rule which is scheduled to take effect in April.

Under the new DOL rule – which expands the definition of a fiduciary to include commission-based brokers – brokerage firms that handle retail retirement accounts will find themselves facing additional and unwelcomed liability.

In the wake of the DOL rule, retail brokerages have already been seen scrambling to adjust their existing retail retirement product lines. Merrill Lynch has announced that it will be closing its commission-based retirement business altogether, and Edward Jones pronounced that it will simply stop offering mutual funds and ETFs as options in commission-based retirement accounts.

Yes, you read that correctly. Retail brokerages would prefer to limit access to investment products or exit the retail retirement business altogether than to deal with the regulatory headaches of helping small investors prepare for retirement.

Instead of being able to access “prepackaged” diversified investment products, Edward Jones’ retail clientele will either have to self-diversify across stocks, bonds, annuities and CDs, or move to a managed account that charges an asset-based management fee. Since the typical retail investor’s account is too small to properly self-diversify using individual investment products such as stocks and bonds, and since asset-based management fees tend to be much more expensive than one-time commissions, once again retail investors are getting the shaft.

According to CEI finance expert John Berlau, “The DOL fiduciary rule will restrict access to financial advice and reduce choices for lower and middle-income savers. The restrictions can deter companies from serving middle-class savers, creating a “guidance gap” that could cost an estimated $80 billion in lost savings.”

As the DOL Fiduciary Rule succeeds in eliminating both financial advisors and investment choices from the traditional retirement planning equation, smaller investors will be forced into taking a more autonomous stance to retirement prep – leading to a seismic shift in both retail assets and retirement vehicles.

This will have widespread implications on the financial services industry that will include a mass exodus from brokerage IRAs into Trust Company IRAs as well as a flock to robo-advisors, marketplace finance and well as P2P and digital investing – a trend in retail investing that is already well underway.

As the battle for the retail retirement account unfolds, I am going to be reveling in the irony of how once again needless regulatory oversight is helping fuel the FinTech revolution.

Originally published on Dara Albright Media.

hqdefault

Dara Albright – President of Dara Albright Media, Co-founded the FinFair ConferenceFinTechREVOLUTION.tv

Recognized authority, thought provoker and frequent speaker on topics relating to market structure, private secondary transactions and crowdfinance. Welcome to my new personal blog where you can glean unique insight into the rapid transformation of global capital markets.

 

Crowdfunding expands innovation

Brett Israel, Media relations |berkeley.Edu

Cowdfunding platforms, such as Kickstarter, have opened a funding spigot to startups in regions that have suffered from a venture capital drought, a new UC Berkeley study shows.

Graphic of kickstarter vs venture capital funding in US

County-level distributions of Kickstarter campaigns and venture capital investments, and the ratio of the amount of Kickstarter to venture capital funding, 2009–2015. Increasing blue to red indicates a higher ratio of Kickstarter to venture capital funding. (Graphic by J. YOU/Science)

Historically, funding for innovation has come from venture capitalists, which tend to fund entrepreneurs that often mirror the investors in terms of their educational, social and professional characteristics. Venture capital funding also tends to be concentrated in a small number of regions, such as Silicon Valley. The study found that crowdfunding has spread startup financing beyond these entrepreneurial bubbles.

“Most venture capital gets invested in Silicon Valley and Boston, and thus shortchanges the rest of the country for entrepreneurial financing,” said study senior author Lee Fleming, faculty director of the Coleman Fung Institute for Engineering Leadership at UC Berkeley. “But crowdfunding has opened up funding to everyone else.”

The article was published in a recent edition of the journal Science.

For the study, researchers analyzed data from 2009 to 2015 on successful Kickstarter campaigns and venture capital investments. Because some Kickstarter campaigns are for projects that have no real possibility of being backed by venture capitalists, such as the creation of artwork, and because venture capitalists may invest in some kinds of companies, such as biotechnology, that fall outside the scope of the Kickstarter platform, the researchers compared investments that could have reasonably been funded by either crowdfunding or venture capital.

The researchers identified 55,005 Kickstarter projects in categories similar to the industries in which venture capitalists invested, and 17,493 venture capital investments in industries engaged in activities similar to those of Kickstarter campaigns. The researchers then used this dataset to map Kickstarter projects and venture capital investments by county and by year.

Although the typical Kickstarter campaign involved a smaller amount of money, these campaigns covered a broader swath of the nation, the analysis found. Several places with the largest number of successful Kickstarter campaigns have not been magnets for venture capitalists’ investments, such as Chicago, Los Angeles and Seattle.

Venture capitalists’ investments were highly concentrated, the analysis found. Just four counties, located in the Boston area and Silicon Valley, account for 50 percent of all matched venture capital investments, according to the data set.

To adjust for differences in population and other factors that might produce more investments in all types of innovative activity in some places, the researchers calculated the relative intensity of Kickstarter versus venture capital dollars in each region. They found that Kickstarter allocates a much larger share of its resources than venture capitalists to the interior of the country, away from coastal population centers and traditional technology hubs. Even in the Boston area and Silicon Valley, Kickstarter investments were concentrated in different areas than venture capitalists’ funding. Kickstarter funding in the Bay Area, for example, goes disproportionately to Marin and Napa counties, whereas San Francisco and the Peninsula counties received more venture capitalists’ funding.

The study found that crowdfunding in a region, and in particular successful technology campaigns, appeared to cause an increase in venture capital funding in the region. This occurs as venture capitalists look for promising new ideas and a successful campaign is a very good indicator of potential.

“This effect has gotten consistently stronger over the last six years,” Fleming said. “If this phenomenon continues, crowdfunding could begin to address regional inequality in entrepreneurial financing, through both direct crowdfunding investment and induced venture capital investment.”

Source:

http://news.berkeley.edu/2017/01/13/crowdfunding-expands-innovation-financing-to-underserved-regions/

Crowdfunding: Can It Work for Brick & Mortar?

By , Crowdfund Beat Guest Post,

Founder + CEO of PieShell – Crowdfunding for food + beverage,

Having a store front or restaurant is expensive, especially when you’re just getting started. Between build-out and equipment costs, starting inventory, licenses, fees, and working capital, starting a brick and mortar business can easily add up to hundreds of thousands of dollars. It’s because of this that many people say that rewards-based crowdfunding isn’t a good option for brick and mortar businesses, but we beg to differ.

Crowdfunding is a great option for restaurants, bakeries, coffee shops, and more (if it’s done in the right way and on the right scale). We’re here to tell you how to make crowdfunding work for brick and mortar operations!

First, A Word of Advice

In previous blogs we’ve cautioned against being overly ambitious when it comes to crowdfunding. Instead, we advise breaking down your grand vision into a series of stepping-stones, picking one and making that the first stepping-stone for your crowdfunding project. Ask yourself, what’s the next step in my business?

We’re doubling down on this advice. If you’re already in business, we recommend using crowdfunding for upgrading or expanding your existing restaurant operation. You may want to invest in new kitchen equipment, renovate your space, or add new offerings to your menu. If you’re still pre-launch, then crowdfunding can be an excellent way to supplement funding from traditional sources like investors and banks. In fact, sometimes crowdfunding can be a precursor to traditional investment, as it shows that there is genuine interest in your venture.

For Existing Restaurants

Crowdfunding, much like running a restaurant, is time consuming and can be hectic. However, we think that brick and mortar businesses actually have a leg up when it comes to crowdfunding.

Unlike online-only businesses or those without a permanent location, owning a restaurant gives you the opportunity to interact with potential supporters in person and on a regular basis. Use this exposure to reach people who love what you’re doing and want to see it continue. Your “regulars” are the perfect people to tap for support, either by asking in person or advertising your crowdfunding project in your space (get ready to make some killer table tents!).

A great example of restaurant crowdfunding comes from Manu Alfau, chef and owner of La Bodega in Seattle, Washington. Manu used his existing customer base to raise $9,000 to build an outdoor patio. For gifts, he offered parties and food from La Bodega — things that he already knew his supporters would love.

For Startups

If you’re in the pre-launch phase, make sure that you’ve invested in the community where you plan to set up shop. That means doing things like being at local farmers’ markets, building an audience on social media that’s made up of people who are local to the area, and networking with other business owners to tap into their pool of customers.

Like we said earlier, it’s unlikely that you’ll be able to raise the full cost of starting a restaurant, so pick a reasonable crowdfunding goal and plan on supplementing it with personal funds, traditional financing, or a combination of both.

For startups, one advantage of crowdfunding is the opportunity to make people feel like they are truly invested in the success of your business. Simply put, crowdfunding is a way to create a sense of community ownership, which is incredibly important when it comes to sustaining a small business.

Gifts that Make Sense

Brick and mortar businesses also have a great opportunity to make a positive impression through gifts. Gifts should get people back into your establishment where they can experience the fruits of their contributions and also become repeat customers!

For example, in 2010 in the small town of Vergennes, Vermont, Julianne Jones and her husband decided to take over a former laundromat and transform it into a French-style bakery. They rewarded their supporters with tokens that could be exchanged for goods once the bakery opened.

Obviously, this strategy is limited to those in the area, so make sure to have a back-up plan for supporters who won’t be able to make it in person.

Meet OUR First Brick and Mortars

Ok, ok, there’s a reason that we chose to focus on crowdfunding for restaurants for this blog. We’re welcoming our first three brick and mortars to the PieShell family!

The first, The Cookie Cups, was live on PieShell at the end of 2016 and successfully reached their first stepping-stone, moving them closer to their bakery cafe dreams!

Second is Bon Chovie, a rock-and-roll seafood restaurant that started life at the “flea food market” Smorgasburg. They will be launching their crowdfunding project on PieShell in the next couple months to help fund the move to a new location in Brooklyn.

And last but not least, LC Farmery. A casual and engaging experience, connecting West Chelsea patrons to passionate craft producers from around the state via a rotating menu of locally sourced ingredients from farmers, fisherman, and purveyors, will be launching a project in the spring.

We’re excited to see them pave the way for many more restaurants to come!

2017 Who’s Who of CrowdFunding Industry Professionals

Who

2017 who’s who in CrowdFunding World

As you know CrowdfundBeat.com continues to grow as the preeminent  go-to source for all news and trends Crowdfunding related.  Our conferences are expanding  as part of our “World Tour” for 2017.

banner300by250

Crowdfunding Beat Media Group, Conference & Expo 2017 USA Tour

New York City Jan 24th   –  Silicon Valley Feb 9th & 10th – 

Washington DC May 4th & 5th Denver October 2nd & 3rd.

 

For sponsorship opportunity contact: CFB@CrowdFundBeat.com  or call 1 888 580 6610
Name Last Name Comapany/Title Contact
Jay Abraham Business Growth Strategist
Dara Albright Dara Albright Media & FinTechREVOLUTION.tv @tothestoics
Kendall Almerico Crowdfunding and JOBS Act Expert @FundhubBiz
Antonio Arias CEO and Co-Founder Healthy Crowdfunder Corp -@alamidas – @healthvcfunder
Sydney Armani CEO Crowdfunding USA & Publisher of CrowdFund Beat Media Group armani@crowdfundbeat.com
Nav Athwal Realtyshares.Com nav@realtyshares.com
Douglas Atkin Guggenheim Partners
Joseph Barisonzi Leader Community Turnkey Crowdfunding
Chance Barnett CEO Crowdfunder
James Beshara CEO And Co-Founder Crowdtilt
Jason Best Co-Founder And Principal Crowdfund Capital Advisors @CrowdCapA
Nick Bhargava Co-Founder GROUNDFLOOR
 Bruce  Blankenhorn  COO Realty XE .com Real Estate CrowdFunding
Jim Borzilleri CEO, Crowdengine @crowdengines
Amanda Boyle CEO And Founder Bloom VC – @nowaffle
Salvador Briggman CEO Crowdcrux.Com
Ryan Caldbeck CEO Circleup, A Crowdfunding Platform For Accredited Investors
Patrick Calderon Founder Crowdco.co
Johanna Calderon-Dakin Co-Founder Crowdco.co
Chris Camillo Author Laughing At Wall Street: How I Beat The Prosinvesting @ChrisCamillo
 Aubrey  Chernick  Founder,  NextGen Crowdfunding  @AubreyChernick
Steve Cinelli   Financier, economist, author, artist. @stevecinelli
Dan Ciporin CEO And Venture Capitalist
Susan Cooney Founder & CEO At Givelocity
Trish Costello CEO & Founder Portfolia
Luan Cox CEO Crowdnetic @crowdnetic.com
Christopher.j Crippen Certified Crowd Funding Professional,
Daniel Daboczy CEO Fundedbyme @fundedbymeceo
Brian Dally Co-Founder & CEO, GROUNDFLOOR
Mat Dellorso CEO Of Wealthforge
Kathryn Diamond SVP Boston Private Bank, Wealth Management
Andrew Dix Co-Founder Crowdfund Insider
Tommaso D’Onofrio CEO Assiteca Crowd S.R.L.
David Drake LDJ Capital Soho Loft Capital Creation
Timothy C. Draper Draper Founder Partner Of DFJ
Peter Einstein Crowdfunding4all (CF4ALL) – Search Engine
Douglas Ellenoff  

EGS  Leading CrowdFunidng Firm

http://www.egsllp.com/attorneys/douglas-ellenoff

ellenoff@egsllp.com
Alex Fair Co-Founder And CEO Medstartr.Com @alexbfair
Michael Faulkner CEO Seedups @seedups
Ryan Feit CEO And Co-Founder Seedinvest @ryanfeit
Brad Feld Managing Director Foundry Group
Jonathan Frutkin Co-Founder Cricca Funding , Author Equity Crowdfunding
Samuel Guzik  

the JOBS Act Expert Guzik & Associates,

sguzik@guziklaw.com

Oliver Gajda Co-Founder And Chairman Eurcrowdfunding @olivergajda
Dr. Michael Gebert German Crowdfunding Network
Sandi Gilbert Founder & CEO Crowdcapital &Seedups Canada
Julia Groves UK’s    Http://Www.Ukcfa.Org.Uk/
Alfredo Guilbert COO Of Digital Film Cloud Network
Sara Hanks CEO And Founder Crowd Check @SaraCrowdCheck
Kevin Harrington Chairman Of As Seen On TV
Daphne Habets Crowdfunding Pro @ geldvoorelkaar.nl
Daryl Hatton CEO Fundrazr.Com
Jillian Helman Realty Mogul Jilliene@Realtymogul.Com
Adam Hooper Founder/CEO Of Realcrowd
Jessica Jackley Investor And Advisor, Collaborative Fund Co-Founder, Kiva @jessicajackley
 Barry E.    James  Author of New Router to Funding, Founder/CEO TheCrowdDataCenter/TheCrowdfundingCenter    @BarryEJames
Oscar A Jofre Founder/CEO KoreConX Corp. @oscarjofre
Paul Keating Founder And CEO Of Crowdcando; A Crowdfunding Platform For Events.
Karen Kerrigan President Small Business & Entrepreneurship Council @karenkerrigan
David Khorram Crowdfunding Evangelist Dkhorram@Crowdfundingplanning.Com
Candace Klein Founding Member Of Crowdfund Intermediary Regulatory Advocates (CIFRA)
Ronald Kleverlaan Senior Crowdfunding Strategist & Vice Chairman European Crowdfunding Network
Brian Korn Crowdfunding Attorney @BKorn@manatt.com
Luke Lang o-Founder Crowdcube @lukelang
Mark Lancaster CEO    CrowdKey, Inc. White Label CrowdFunding solution  markl@crowdkey.com @mtlancaster
Sang H. Lee Lee CEO & Founder At Return On Change
Howard Leonhardt Founder, Chairman And CEO Leonhardt Ventures @howardleonhardt
Alessandro M. Lerro Lerro Crowdfunding Italy
Jeff Lynn CEO And Co-Founder Seedrs @jeffseedrs
Peter Mackness UK Crowdfunding, Sponsorship, Brand Activation,
David Manshoory CEO, Assetavenue
Michael Markowski Crowdclassifieds.Com, Inc.
Jonathan May CEO and Founder,Hubbub, Director of UKCA
Matteo Masserdotti Founder@Tip.Ventures
Gene Massey CEO Of Mediashares Gene@Mediashares.Com
Blaine McLaughlin COO- VIA FOLIO mclaughlinb@viafolio.com
Matthew Mcgrath President And CEO Of Optimize Capital Markets
Congressman Patrick Mchenry One Of The Investment Crowdfunding Industry’s Most Resolute Champions
Scott E. McIntyre Secy. Board Of Directors CFPA , Director Phabriq Devp.; @scot_mcintyre
Jonathan Medved CEO At Ourcrowd
Brian Meece Rockethub Rewards Platform
Klaus-Martin Meyer Crowdfunding Blogger In Europe
Eric Migicovsky Founder Pebble Technology @ericmigi
Benjamin Miller Co-Founder, Fundrise Fundrise – Direct Public Offering Platform
Alexander Mittal Co-Founder And CEO Fundersclub@Mittal
Vincent Molinari Founder-CEO Gate Global Impact,Inc
Roy Morejon President Of Digital Marketing Agency Command Partners
Bill Morrow Co-Founder & Director Angels Den
Andrew Moss President Of Booster, LLC
Brock Murray CEO Of Joi Media, Makers Of The Katipult White Label
Paul Niederer Venture Capital & Private  Australian paul@raiseworth.com @paulniederer
Rodrigo Niño Prodigy Network’s Founder And CEO
Perry Niro Montreal, Canada Perry@Groupeavea.Com
Howard Orloff Crowdfunding-Website-Reviews
Jeremiah Owyang Web Strategy Www.Crowdcompanies.Com
DJ Paul Co-Chair CFIRA
Humphrey Polanen Managing Director Of I-Bankers Direct
Darren Powderly Co-Founder Crowdstreet, Inc.
Tanya Prive Founder And COO Rockthepost @tanyapri
Scott Purcell CEO Fund America   scott@fundamerica.com
Sam  Quawasmi  MD Eureeca
Georgia Quinn   CEO @ disclose.com  gquinn@idisclose.com
Mark Roderick mark.roderick@flastergreenberg.com  WWW.CrowdfundAttny.com  @CrowdfundAttny
Naval Ravikant Founder And CEO Angellist
Danae Ringelman Co-Founder And Chief Customer Officer Indiegogo @GoGoDanae
David S. Rose Founder And CEO Of Crowdfunding Site Gust
Slava Rubin CEO Indiegogo @gogoslava
Bishop Rodney Sampson Kingonomics
 Jillian  Sidoti  jillian@syndicationlawyers.com
Joy Schoffler Principal Joy.S@Leverage-Pr.Com
Eric Schreyer Journalist And Editor Crowdfundbeat Germany
Wil Schroter Founder And CEO Fundable @wilschroter
Marlon Schulman Founder & CEO Horror Equity Fund, Inc
Joanna Schwartz CEO Of Earlyshares
Barry Sheerman Member Of Parliament For Huddersfield UK Parliament @BarrySheerman
Barry Silbert Founder And CEO Secondmarket @barrysilbert
Rose Spinelli Coach, Trainer, Pitch Video Creator Thecrowdfundamentals.Com @TCFrose
Paul Spinrad Crowdfunding Advocate Investian
Duncan Stewart Director Of TMT Research Deloitte Canada @dunstewart
Yancey Strickler Co-Founder And CEO Kickstarter @ystrickler
Ron Suber President At Prosper Marketplace
Bryan Smith Co-Founder- Realty Wealth.com
Richard Swart  Chief Strategy Officer NextGen Crowdfunding @richardswart
Kevin Swill COO Of The Carlton Group
William Skelley CEO and founder of iFunding.  @SkelleyWilliam
Chris Thomas CEO Eureeca
Devin D. Thorpe Journalist, Author, Philanthropist @devindthorpe
Nadav Trenter Moser: Http://Www.Mimoona.Com/ Medugam@Gmail.Com
John Trigonis Indiegogo Author Of Crowdfunding For Filmmakers
Chris Tyrrell CEO At Offer Board @christyrrell
Andres Trujillo Founder-CEO Global GroupFund inc.
Katharine Voyles Mobley Chief Marketing Officer Wecarecard
Sam Vogel Co-Founder-Realty Wealth.com
Sonny Vu Misfit Wearables
Kim Wales  founder and CEO of Wales Capital @kimwales1
Mathew Walker Technology Enthusiast | Domain Name Broker | Ebook Author
David Weild Chairman & CEO At Issuworks
Noreen Weiss Adler, A New York–Based Attorney Who Has Written Extensively On Crowdfunding.
Darren Westlake CEO Crowdcube @DazWest
Joanne Wilson Co-Founder Gotham Gal Ventures @thegothamgal
Jonathan Wilson  Attorney Jwilson@Taylorenglish.Com
Sherwood Woodie Neiss Partner, Crowdfund Capital Advisors
Dr. Letitia Wright Wright Place TV Show
Diana Yazidjian Crowdfunding Strategist Canada
Korstiaan Zandvliet Symbid – Global Equity Platform
Anthony   Zeoli  

Professional Problem Solver; Partner at Freeborn & Peters LLP

anthony.zeoli@gmail.com

Bryan Zhang Phd Researcher Bryan Zhang @BryanZhangZ
 Tony  Zerucha
Managing Editor
Bankless Times

Sponsored by 2017 SV CrowdFunding Conference 
tags:

crowdfundbeat, Crowdfunding, equity crowdfunding, indiegogo, Kickstarter, Real Estate, Realty Mogul, SEC, sv crowdfund, UK, Who’s Who, Who’s Who? of CrowdFunding

How 2016 Reshaped Financial Services for Generations to Come

By Dara Albright,CrowdFunding BeatGuest Editor, FinTechREVOLUTION.tv  , Dara Albright Media,
The year began with the renaissance of the retail investor and it ended with a massive crowdfinance conference which centered – for the first time – around the actual crowd (“retail”) investor.2016 will be etched in time as one of the most unpredictable and metamorphic years in our planet’s history. While every fragment of civilization will feel the effects of 2016, the year will leave an indelible imprint on financial services, global political landscapes and mass media for generations to come.

In between was the successful completion of the Elio Motors Reg A+ offering, the first phase of investment product ingenuity through JOBS Act exemptions, the launch of the first retail retirement technology, the “fix Crowdfunding bill”, the introduction of Congressman McHenry’s new FinTech legislation aimed at fostering financial innovation, the implementation of Reg CF, lots of industry turmoil, a surprising Brexit vote, and perhaps the most controversial and suspense-filled U.S. election in history.

2016 was also the year that the Cubs finally won another World Series and I discovered the video selfie.

Before I underscore how all of these events will have monumental economic implications on 2017 and beyond, let me just take a moment to boast about the accuracy of last year’s predictions.

istock_fourgenerations

 Last December I forecasted that:

  1. Robo-advisors will find opportunities in crowdfinance – Just as I predicted, ETF-centric robo-advisors made an entrance into crowdfinance this year. In early 2016, robo adviser, Hedgeable, first entered the crowdfinance space by offering its retail clientele opportunities to venture invest through leading equity crowdfunding platforms such as AngelList and CircleUp. A few months later, Hedgeable announced that it will soon be rolling out a peer-to-peer lending product. Furthermore, based on conversations that I’ve had in recent months with robo-advisory firms as well as with companies that develop technology for robo-advisors, I anticipate many more robo-advisors will soon be joining the party.
  2. Retail Financial Product Ingenuity will Escalate – As discussed last year, GROUNDFLOOR made history in late 2015 with its Reg A+ qualification to offer micro-investors small pieces of real estate debt. In 2016, two more companies broke ground in the Reg A+ arena: StreetShares and American Homeowners Preservation – offering retail investors the ability to capture both monetary and social returns through micro-investments into private businesses as well as individual mortgages, respectively. Companies like these are helping to inspire a new generation of retail alternative products. This type of investment product ingenuity is about to spread well beyond online platforms and marketplaces. I predict that any financial services business involved in the production or sale of alternative securities will soon look to expand distribution by taking advantage of this modern regulatory framework.
  3. Straight Equity Title III Offerings will Fall Flat – Indeed they have. According to NextGen Crowdfunding, a leading provider of crowdfunding deal data, investors have committed to invest slightly more than $15 million into Title III equity crowdfunding campaigns during 2016. $15 million equates to approximately 60 Hillary Clinton speeches or the amount that the U.S. national debt grew since you started reading this article. $15 million won’t even begin to scratch the surface of fixing our economic woes. To put it bluntly, $15 million is not an industry – it’s barely even a house in the Hamptons! Unless and until more creative hybrid financing structures are employed for Reg CF offerings, the market for Title III Offerings will remain insignificant.
  4. Reg A+ “Testing The Waters” will Call Attention to Serious Title II Crowdfunding Flaws – While no one really cared much about this issue in 2016, I do believe that the considerable disparity between total “indications of interest” and the amount of funding actually raised will eventually lead to regulatory amendments. It is completely misleading for a company to “advertise” that it has garnered sizeable funding interest without ever having to notify the public that it failed to raise even a fraction of the amount.
  5. The Crowdfinance Playing Field will Undergo Leadership Change – Wow, was I right about this one! Industry leadership has begun to undergo significant change in 2016 – particularly in marketplace lending. I stand by my statement that, “New leaders will rise. Some unexpected frontrunners will fall. The businesses that will best be able to oblige the retail customer, adapt to regulatory changes, and penetrate retail’s $14+ trillion retirement capital will prevail.”
  6. Hoverboards will Disappear from Toy Store Shelves – Uh, I meant to say Galaxy Note 7’s will disappear from the shelves. Yeah, yeah, that’s the ticket. (In the era of “fake news” this totally passé catchphrase deserves to make a comeback).

While some of my last year’s prognostications have yet to fully reach fruition, I’m still standing by all of my 2016 predictions. I’ve come to realize that predictions, much like karma, operate on their own timetable. Even some of the prophecies of the great Nostradamus were a year or two off. And, let’s not forget that Robert Zemeckis was just one year too early in forecasting the Cubs World Series victory.

Speaking of which, you are probably wondering what the Cubbies winning the World Series and video-selfies have to do with the future of personal finance anyway.

A lot. Maybe even everything.

The Cubs World Series win and video selfies are empowering underdogs everywhere. If the most mocked team in the history of professional baseball can win a World Series and amateur videographers can become universally recognized broadcast journalists, then long shots everywhere can achieve astonishing victories. Non-politicians can win presidential elections. Non-lawyers can prevail in litigation. Small businesses can access capital as freely as large corporations. And primarily due to crucial advancements in micro-investing technology, even investing novices will be able to outperform financial experts. At long last, the little guy can have just as much of an opportunity to create wealth as the George Soros and Warren Buffet ilk.

This brings me to my bold 2017 predictions (or as Ron Suber would likely call them “Big Hairy Audacious” predictions).

  1. Underdogs across the land will triumph in 2017 – The Chinese predict that 2017 will be the year of the rooster. I disagree. I believe that 2017 will be the year of the Rudy.
  2. The broader markets will correct – I foresee the broader markets headed for a crash – triggered primarily by manipulators, speculators and years of unsustainable monetary policy. Our public equity markets have been artificially propped up by policy for far too long. America simply can’t keep lowering rates and printing its way to prosperity. Interest rates have nowhere left to go but up, particularly if Trump makes good on his economic plan and we see some real economic growth. I foresee rate hikes leading to a stock market correction. Although it may be a short-lived correction, those who are well-diversified and have allocated some capital to less volatile, less correlated asset classes, will be better able to weather the storm.
  3. The face of financial media will Become Unrecognizable – In 2016 the established media awoke to the revelation that it no longer holds the relevancy that it did in previous generations – something housewives on Facebook have known since about 2008. Although it tried hard not to accept it, traditional media has been hemorrhaging influence for quite some time now. Just like how the video killed the radio star, how Napster crushed the CD, how Netflix annihilated Blockbuster and how Amazon overtook Barnes & Noble, communications technology is on an unstoppable path to demolish mainstream media. While bloggers have been gaining prominence for years at the expense of print media, it will be the video-selfie that delivers mainstream media its final blow. Financial media is no exception. The 2016 U.S. presidential election established social media – not television – as the dominant medium. Clearly, more people tuned into Infowars than to Rachel Maddow. If the video selfie can help influence a U.S. election, its impact on financial services will be colossal. Expect financial content to become edgier as well as more engaging, encompassing and interactive. Expect new financial voices to emerge and gain prominence. Most significantly, expect these new financial media players to forever transform the way people invest, where people invest and how people invest.
  4. FinTech will Expand into Older Demographics – I see countless FinTech business plans. Most of them are loaded with statistics on millennials, ideas for targeting millennials and even pictures of millennials. Yes, many of us industry folks are well-aware that millennials prefer having a root-canal than going to a bank. However, FinTech is not a millennial-centric market. I predict that 2017 will be the year that FinTech crosses demographical thresholds. I expect that older demographics will start incorporating FinTech into their daily routines. As a result, I envision more FinTech innovation being directed towards developing products for other generations, particularly retirees.
  5. The U.S. retirement infrastructure will begin to undergo monumental transformation in 2017 – The $14 trillion retail retirement industry is on the cusp of great transformation. Thanks to the progression of FinTech, RegTech and AltTech, the retirement industry is about to become fairer, simpler and more inclusive. Expect regulatory and technological innovations to be introduced that will unwind a broken and unjust retirement system. Expect retirement plans to become more consumption driven than employment-based. You can also look forward to seeing the mass adoption of game-changing financial products that will give everyone – including present retirees – a fighting chance to prosper throughout their senior years.

The story of financial services is unfolding and it is growing more fascinating by the minute. And I am truly grateful to be alive at this particular moment in time to witness it firsthand.

Anyone who has read my previous year-end articles knows how reflective I tend to get as I approach my Christmas Eve birthday. And this year I am especially pensive given the fact that I am turning 29 (again) and that mercury is in retrograde and that Uranus (pronounced: “Your Ron Issss”) is, well it is somewhere in the universe doing something to affect my mood. Whenever that happens, I tend to seek inspiration in a poem, a lyric or even in just one simple word.

It is for this very reason that I subscribe to dictionary.com’s word of the day. On December 16th, dictionary.com’s word of the day was “hotsy-totsy” and it means, “about as right as can be”. Because I vowed to find a way to incorporate this quirky “makes-you-feel-like-skipping” word into an article, I would like to simply conclude by wishing everyone a joyous holiday season and a very hotsy-totsy 2017!

Originally published on Dara Albright Media.

hqdefault

Dara Albright – President of Dara Albright Media, Co-founded the FinFair ConferenceFinTechREVOLUTION.tv

Recognized authority, thought provoker and frequent speaker on topics relating to market structure, private secondary transactions and crowdfinance. Welcome to my new personal blog where you can glean unique insight into the rapid transformation of global capital markets.

 

CONNECT ON SOCIAL MEDIA:

www.linkedin.com/in/daraalbright/

 

White Paper Report: Expanding into Cannabis-Related Investing

Crowdfund Beat Media,

VIA Folio, the private securities division of Folio Investments Inc., has decided to support capital formation for certain businesses engaged in the cannabis sector. We reached this decision because we believe it will advance our goal of democratizing the private securities sector and will help fund companies that cannot tap traditional venture capital. We began exploring this idea after broker-dealers contacted us about our willingness to support the fundraising efforts of certain cannabis-related businesses.

cannabis_investments_04

Prior to reaching a decision, we studied and carefully considered the complex legal landscape and public policy issues surrounding the growing legalization movement for cannabis. Any use of cannabis is currently illegal under federal law. However, with November’s election results, medicinal use of cannabis is now permitted under state law in 28 states and the District of Columbia, a region compromising more than 60% of the U.S. population. Adult recreational use of cannabis is now legal in seven states and the District of Columbia, an area comprising more than 20% of the U.S. population. We believe that the effort to decriminalize the use and sale of cannabis will continue and is consistent with public policy reforms seeking to mitigate the harmful impact that cannabis-related arrests and imprisonments have, including on minority communities, where they have had a disproportionate effect.

 
We have decided to begin our work in this area by supporting two categories of companies whose activities are legal under both state and federal law. Those companies are (1) pharmaceutical companies engaged in research under waivers granted by the Drug Enforcement Administration; and (2) companies that do not “touch the plant” but provide products or services to businesses that do.

 

We will actively assess developments in this area as they occur and may decide to expand the categories of companies that we have decided to support. We therefore invite companies in categories not described above, specifically companies involved in sales of cannabis for both medical and recreational uses, to contact us to discuss ways that we might assist them in the future.

Here is the cannabis white paper that Folio recently launched
outlook:

 

 

Crowdfunded Cars To Exhibit At Crowd Invest Summit December 7th & 8th

Crowdfund Beat Newswire,

Regulation A+ Conference Proves to be Compelling Destination for Consumer Products Companies Looking to Extend their Brand Equity

LOS ANGELES, CA  / The Crowd Invest Summit, a new conference connecting everyday Americans with crowdfunded investment opportunities, is proud to announce the addition of three innovative companies that will exhibit their unique cars at the event, December 7-8 at the Los Angeles Convention Center in downtown Los Angeles.

The Crowd Invest Summit was developed with the vision that every American, through the Jumpstart Our Business Startups Act (also known as the JOBS Act), can now be a venture capitalist – or shark.

ronn-motor-group-prototype-600x450

Motors Leads the Pack

Elio Motors’ Regulation A+ crowdfunding campaign, launched in June, 2015 and completed this past February, did more than just allow individuals to participate in the company’s vision of disrupting auto transportation – it has been one of the most successful campaigns to date, raising $17 million from 6,500 everyday Americans. In February, Elio Motors became the first crowdfunded IPO in the United States when it listed its shares on the OTC Markets’ OTCQX (“ELIO”).

Although Elio Motors will not be exhibiting this year, the company has inspired other automotive innovators – including Campagna Motors, Ronn Motor Company, and HyGen Industries – to participate.

Campagna Motors

Campagna Motors is a forward-thinking car company that has been designing and producing three-wheel vehicles with a focus on performance since 1988. Located in Montreal, Canada, the company’s most popular models are the T-REX and V13R, both of which will be featured at the conference. The company plans to create a sister company in the United States to facilitate an upcoming Regulation A+ campaign.

CEO of Campagna Motors, André Morissette said, “Campagna is a vehicle manufacturer that wants to expand and grow to be a serious player in the emerging three-wheel vehicle market. We looked at all sorts of financing avenues and opportunities and we chose the Reg A+ route because it will provide us with the possibility of engaging our large fan base to become investors and partners in our business, and it allows us to raise the required capital in conditions that are interesting for us and our investors to realize our vision.”

Ronn Motor Company

Through its current Regulation A+ campaign, Ronn Motor Company has enlisted the support of its community and beyond, asking for one million partners to co-create technology that has “the face of a supercar.”

Ronn Ford, Chairman and CEO of Ronn Motor Company said, “This new investment approach through crowdfunding allows us to partner with many to take on the big automakers and give the small guys a way to bring their collective dreams to fruition by joining us as investors and partners. We celebrate this community approach of building cars by capitalizing community effort through crowdfunding.”

HyGen Industries

HyGen Industries, based in Los Angeles, California, produces fuel to power eco-friendly vehicles, distributing the fuel through partner locations throughout the state. HyGen’s hydrogen refueling pumps coexist with current gasoline dispensers without additional infrastructure. The company is currently running a Regulation A+ campaign to build hydrogen fuel stations.

HyGen’s technology will be on display at the conference; the company will feature a Toyota Mirai that runs on hydrogen fuel.

Paul Dillon, CFO of HyGen Industries said, “What really excites me about Reg. A+ is the ability to connect directly with impact investors. The transition from fossil fuel vehicles to zero-emission cars, buses, and trucks presents unlimited opportunities for innovation, jobs, and economic growth. HyGen is at the forefront of this sea change. We believe Reg A+ lets small investors put their money to work for a sustainable future by opening up access to promising startups.”

About The Crowd Invest Summit

The Crowd Invest Summit was founded by three pioneers in the equity crowdfunding sector: Josef Holm, Darren Marble, and Alon Goren. The conference was developed with the vision that every American – whether accredited or not – can now become equity investors. Visit us online at www.crowdinvestsummit.com.

Trump victory: a bumpy ride or financial opportunities?

CrowdFund Beat  Special Report, 

Trump winning the U.S. presidency is a bigger deal than Brexit, expect enormous volatility, but also important financial opportunities, affirms the boss of one of the world’s largest independent financial advisory organizations.

The observation from Nigel Green, founder and CEO of deVere, comes as multibillionaire real estate mogul and reality TV star Donald Trump wins the race to the White House to become America’s 45th president.

150401134612-donald-trump-gallery-3-super-169

Mr Green comments: “Buckle up for a bumpy ride in the global markets.  Whether President Trump will, in fact, do what he has said he will do throughout his campaign, or whether it was just soaring rhetoric to whip up his support base, for now, Trump winning is sending shockwaves across the world.  As such, enormous volatility can be expected in the markets.

“The Brexit result was a real shock and created instability in the UK.  But this is a far bigger deal as this creates instability on a much wider, international scale.

“The markets’ main concerns include Trump’s protectionist policies, focusing on potential trade wars with China – America’s largest trading partner – and with Mexico, it’s third largest.

“In addition, with Trump having said certain countries are ‘cheating’ due to their undervalued currencies, currency tensions should also be expected.”

He continues: “Whilst some people are put-off investing because of volatility, many of the most successful investors welcome it.  This is because major buying opportunities are always found where there are fluctuations.

“Fluctuations can cause panic-selling and mis-pricing. High quality equities can then, for example, become cheaper, meaning investors can top up their portfolios and/or take advantage of lower entry points. This all, in turn, means greater potential returns.

“A professional fund manager will help investors take advantage of the opportunities that volatility brings and mitigate potential risks as and when they are presented.

“Anyone serious about enhancing their finances should be using this somewhat unexpected turn of events to create, maximise and protect their wealth.”

Mr Green concludes: “As ever, the best way to benefit from the inevitable key opportunities and sidesteps risks is through real diversification – this includes across asset classes, sectors and geographical regions.”

Yesterday, the deVere CEO said: “With a Trump win we can expect in the immediate aftermath a double whammy negative impact on the market.

“This is because the likely sell-offs will be compounded by the markets having priced in a Clinton victory and were wrong.”

On the SEC’s New Intrastate Crowdfunding Rules and the Nanny State

By Samuel S. Guzik, CrowdFundBeat special guest editor,  Guzik & Associate

On October 26, 2016, the SEC’s three Commissioners convened at their headquarters to adopt new rules intended to modernize what had historically been a little used path of raising capital for startups, early stage businesses and community-based enterprises: the so called intrastate exemption. It had its origins in our federal securities regulation legislation adopted back in 1933, which required the federal registration of the sale of securities in the U.S.  absent an exemption from registration.

sec-meeting-commission-white-piwowar-stein


In 1933 Congress, in its wisdom, carved out from the registration requirement those offerings that were purely local in character, where offers and sales were made by local businesses within their state borders.  This area it left to regulation by the states – on a state by state basis – with each state left to decide for itself how best to balance the need to protect its investing public with the ability of local businesses to access capital.

And to facilitate the utilization of this exemption from registration the Commission enacted Rule 147, intended to be a non-exclusive safe harbor to facilitate compliance with the federal exemption.

Over the years it became more and more apparent that both the exemption itself and the Rule were flawed – hence its use languished – in favor of other more manageable exemptions from federal registration.   Its use was generally shunned by securities lawyers, as it was too easy to fall out of compliance with its requirements.

And time was not kind to the intrastate exemption. If your business was a corporation, the statutory exemption was limited to corporations incorporated in the state where the offering occurred, thus excluding local businesses who might elect to incorporate in out of state jurisdictions.   And with the onset of the Internet in the 1990’s the Commission struggled with how to address offers by a local business on the internet which by their very nature would cross state borders.  This struggle came to a head in 2014, when the SEC Staff issued an informal interpretation, a “CDI” (compliance and disclosure interpretation), opining that unrestricted Internet solicitation and advertising of an offering was taboo for an offering relying on the intrastate exemption.  This effectively put a damper on local investment crowdfunded offerings in the dozens of states that had adopted, or were to adopt, intrastate crowdfunding statutes relying on the intrastate exemption.

keith-higgins-corpfin-sec

The 2014 CDI was greeted with a growing chorus of mystified securities lawyers, state securities regulators and small business advocates.  At a time when the SEC was dragging its feet to adopt regulations to implement interstate (nationwide) investment crowdfunding,  it had in effect shut off many states from enacting local crowdfunding statutes which would enable SME’s to leverage the Internet in local investment crowdfunding campaigns.

Invest Today Billboard AdvertisementIn 2015 the Staff at the SEC’s Division of Corporation Finance took the bull by the horns, recommending that the Commission adopt new rules to modernize and expand the federal intrastate crowdfunding exemption. On October 30, 2015, the same day that the Commission adopted the long-awaited final rules implementing JOBS Act Title III crowdfunding, it came with its own October surprise: proposed rules to update and expand the intrastate exemption – notably, allowing unrestricted Internet advertising of an offering.

One year later, on October 26, 2016, the Commission adopted final intrastate crowdfunding rules, much improved from the proposed rules. Gone in the final rules, among other things, was a provision which would have prohibited state legislatures and state securities regulators from authorizing local investment crowdfunded offerings in excess of $5 million per year.  Though no state has yet to authorize crowdfunded offerings above this amount, virtually all of those who commented on the propose rules were unanimous: this was a matter best left to the discretion of each state – not the federal government.  And in the UK, where investment crowdfunding has flourished, the $5 million dollar ceiling has been broken and is expected to go higher.

Though the vote by the Commissioners on the final rules was unanimous, not so with the sentiment of the Commissioners.  In Commissioner Kara M. Stein’s public remarks on the final rules, she was not shy about expressing reservations about the ability of the individual states to protect their local residents from questionable offerings and bad actors, cautioning of the need for continuing federal oversight:kara-stein-sec-intrastate

“Today’s rules amend Rule 147, and create a new federal offering exemption known as Rule 147A.  Hopefully, the updated safe harbor and new exemption before us today will foster opportunities and create new paths forward for such smaller firms, while still safeguarding investors.”

 

“At least, this is the theory.  Like other experimental capital-raising rules, such as Regulation A+ and Regulation Crowdfunding, only time will tell how well the theory works in practice. Only time will tell whether we can relax capital-raising regulations, while also maintaining appropriate investor protections.  So, while today’s rules may provide smaller companies with additional funding opportunities, today’s rules also raise some investor protection concerns.”

And in closing her remarks, Commissioner Stein  again emphasized what she viewed as the “experimental” nature of these new rules:

“Today’s amendments to Rules 147 and 504 and the new exemption under Rule 147A are part of a suite of rules focused on providing options for smaller businesses seeking to raise capital.  On balance, I think they are worth the experiment.  However, by collecting, sharing, and examining data on how these new options are working in practice, we should be able to recalibrate these rules if the experiment is not working out as planned.”

Most respectfully, I must take exception to Commissioner Stein’s characterization of these rules. It is not a question of whether the glass is half full, or half empty. In my opinion, the glass, from Commissioner Stein’s perspective, is simply upside down.

Science Chemistry TechnologyThe real “experiment,” historically, dates back not only to 1933, when Congress first carved out this statutory reservation of power to the states. The “experiment” also dates back to 1776, when our Founders adopted a Constitution which gave specified powers to the federal government, with all other powers being reserved to the states.  The “experiments” our Founders had in mind were those which would take place under laws enacted by each of the states – as they, and not the federal government, saw fit.  States were to set up their own laboratories of experiment for matters uniquely concerning their residents, and occurring within their borders – free from interference by a federal bureaucracy.

Seems that Commissioner Stein never got that memo. In her view, it would be up to the SEC to “recalibrate” the new rules if the states get it wrong – in the judgment of the Commission, of course.

So Why Does Any of This Matter?

It would be easy to be dismissive of the recently adopted intrastate rules.  After all, historically the intrastate exemption has not been in favor –there have been much better options – with far fewer pitfalls. Even more so now, with new pathways of capital formation opened up by the JOBS Act of 2012.  And with the advent of federal investment crowdfunding, most would yawn when examining the seemingly unimpressive statistics for the use of intrastate crowdfunding during brief period in which intrastate crowdfunding has been allowed.

I submit that current statistics are not very meaningful – as they do not tell the whole story. There is a lag between the time that new capital raising paths are created and when they become “mainstream.”  And let us not forget – until these new rules go into effect (April 2017), as a general matter broad internet solicitation is not permitted in intrastate crowdfunded offerings relying on the current Rule 147 – covering most of the 35 states which have adopted their own intrastate crowdfunding statutes.  And crowdfunding without the Internet is more akin to a day without sunshine. Not much can grow in that environment.

path-trail-utah-desert-blue-sky-mesa-scrub-bush

Size Does Not Always Matter

Statistics, however, do not tell the whole story. Most businesses start out as local businesses.  But when it comes to allocating investor capital in SME’s, most of it winds up in California, New York, and Massachusetts, leaving the vast majority of this country as “capital deserts.”

Patrick McHenry 2Those are not my words. They are the words of US Congressman and Deputy Whip Patrick McHenry, who hails from the Great State of North Carolina – the same gentlemen who has been unrelenting in his efforts to implement smart federal legislation intended to remove unnecessary federal regulatory barriers to SME capital formation: starting with the JOBS Act of 2012, and continuing to this day with a host of bills to further improve the access of SME’s to much needed capital – especially in capital-starved “flyover” states.

Make no mistake about it.  This is not a political issue, notwithstanding the heated rhetoric in 2016 which has saturated our media.  To put a fine point on this, I offer the views of our Democratic Vice President, Joe Biden, spoken in 2014 at the U.S. sponsored Global Economic Summit, on the other side of the world in Morocco to an assembly of thousands of entrepreneurs and government officials, including the head of the U.S. Small Business Administration, Maria Contreras – Sweet.

“The single most valuable resource on this planet I think we could all agree on in this room is not what’s in the ground, but what’s in the mind.  It’s the single least explored part of the world, the mind.  The things that are going to happen in the next two, five, 10, 15 years are breathtaking.  Investors, they have to be willing to expand the horizon and invest in early stage entrepreneurs — not only in Silicon Valley — but . . . everywhere, everywhere where there’s talent.”

maria-contreras“Governments have to unlock the marketplace of ideas by allowing people to express their views openly about what they’re thinking and what they’re trying.”

“They must unlock the commercial marketplace by eliminating barriers to access to capital; ensuring that rules are fair and predictable, removing excessive cumbersome regulations.”

“The government can’t grow the economy by itself.  As a matter of fact, it’s not the major reason.  It’s a catalyst for growth — no matter how big the megaproject.  To prosper in the 21st century, you also need to grow from the bottom up, allowing your people to unlock their talents through private enterprise and political and economic freedom and action.”

And there was some irony – not apparent from the remarks themselves.  They were spoken at a U.S. sponsored world conference intended to promote entrepreneurial activity in Muslim-majority countries – one of former Secretary of State Clinton’s initiatives started by her back in 2009.

Washington Monument DCSo let’s not be too “provincial” when pronouncing judgment on who knows best, when it comes deciding how investors should best be protected – or what is needed to enhance capital formation for SME’s –  or where those funds are needed most – especially when the boundaries of that “province” are marked by the Washington Beltway – and the matters at hand reside within the borders of a single state.

So let’s wake up – and give some deference to our local communities, big and small, U.S. entrepreneurs everywhere, including in the flyover states, and the state legislatures which regulate them.  Sometimes big ideas start in small, seemingly unlikely places.

“Bite-size” businesses, in the aggregate, are important to our economy and job creation. And in Finfair Panel with Amy Cortesethis day and age of readily accessible technology “Uber” sized businesses often have their genesis with relatively modest amounts of capital.

After all, it’s why one notable leader championing the importance of local investing, and New York Times contributor,Amy Cortese, calls it “Locavesting,” – not “Loco” – vesting.

SEC Adopts Final Expanded Intrastate Crowdfunding Rules

By Samuel S. Guzik, CrowdFundBeat special guest editor,  Guzik & Associate

Today the SEC unanimously adopted amendments to Rule 147 and Rule 504, and adopted a new Rule 147A, intended to modernize and facilitate local offerings by companies in their home state.  The final rules are much improved from the proposed rules issued in October 2015, in response to virtually unanimous views of rule commentors.

The only fly in the ointment is that most states will need to update their legislation in order to be able to take advantage on the new, relaxed rules allowing broad internet solicitation. However, sales are still limited to investors in the company’s state.

The new rules will generally take effect in April 2017.

Here is a link to the SEC’s Final Rules Release: https://www.sec.gov/rules/final/2016/33-10238.pdf

Following is the SEC Press Release announcing the adoption of the final rules and a brief summary of the key provisions:

US-SEC-gov

 

SEC Adopts Final Rules to Facilitate Intrastate and Regional Securities Offerings

Rules Provide More Options for Companies to Raise Money While Maintaining Investor Protections

FOR IMMEDIATE RELEASE
2016-226

Washington D.C., Oct. 26, 2016 —The Securities and Exchange Commission today adopted final rules that modernize how companies can raise money to fund their businesses through intrastate and small offerings while maintaining investor protections.

“These final rules, while continuing to provide investor protections, update and expand the capital raising avenues for smaller companies, allowing them to more fully take advantage of changes in technology and business practices,” said SEC Chair Mary Jo White.

The final rules amend Securities Act Rule 147 to modernize the safe harbor under Section 3(a)(11) of the Securities Act, so issuers may continue to use state law exemptions that are conditioned upon compliance with both Section 3(a)(11) and Rule 147.  The final rules also establish a new intrastate offering exemption, Securities Act Rule 147A, that further accommodates offers accessible to out-of-state residents and companies that are incorporated or organized out-of-state.

To facilitate capital formation through regional offerings, the final rules amend Rule 504 of Regulation D under the Securities Act to increase the aggregate amount of securities that may be offered and sold from $1 million to $5 million.  The rules also apply bad actor disqualifications to Rule 504 offerings to provide additional investor protection, consistent with other rules in Regulation D.  In light of the changes to Rule 504, the final rules repeal Rule 505 of Regulation D.

Amended Rule 147 and new Rule 147A will be effective 150 days after publication in the Federal Register.  Amended Rule 504 will be effective 60 days after publication in the Federal Register.  The repeal of Rule 505 will be effective 180 days after publication in the Federal Register.

*   *   *

FACT SHEET

Exemptions to Facilitate Intrastate and Regional Securities Offerings

SEC Open Meeting
Oct. 26, 2016

Action

The Securities and Exchange Commission is considering whether to adopt new and amended rules that would update and modernize how companies can raise money from investors through intrastate and small offerings.  The rules are part of the Commission’s efforts to assist smaller companies with capital formation while maintaining investor protections.

Highlights of the Final Rules

New Rule 147A and Amendments to Rule 147

The adoption of new Rule 147A and the amendments to Securities Act Rule 147 would update and modernize the existing intrastate offering framework that permits companies to raise money from investors within their state without concurrently registering the offers and sales at the federal level.

Amended Rule 147 would remain a safe harbor under Section 3(a)(11) of the Securities Act, so that issuers may continue to use the rule for securities offerings relying on current state law exemptions.  New Rule 147A would be substantially identical to Rule 147 except that it would allow offers to be accessible to out-of-state residents and for companies to be incorporated or organized out-of-state.

Both new Rule 147A and amended Rule 147 would include the following provisions:

  • A requirement that the issuer has its “principal place of business” in-state and satisfies at least one “doing business” requirement that would demonstrate the in-state nature of the issuer’s business
  • A new “reasonable belief” standard for issuers to rely on in determining the residence of the purchaser at the time of the sale of securities
  • A requirement that issuers obtain a written representation from each purchaser as to residency
  • A limit on resales to persons residing within the state or territory of the offering for a period of six months from the date of the sale by the issuer to the purchaser
  • An integration safe harbor that would include any prior offers or sales of securities by the issuer made under another provision, as well as certain subsequent offers or sales of securities by the issuer occurring after the completion of the offering
  • Legend requirements to offerees and purchasers about the limits on resales

Amendments to Rule 504 and Repeal of Rule 505

Rule 504 of Regulation D is an exemption from registration under the Securities Act for offers and sales of up to $1 million of securities in a 12-month period, provided that the issuer is not an Exchange Act reporting company, investment company, or blank check company.  The rule also imposes certain conditions on the offers and sales, with limited exceptions made for offers and sales made in accordance with specified types of state registration provisions and exemptions.  The amendments to Rule 504 would retain the existing framework, while increasing the aggregate amount of securities that may be offered and sold under Rule 504 in any 12-month period from $1 million to $5 million and disqualifying certain bad actors from participation in Rule 504 offerings.  The final rules also would repeal Rule 505, which permits offerings of up to $5 million annually that must be sold solely to accredited investors or no more than 35 non-accredited investors.

Background

The Commission adopted Rule 147 in 1974 as a safe harbor to a statutory intrastate exemption, Section 3(a)(11), which was included in the Securities Act upon its adoption in 1933.  Commenters, market participants and state regulators have indicated that the combined effect of the statutory limitation on offers to persons residing in the same state or territory as the issuer and the prescriptive eligibility requirements of Rule 147 limit the availability of the exemption for companies that would otherwise conduct intrastate offerings.

The $1 million aggregate offering limit in Rule 504 has been in place since 1988.

Effective Date

Amended Rule 147 and new Rule 147A would become effective 150 days after publication in the Federal Register.  Amended Rule 504 would become effective 60 days after publication in the Federal Register.  The repeal of Rule 505 would become effective 180 days after publication in the Federal Register.

#           #          #

NASAA and Members of Congress Come Together on the Need for the SEC to Expand Intrastate Crowdfunding Rules

By Samuel S. Guzik, CrowdFundBeat special guest editor,  Guzik & Associate

It is rare that I am able to find agreement with the publicly stated positions of the North American Securities Administrators Association (NASAA). Equally rare – members of Congress who are traditionally strong advocates for “smart” regulatory reform of capital formation by SME’s to find themselves on the same page as NASAA.  However, there appears to be a growing, even overwhelming, consensus that the SEC’s proposed rules to modify current federal restrictions on the intrastate sale of securities – are on the one hand a step in the right direction.  But on the other hand, the SEC’s rule, as proposed, does not go far enough, and places unnecessary restrictions on the ability of states to decide what is in the best interests of their constituents – free of interference from the SEC.

By way of background, on October 30, 2015, the same day that the Commission announced final investment crowdfunding rules in furtherance of Title III of the JOBS Act of 2012 to implement investment crowdfunding on a national level – it also issued for comment a proposed rule, primarily intended to facilitate investment crowdfunding at the state level – Rule 147A. Significantly, the proposed rule would allow companies to advertise their offering on the Internet, something which the SEC Staff has stated is prohibited under current Rule 147 – and much to the consternation of state regulators and securities lawyers  alike.  In doing so, the SEC proposed to limit the amount that a state could authorize under its laws to $5 million. And it also proposed to eliminate the existing rule, Rule 147, in its entirety.

On October 7, 2016, a bi-partisan group of 15 members of Congress, many members of the House Financial Services Committee, signed a letter addressed to the SEC, encouraging the Commission to finalize its rulemaking, but with some important modifications. In particular, as proposed by the Commission, the existing “safe harbor” rule, Rule 147, which would allow states to regulate offerings occurring entirely within their state, would be scrapped in its entirety, and replaced by a new rule, Rule 147A, under the Commission’s general rulemaking powers.  This approach, if adopted in the final rules, has at least two untoward effects, as regards the ability of states to fashion their own rules for intrastate offering, including intrastate investment crowdfunding.

First, of the 35 or so states which have enacted their own investment crowdfunding statutes, adoption of the Rule, as proposed, would in effect, terminate these exemptions in many of the states which enacted their exemptions based entirely upon the current rule – proposed to be eliminated – bringing intrastate crowdfunding to a halt.  Comment letters to date have almost universally requested the SEC to clarify and expand the existing Rule 147, but to retain the existing rule.  Though a technicality of sorts, failure to fix this glitch would require the large majority of states authorizing intrastate investment crowdfunding to go back to their state legislatures to incorporate any new rule which replaces the current Rule 147. And until then, intrastate crowdfunding would be shut down.

Second, though the SEC’s proposed rule makes necessary improvements, it comes with some conditions which many find unpalatable – and unnecessary. In particular, the SEC rule, as proposed, would limit the ceiling under this proposed exemption to $5 million.  Opposition to this condition has been strong, simply because this is a matter which ought to be determined by each state – on a state by state basis.

The latest missive by 15 members of the House Financial Services Committee includes Congressman and Deputy Whip Patrick McHenry, a leading proponent of the JOBS Act of 2012 and subsequent legislation, and Congressman John Carney, the original sponsor of a Bill which passed the House this year which if enacted would create a new, independent office at the SEC – Office of Small Business Advocate – and would report to the full Commission and to Congress.  Undoubtedly, their letter will signal to the SEC the need to approval final rules as expeditiously as possible nearly a year after originally proposed. So look for good things to come from the Commission in this area in the coming months.

For those who want to dig a little deeper, I am providing links to my Comment Letter to the SEC as well as the Comment Letter submitted by NASAA, both back in January 2016.

Samuel S. Guzik has more than 35 years of experience as a corporate and securities attorney and business advisor in private practice in New York and Los Angeles, including as an associate at Willkie Farr and Gallagher, a major New York based international law firm, a partner at the law firm of Ervin, Cohen and Jessup, in Los Angeles, and in the firm he founded in 1993, Guzik & Associates.

 

samuel guzik

Samuel S. Guzik has more than 35 years of experience as a corporate and securities attorney and business advisor in private practice in New York and Los Angeles, including as an associate at Willkie Farr and Gallagher, a major New York based international law firm, a partner at the law firm of Ervin, Cohen and Jessup, in Los Angeles, and in the firm he founded in 1993, Guzik & Associates.

Mr. Guzik has represented public and privately held companies and entrepreneurs on a broad range of business and financing transactions, both public and private. Mr. Guzik has also successfully represented clients in federal securities litigation and SEC enforcement proceedings. Guzik has represented businesses in a diverse range of industries, including digital media, apparel, health care and numerous high technology based businesses.
Guzik is a recognized authority and thought leader on matters relating to the JOBS Act of 2012 and the ongoing SEC rulemaking, including Regulation D Rule 506 private placements, Regulation A+, and investment crowdfunding. He has been consulted by Congressional members, state legislators and the U.S. Small Business Administration Office of Advocacy on matters relating to the JOBS Act and state securities matters.

Guzik & Associates

1875 Century Park East, Suite 700

Los Angeles, CA 90067

Telephone: 310-914-8600

www.guziklaw.com

www.corporatesecuritieslawyerblog.com

@SamuelGuzik1