Category Archives: money

Political Crowdfunding: Building a Community Instead of a Campaign

By Anum Yoon, Crowdfund Beat Media Guest Editor,

Throughout the past few years, crowdfunding has become a source of fundraising for charities, life-saving surgeries, new products, individual travel goals, research projects and more. With crowdfunding platforms and social media, it’s easier than ever to set up a page where friends and family can donate to whatever it is you’re passionate about or need money for. But does this new fundraising fad have a place in politics?

Election-Money

Politicians who are starting campaigns or building platforms need money, and it’s a fairly new possibility that this money could come from small individual donations from people on crowdfunding websites instead of the wealthy upper class. Here’s everything there is to know about crowdfunding in the political arena.

Traditional Political Fundraising

In the past and even currently, campaigns have been funded by the appropriate political party the candidate is running for. Additionally, wealthy donors throw large amounts of money into the politician’s bank account and, more often than not, cash in the donation for a favor later on down the road.

With this system, the upper class and politicians are completely running the show. Campaigns are based on who got money from the top dogs, and elections are based on those campaigns. So, it’s not hard to see how the average person isn’t exactly included in the political process.

Changes Being Made

In 2008, Barack Obama, who would be elected president that year, changed the game of fundraising in politics. He was the first candidate who collected funds for his campaign from the average working class family.

Obama successfully built a campaign that got American families interested and invested in him – literally. He asked for donations on his website in order to fund his campaign and raised millions of dollars from small donors who simply donated what they could afford, even if that was only a dollar.

Obama’s strategy worked, obviously. Since then, politicians at the local and federal level have used similar campaign strategies. Bernie Sanders, who ran for the Democratic nomination in the 2016 presidential race, prided himself on not accepting money from billionaires. Instead, he wanted to be funded only by the average American. It was easy for his supporters to support him because donating was just a few clicks away thanks to the ease of electronic payments.

He would often send out emails to his supporters asking for just $3 before midnight to send a message to Washington that Americans are tired of billionaires buying elections. The average campaign donation was $27.

On the surface, it seems like Sanders’ strategy did not pay off, since he did not win the nomination. However, Bernie Sanders made quite a name for himself in just a few short months and was a serious contender for the nomination, running on only small donations through crowdfunding efforts. His effort is a look into what could be the future of political fundraising.

Building a Community

The idea behind crowdfunding is to build a community. Crowdfunding started with individual stories. People who wanted to travel and do philanthropic work. Somebody who needed a surgery their family couldn’t afford. An entrepreneur with a great business idea. A young girl who wanted to go to Disney World.

The stories behind each crowdfunding page are what drives people to donate money. People tell their story in the hopes of touching others and convincing them to donate to their cause.

For this reason, crowdfunding in the political arena could be a great thing. Imagine politicians building their campaign not around the nitty gritty of politics, but around a story that touches the American people — a story of hope and resilience. Campaigns and politics in general could become so much more personalized, and Americans could really play a part in the government.

Of course, there are always some things that could go wrong. Politicians could somehow corrupt this system. There will always be billionaires to buy out politicians in their own best interest. There are holes in every system, but it’s also possible to patch up those holes. Since crowdfunding is such a new idea, there is much to be said and discovered about how the system would actually work when utilized by many politicians.

So, crowdfunding in politics could be great, it could be terrible or it could be somewhere in the middle. Only time will tell how politicians will use crowdfunding for their campaigns and how people will react to this new way of fundraising.

 

 

 

 

2017 Real Estate Crowdfunding: Surveying the Landscape

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“Copyright” By Jonathan B. Wilson CrowdFund Beat Sr. Guest Editor, Partner, Taylor English Duma LLP

The impact of crowdfunding on real estate finance and deal-making has been one of the hottest topics of the past year.[1]  With the advent of crowdfunding, real estate developers and investors have multiple pathways to finance their projects and even to plot their exits.  But in many ways the impact of crowdfunding has not yet arrived.  Crowdfunding for real estate is still in the early stages and may take several detours along the way to its final destination.

What is Crowdfunding?

The idea of “crowdfunding” has been in the news a great deal but investors have only just begun to realize its potential for the industry.  Crowdfunding is the idea that a large number of people, with no particular expertise, can accurately predict the likely success or failure of a venture by combining their own observations and communicating with each other.  James Surowiecki‎, in his book, The Wisdom of Crowds[2], recounts dozens of examples where a large group of people who were able to collect and share information were able to make more accurate guesses about the success of a project than the best guess of any individual expert in the topic.  The Internet, with its ability to collect a large number of people quickly and easily, makes it possible to collect a “crowd” to evaluate an idea better than was ever possible before.

Crowdfunding applies this idea to the process of evaluating investment opportunities, allowing members of the crowd to put money behind their predictions and preferences.  Proponents believe that by allowing a crowd of potential investors to share their opinions about the investment and the information they collect that crowd will be better able to predict the success of the investment than individual investment experts.  Sydney Armani, the publisher of CrowdFundBeat, says, “People get excited when they engage with a new product that arouses their passions.  Those passions take on even greater intensity when they can invest in that new product.” [3]

Crowdfunding can take several forms.  Popular crowdfunding sites like Kickstarter and Indiegogo let project sponsors describe their projects to the public and ask for donations.  In an “affinity” campaign, supports of a project pledge funds for a project because they like it and support it.  Their affinity for the project is their only reward.  In a “rewards-based” campaign, project sponsors offer rewards for cash contributions.  Rewards may range from recognition on a website or on a wall, to t-shirts, products samples and more.

Securities-Based Crowdfunding

Securities-based crowdfunding is possible through several recent changes in U.S. securities laws, most of which are derived from the 2012 Jumpstart Our Business Startups Act (or “JOBS Act”).  In particular, the JOBS Act created three types of crowdfunding: (a) crowdfunding to “accredited investors” under Rule 506(c), (b) crowdfunding for up to $50 million each year under new Regulation A+ and (c) crowdfunding to both accredited and non-accredited investors in small offerings under Title III.

Investing Under Rule 506(c)

First, a sponsor could offer debt or equity securities to “accredited investors” under Rule 506(c).  The JOBS Act changed some of the rules affecting private offerings under Rule 506 so that sponsors could publicly-advertise their offerings.  Before this change in the law, public solicitations of private offerings were strictly prohibited.  Under new Rule 506(c) however a promoter that wants to advertise publicly must take various steps to ensure that every investor who participates in the offering is “accredited”, which is defined as having a net worth of over $1 million (excluding the investor’s principal residence) or having an income of more than $200,000 for two consecutive years ($300,000 is the investor is married and files tax returns jointly with a spouse).

Crowdfunding under Rule 506(c) has been feasible for more than a year and several websites, have had some success hosting real estate crowdfunding campaigns that have included securities under Rule 506(c).  Most of the popular real estate crowdfunding sites included in our survey, however, require accredited investors to create a membership on the site before they can view any live offerings.  As a result, the offerings made available to members are intended as a private offering, and not a general solicitation.  Because there is no general solicitation, those websites take the position that their offerings are private offerings under Rule 506(b) rather than publicized general solicitations under Rule 506(c).

Investing Under Regulation A

Another legal change that came from the JOBS Act was a change to Regulation A, an SEC rule that allows a private company to qualify its securities (which may be equity or debt) through filing a formal prospectus with the SEC.  The SEC reviews the prospectus to ensure that it adequately describes all of the risks of the business and the risks to investors.  Once the issuer’s prospectus is approved by the SEC (at which point it is said to be “effective”) the sponsor may sell the securities to both accredited and non-accredited investors.

Before the JOBS Act, offerings under Regulation A were limited to not more than $5 million.  Under the new provisions of Regulation A (sometimes called “Regulation A+”) an issuer of securities may raise up to $50 million in any 12-month period.

One of the advantages of a Regulation A offering is that the company will be able to solicit investments from both accredited and non-accredited investors, thereby widening the scope of interest in the project.  The SEC’s rules, implementing these changes to Regulation A, however, have only been effective since October 2015.  As a result, there have been relatively few offerings that have completed the new process and it is harder to tell how these new offerings will be accepted by investors.

Regulation CF

The third possible route for crowdfunding is often called “Title III” because it arises under Title III of the JOBS Act.  Although the JOBS Act became law in 2012, the SEC only released its rules implementing this new law in October 2015 and those rules didn’t take effect until May 2016.  Under those roles, a promoter may issue securities, in an amount up to $1 million in any 12-month period, to both accredited and non-accredited investors.  But, soliciting for investors may only take place through licensed crowdfunding portals that have received a license from the Financial Institutions Regulation Authority (“FINRA”).

Under Regulation CF (the name used for the SEC’s Title III regulations), issuers do not file a prospectus with the SEC but do need to include certain disclosures about the company in their offering memorandum.  The funding portal will also be liable for making sure that all of the prospective investors receive certain notices about the process and for ensuring that each investor does not invest more than a certain maximum that is derived from the investor’s taxable income.  While a Regulation CF offering can “go national” by accepting investments from people across the country (whether they are accredited or not) the $1 million limit and the requirement that all solicitations take place online through the licensed portal make this approach a challenge for many new ventures.

Because of the $1 million annual cap on fundraising under Regulation CF, however, this approach is usually not a good fit for real estate projects that often require more than this maximum amount.

Surveying the Landscape

The following websites have used one or more of these regulatory pathways to create a marketplace for crowdfunding real estate projects.  By surveying some of the more popular websites I have tried to provide an overview for how industry players are using these now crowdfunding regulations to make deal flow and investment opportunities possible.  This list is not an endorsement of any of these sites and a site’s omission from this list is not intended as a criticism or a suggestion that the site is not worthwhile or valuable.

Peer Street

PeerStreet specializes mostly in residential debt investments (with a smattering of multifamily and commercial). PeerStreet utilizes Rule 506(b) to solicit accredited investors to participate in loans that are secured by real estate.[4]  They have one of the lowest minimums in the top 10 ($1K versus $10K average), and a healthy volume of new transactions.

Virtually every site in the industry claims that they have superior due diligence. PeerStreet, however, supports its claim with concrete proof.  PeerStreet allows investors to review the performance of every past investment. PeerStreet’s site claims that, since 2014, the site has offered more than 200  notes but without any foreclosures or unremedied defaults.

Unlike many other real estate crowdfunding sites, however, PeerStreet does not originate its loans.  Rather, project sponsors introduce opportunities to the site and then earn a fee based on successfully closing the investments.  As a consequence, investors that participate in deals on PeerStreet pay slightly higher total fees than some other sites.  Because of the relatively high performance that PeerStreet’s deals have produced,[5] however, these fees so far have not kept investors away.

Real Crowd

Real Crowd acts as a syndication platform for real estate development companies and real estate funds.  The development companies and funds pay a fee to Real Crowd to have their offerings listed on the site.  Viewing the offerings is possible only for accredited investors who have created a free membership account on the site.  Most of the opportunities on Real Crowd involve commercial real properties or multi-family properties.  Some of the investments are funds in which the fund manager will be investing in the proceeds in a targeted type of property while others are syndicating take-out financing for existing properties.

From the investor’s point of view, Real Crowd has successfully recruited a large number of property developers and fund managers, so there are many investment opportunities to consider.  Most investments, however, require a minimum investment of at least $25 to $50,000, so the platform is not friendly to small retail investors who want to dip their toes in the water.   In addition, most of the investment opportunities are equity securities, so there is a higher risk of principal loss than is generally the case with debt-oriented platforms.

Realty Mogul

Realty Mogul is one of the largest real estate crowdfunding sites and it uses several different approaches based upon the needs of the project sponsor and the class of investor involved.  Accredited investors may invest in either debt or equity securities.  Accredited equity investors invest in syndicated private placements of special purpose limited liability companies that exist to finance equity investments in particular properties.  The equity investment has the higher potential return associated with equity as well as the potential downside risk of loss.

Accredited investors may also invest in debt securities called “Platform Notes”.  Each Platform Note is a debt security issued by a Realty Mogul special purpose vehicle which uses the proceeds of the Platform Notes to make a loan to particular sponsored investment.  By issuing the note from its special purpose vehicle, Realty Mogul is able to take on the management function of managing the underlying loan (reviewing financials, monitoring loan covenants, working out any defaults, and so on) without involving the passive investors who have purchased the Platform Notes.

For non-accredited investors, Realty Mogul has sponsored its own non-traded real estate investment trust.  Although the REIT (called Mogul REIT I) is not traded on any stock exchanges, its shares were qualified with the SEC through a Regulation A prospectus.[6]  According to the prospectus (which went effective in August, 2016) the REIT plans to hold:

“(1) at least 55% of the total value of our assets in commercial mortgage-related instruments that are closely tied to one or more underlying commercial real estate projects, such as mortgage loans, subordinated mortgage loans, mezzanine debt and participations (also referred to as B-Notes) that meet certain criteria set by the staff of the SEC; and (2) at least 80% of the total value of our assets in the types of assets described above plus in “real estate-related assets” that are related to one or more underlying commercial real estate projects, these “real estate-related assets” may include assets such as equity or preferred equity interests in companies whose primary business is to own and operate one or more specified commercial real estate projects, debt securities whose payments are tied to a pool of commercial real estate projects (such as commercial mortgage-backed securities, or CMBS, and collateralized debt obligations, or CDOs), or interests in publicly traded REITs.  We intend to qualify as a real estate investment trust, or REIT, for U.S. federal income tax purposes beginning with our taxable year ending December 31, 2016.”

Because Realty Mogul facilitates both equity and debt investments for accredited investors as well as equity investments for non-accredited investors through MogulREIT I, Realty Mogul is ideally-situated to generate substantial deal flow and relatively rapid underwriting for projects that apply for funding.  As a platform for providing funding for sponsored-projects as well as a platform for creating investment opportunities, Realty Mogul has one of the best head starts of all the available real estate websites.

Those advantages, however, come at a cost.  Realty Mogul has a large staff operation (which is required for its extensive underwriting duties) and that cost is borne by investors through the 1-2% fees they pay to participate in investments on the site.  While the site has tremendous deal flow, however, a student of the industry might ask, “is this really crowdfunding?”  Because Realty Mogul takes such an active role in performing due diligence on its projects and in structuring the investment opportunities on its site, the overall experience is more structured than most crowdfunding sites and there is less opportunity for the collectively give-and-take than crowdfunding was originally thought to represent.

Realty Shares

Realty Shares facilitates both debt and equity investments into both commercial and residential real estate.  The site claims that it has funded over $300 million to 550 projects that have returned more than $59 million to the site’s more than 92,000 registered accredited investors.[7]   Project sponsors must submit to underwriting through Realty Shares and only projects that have exceeded the site’s standards can be offered to the site’s members.  Fees range from 1 to 2% of the investment amount, but investment minimums are as low as $5,000.

As with most of the other real estate crowdfunding sites, investments are made through private placements under rule 506(b).

Residential Real Property Sites

There are several websites that focus primarily on residential real estate.  Because of the similarity of their focus and approach, they can be surveyed as a group:

LendingHome

Lending Home describes itself as the “largest hard money lender” [providing] “fix and flip loans up to 90% LTC and 80% LTV.”[8]  Unlike many of the other sites that aim their value proposition at investors, Lending Home addresses itself primarily to homeowners how are looking for loans and are willing to pay “hard money” rates of interest to get cash.  Accredited investors can participate in Lending Home in increments as low as $5,000.[9]

Roofstock

Roofstock’s tagline is “Property Investing Like the Pros.”[10]  Like Lending Home, Roofstock focuses only on single family residential properties.  Differently, however, Roofstock allows accredited investors to invest directly through loan participations as well as through small funds that focus on particular regions or particular rates of return.  Roofstock also emphasizes, through its underwriting and its messaging, the underlying quality of the properties and their surrounding communities, school systems and the like.  Browsing through loan opportunities on Roofstock feels more like browsing through listings on Zillow than looking for investments.

Patch of Land

Patch of Land is one of the largest and most heavily-trafficked real estate crowdfunding sites.  The site claims to have originated more than 400 loans for over $245 million in loans, returning over $61 million to investors.[11]  Although Patch of Land has made investments in multi-family and commercial real estate, more than 70% by value of its investments have been made in single family real estate.

Fund That Flip

Fund that Flip is a site that proudly advertises its role in financing single family residential rehab and resale projects.[12]  The site claims that the sponsors underwrite individual deals, requiring borrowers to put at least ten percent in the property’s value in equity.[13]  The site also tries to entice investors, claiming average returns between 10 and 14%.

The Future of Real Estate Crowdfunding

Real estate crowdfunding has definitely arrived.  Through the dozens of existing sites claiming to offer some kind of real estate crowdfunding, investors have invested more than a billion dollars through thousands of investments in just a few short years.  While this method of investing is still very small (in contrast to retail investments in mutual funds and the stock market) it fills a market need that shows no sign of disappearing.

For real estate crowdfunding to achieve a wider degree of acceptance, platform owners will need to continue to facilitate high quality investment opportunities while improving transparency.  Wider acceptance will require a level of information sharing that does not yet exist in the industry.  Even the most popular sites today have varying levels of information available to potential investors.  These inconsistent levels of disclosure can undermine the trust that is necessary to grow crowdfunding as a method of investing.  Real estate crowdfunding sites that facilitate exempt transactions under Rule 506(b) are not regulated, and that is probably a good thing.  But the lack of regulation also permits a wide diversity in style and approach that can make comparing the platforms difficult.

If the leading crowdfunding platforms could collaborate on a standardized “scorecard” that pulled together standard metrics on transactions, investment amounts and rates of return, the result would make it possible for both investors and project sponsors to compare platforms on a level playing field.  The investor confidence that might come from such a development would encourage new investors to come into the market.  Platforms that did not adopt the scorecard at first would experience market pressure to begin reporting results in the scorecard format.  Adopting a standardized scorecard for recording would, in a sense, demonstrate the power that crowdfunding was supposed to represent, by making it possible for the market to adjust itself to the information needs of the investing community.

[1]           http://www.jdsupra.com/legalnews/the-evolution-of-real-estate-15259/

 

[2]           Surowiecki, James, The Wisdom of Crowds, Anchor Books (2005).

 

[3]           Wilson, Jonathan B., Follow the Crowd: What the Future of Crowdfunding Holds for Startup Restaurant Owners, Restaurant Owner Startup & Growth Magazine, 18 (Feb. 2016).

 

[4]           www.peerstreet.com.

 

[5]           PeerStreet claims that its loans have generally yielded between 6 and 12%.  See PeerStreet FAQs, available at https://info.peerstreet.com/faqs/how-do-peerstreet-returns-compare-to-other-debt-investments/ (last visited January 29, 2017).

 

[6]           MogulREIT I, LLC SEC File, available at https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001669664&owner=exclude&count=40&hidefilings=0 (last visited January 29, 2017).

 

[7]           Realty Shares website available at https://www.realtyshares.com/  (last visited January 29, 2017)

 

[8]           Lending Home website available at www.lendinghome.com (last visited January 29, 2017).

 

[9]           https://www.lendinghome.com/how-it-works/#individual-investors.

 

[10]          Roofstock website available at www.roofstock.com (last visited January 29, 2017).

 

[11]          Path of Land website available at https://patchofland.com/statistics/ (last visited January 29, 2017).

 

[12]          Fund that Flip website available at www.fundthatflip.com (last visited January 29, 2017).

 

[13]          Fund that Flip website available at https://www.fundthatflip.com/lender (last visited January 29, 2017).

 

2017 State of Crowdfunding


Brian Korn is a corporate and securities attorney at the law firm Manatt, Phelps & Phillips, LLP

SEC Metrics on Reg A+

On 12/31 the SEC published a report on Reg A activity as of Q3 that has some eye-opening bullets. Here are a few of the key metrics, along with my observations and musings.

  • 147 offering statements filed, of which 81 were qualified (as of the date of the stats)
  • Of the 81 qualified, 49 were Tier 2, 32 were Tier 1
  • 121 days avg time from filing to qualification (Tier 2)
  • 17% used broker-dealers (Tier 2)
  • $18M avg max-raise
  • 20% used “test the waters”
  • 87% equity/13% debt or other offerings
  • $50,000 avg legal costs to file & get qualified
  • $15,000 avg accounting audit costs
  • 50%+ of all issuers are incorporated in either Delaware or Nevada and located in California, Texas, Florida or DC-area
  • Typical issuer had no assets, no revenue, no net income (in other words, they are start-ups)
  • Real estate was dominant, accompanied by financial services

Thoughts on:

Time to qualification, 121 days (Tier 2 avg):
This puts an exclamation mark on the fact that this isn’t a Reg D, which can be launched overnight. If you want to allow non-accredited investors to participate in a large or continuous private offering, and if you want the securities to be free of various restrictions (e.g. Rule 144 on Reg D), then you are going to need to allow for the time it takes to get audited, prepare the offering statement, and go through a 121 day avg SEC qualification process (though I know of several that have been much shorter, it seems to depends upon the experience of the lead attorney).

Broker-Dealer Activity, 17%: This is the most disturbing metric to me. You’d think that every broker-dealer in the country with “private placements” as an approved business line would be jumping on the bandwagon as Reg A is a fantastic Reg D alternative. But they’re not. The reasons, from my experience, are…

  1. Brokers think Reg A’s are IPO’s. As such they expect the issuers to be mature companies that are ready to trade on OTC or NASDAQ. This is completely misguided, of course, as Reg A is simply an “unrestricted (private) security” and should not be confused with an S-1 filing IPO. The fact that it “can” trade on OTC or NASDAQ doesn’t mean it should. Brokers need to view this as a private placement, not an IPO.
  2. FINRA treats Reg A’s like IPO’s. As such they are limiting broker compensation to the same caps as an S-1 of a less risky mature company backed by far more detailed disclosures and easy settlement mechanisms. We hear from many brokers that FINRA’s comp-caps make it impossible for them to justify the risk or work involved in handling a Reg A, so they pass on these; which leaves issuers (and investors) to fend for themselves.
  3. Compliance Education. The internal compliance depts at broker-dealers are not yet up to speed on this type of offering and so are quick to say “no” to deals their investment bankers bring to the table.
  4. Technology. Conducting an online offering is easy in concept, and challenging in execution. The transaction engine, the compliance requirements, the supervisory issues, and the fact that escrow has to manage potentially tens of thousands of individual investors are daunting issues. (of course this is FundAmerica’s primary business, our software makes all this very easy for brokers and escrow agents)

=> Unintended Consequence: this is a situation where issuers could really use the guidance of a regulated broker-dealer, and the market and investors would be better for it. But regulators and compliance issues have caused issuers to say “no thanks, too much hassle, I’ll do this on my own.” In an age of General Solicitation, brokers are an optional expense/luxury as far as many companies are concerned, and with unclear or oppressive regulations they often (83% of the time) just skip it altogether.

Tier 1 Offerings, 40%. Stunning really, considering people filing under Tier 1 almost always have to get audited financials (as some states require them, e.g. CA), they have to pay filing fees that they could avoid with Tier 2, and they subject themselves to what can be extraordinarily painful “merit review” by some states.

Equity/Debt, 97% to 13%. This is a misleading metric and doesn’t really explain what’s happening or what investors are buying (in successful offerings). For instance, the equity sold in the Reg A’s for Realty Mogul* and American Homeowners Preservation* pay investors a defined income stream and have articulated exit mechanisms; Brewdog* investors feel they are buying into a culture; Elio Motor’s* fans (oh, I mean “investors”) were passionate about the concept and the mission; Fig* investors are excited about the games and projects. So the vast majority of successful Reg A’s have some sort of defined returns and/or benefits for investors that make them more than just equity securities being bought based upon technical merits and potential market gains. It’s critical that issuers, brokers and others in this market grasp this essential point, as we’ve seen several Reg A’s fail that did not do a good job with this.
* note that all of these companies are customers of FundAmerica, I cite them here only to illustrate a general point and am NOT making a recommendation or providing advice as regards their securities.

Test The Waters, 20%. This isn’t surprising, as the current method of testing the waters is clearly broken. This will be fixed with technology and the number will increase.

In summary, it’s apparent that 2016 was a fantastic first year for Reg A+. At FundAmerica our technology was used in over $300M worth of online investment transactions, including tens of thousands of investments and millions of dollars from Reg A buyers. With continued education, with more issuers successfully raising funds, and with the new Reg CF now taking care of the smallest, least-prepared issuers, it seems clear that the use of Reg A will grow exponentially in the coming years.

Best Regards,

 Scott Purcell
CEO
FundAmerica, LLC

 

About the Author: Scott Purcell is the CEO of FundAmerica, a fintech services provider to the emerging equity and debt crowdfunding industry. His firm provides escrow, payment processing, and compliance technology for numerous broker-dealers, investment advisers, portals and others who make a business of online capital formation pursuant to rules now in effect thanks to the  JOBS Act. FASTransfer is the only tech-driven SEC registered transfer agent focused on the crowd-industry. He is a founding Board member of the Crowdfunding Intermediary Regulatory Association (CFIRA) and the author of the book “The Definitive Guide to Equity and Debt Crowdfunding” as well as the “Industry Best Practices for Funding Portals”.

Legal Disclaimer:
These materials are my personal opinions and for informational purposes only and not for the purpose of providing legal or tax advice. I am not advocating, advising or recommending anyone purchase any specific or general investment of any type, ever. The issues discussed include complicated areas of law and legal advice should only be obtained and relied upon from a securities attorney about your specific circumstances.

NextGen Crowdfunding Video Awards

Crowdfund Beat News Wire,

Public Will Vote on First Round of Contestants to Determine Winners of New Online Awards Shows

LOS ANGELES–(BUSINESS WIRE)–NextGen Crowdfunding®, the leading company that helps people explore new types of crowdfunding, announces the season one premiere of the Crowdfunding Video Awards (CVAs). This new, six-part series of online awards shows will showcase videos from both rewards-based crowdfunding campaigns featured on Indiegogo, Kickstarter and other platforms, as well as equity crowdfunding campaigns.

“The campaign videos we’ll be showing viewers over the course of this season showcase creativity, passion and the entrepreneurial spirit.”

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Season one kicks off on Wednesday, January 25 with a live-online show at 3:00pm PT/ 6:00pm ET. Viewers will log on to NextGenCrowdfunding.com to watch and vote on their favorite crowdfunding campaign videos. The first season of the CVAs will include five preliminary awards shows, and will culminate in a final seasonal awards show highlighting the best videos of the season as voted on by the public.

“We received a wide variety of submissions from crowdfunding campaigns — spanning industries from technology to pets to wellness — to participate in the first season of the Crowdfunding Video Awards,” said NextGen founder Aubrey Chernick. “The campaign videos we’ll be showing viewers over the course of this season showcase creativity, passion and the entrepreneurial spirit.”

The contestants that will be showcased during the first round of the Crowdfunding Video Awards include:

  1. Codeybot by Makeblock: Makeblock is an open-source Arduino robot building platform to turn ideas into success.
  2. Cowin Ark by Cowin Music: Innovative audio company pioneering revolutionary Bluetooth speaker design.
  3. Flash Porter by DFiGear: Flash Porter lets you quickly and easily backup your precious digital photos and videos from any device – smartphones and digital cameras.
  4. FlowMotion by FlowMotion: FlowMotion ONE – Capture smooth cinematic videos with your smartphone. Auto-follow tracking, motion time-lapse, and so much more.
  5. High-End Theater by XGIMI H1: High-end Theater with 5 minute setup | 1080p LED Projects Up To 300″, Transform 2D Film Into 3D, Android OS.
  6. Limitless Phone Case by Mous: Whether you drop your iPhone from your pocket or from 45ft, Limitless cases will protect your phone from breaking.
  7. Modobag by Modobag: Modobag is the World’s First Motorized, Rideable Luggage and is changing the way people travel.
  8. Piqapoo by Piqapoo: A team of dog lovers that love their dogs but not picking up after them.
  9. PowerFilm: The revolutionary solar panel with an integrated battery to charge your devices anywhere, anytime.
  10. ZEEQ Smart Pillow by REM-Fit: REM-Fit is a team of dedicated individuals who believe in a restful night’s sleep. We all know that sleep is often put to the wayside in our busy lives.

Supporters of NextGen’s CVAs include the Crowdfunding Professional Association (CFPA), an organization supporting the growth of the crowdfunding industry, as well as the crowdfunding portals OurCrowd, SeedInvest, StartEngine, Republic and WeFunder and media companies Crowdfund Beat and Crowdfund Insider.

To learn more about the contestants participating in the first CVAs show, please click here.

About NextGen Crowdfunding

NextGen Crowdfunding helps people explore the new era of equity crowdfunding. With unique in-person events and live streaming video content, NextGen enables individuals to discover, research and support specific companies launching crowdfunding campaigns. NextGen’s unique Ignition Events showcase the companies and emerging businesses presenting equity crowdfunding campaigns. NextGen also provides educational content, including online webinars, boot camps and videos, to inform the public about equity crowdfunding. NextGen also provides education to, and visibility for, companies with crowdfunding campaigns. As a purpose-driven company, NextGen aims to encourage entrepreneurship and help spark a new economy. Visit http://www.nextgencrowdfunding.com.

Contacts

Media
For NextGen Crowdfunding
Jason Feldman, 212-319-3451, ext. 644
jason@goldin.com

Targeted IRRs in Crowdfunding

By Mark Roderick CrowdFunding Beat  Sr. contributing editor and crowdfunding attorney with Flaster/Greenberg PC.

 

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Closeup sad young man with worried stressed face expression and brain melting into lines question marks. Obsessive compulsive, adhd, anxiety disorders

Targeted internal rate of return, or IRR, is used widely to advertise deals on Crowdfunding sites, real estate and otherwise. While target IRR means something to sophisticated sponsors and investors, its widespread and uncritical use makes me a little uneasy, for the following reasons:

  • If pressed, many people don’t know what IRR really means. Investors assume that a higher IRR is better than a lower IRR, but many couldn’t explain exactly why or how.
  • IRR can be misleading. For example, a bond purchased for $100 that pays interest of $10 at the end of each of the first four years and $110 at the end of the fifth year has an IRR of 10%. A bond purchased for $68.30 that pays nothing for four years and $110 at the end of the fifth year also has an IRR of 10%. But those two investments are very different. The IRR calculation assumes that the $10 interest payments on the first bond can be reinvested at 10%, which is probably not true.
  • The IRR of a real estate deal (or any deal) increases when the asset is refinanced and the proceeds distributed to investors. But refinancing the asset doesn’t necessarily make for a better investment.
  • There being no such thing as a free lunch in capitalism, a higher IRR generally coincides with higher risk. For example, I can usually increase my IRR by borrowing more money. That relationship is not typically highlighted.
  • For a typical startup outside the real estate industry, IRR has no meaning. Or to put it differently, a 28% target IRR for a startup plus $2.75 gets you on the New York subway.
  • The term “target IRR” tends to mask what’s really important:  the factual assumptions concerning sales and asset appreciation. To say “We expect a target IRR of 18%” is somehow easier to sell than “We expect the property to appreciate at 6% per year.”
  • Under FINRA Rule 2210, offerings conducted through a broker-dealer may not advertise target IRRs. FINRA also prohibits Title III Funding Portals from advertising target IRRs, and the SEC prohibits new issuers from advertising a target IRR in Regulation A offerings, even for sponsors with extensive track records. Hence, target IRR cannot be used to compare offerings across all platforms and all deal types.

What can we do better as an industry? Here are a few ideas:

  • We can explain internal rate of return better, maybe with examples and a standardized presentation and graphics.
  • We can develop other apples-to-apples metrics for comparing deals.
  • We can make clear that higher IRRs generally come with higher risks.
  • In Regulation A offerings, and even in Rule 506(b) offerings where non-accredited investors are involved, the issuer is required to provide extensive information about the sponsor’s track record. Some version of that concept, applied consistently and allowing for side-by-side comparison, might be the most valuable information for investors.

Mark Roderick is one of the leading Crowdfunding lawyers in the United States. He represents platforms, portals, issuers, and others throughout the industry. For more information on Crowdfunding, including news, updates and links to important information pertaining to the JOBS Act and how Crowdfunding may affect your business, follow Mark’s blog, or his twitter handle: @CrowdfundAttny. He can also be reached at 856.661.2265 or mark.roderick@flastergreenberg.com.

2017 Crowdfunding Persons of the Year

 

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Sherwood Neiss, Jason Best. Principals Crowdfund Capital Advisors, LLC

Each year, Crowdfund Beat Media Group assesses the landscape of the crowdfunding industry to identify thought leaders and individuals significantly impacting the evolution of digital finance.   To culminate this search, the Group selects a Crowdfunding Person of the Year, whom it believes has made an indelible mark to advance adoption and growth of the crowdfunding effort.  With Title III of the JOBS ACT, effectively Regulation CF, went live past May, we have identified two individuals that have been working tirelessly and successfully in making crowdfunding a reality, and feel honored to recognize them as 2017 Crowdfunding Persons of the Year.

Jason Best and Sherwood “Woodie” Neiss are Principals at Crowdfund Capital Advisors, where they have advised government agencies, NGOs and global leaders on the merits of crowdfunding and its impact on entrepreneurial activity.   Prior to the expanse of their travels and relationships, including with the World Bank and InterAmerican Development Bank, they initiated Startup Exemption, with Zak Cassady-Dorion, which laid the foundation of the legislative framework that evolved into Title III.

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It is due to these past and ongoing contributions that Crowdfund Beat Media feels compelled and honored to award Woody and Jason 2017 Crowdfunding Persons of the Year.

By Jorge Sanchez, Crowdfund Beat Guest Editor,

Innovation and entrepreneurial activity is driven by entrepreneurs, their ideas, actions, and the relationships formed in the marketplace. While this has been the case for economic growth, the primary funding mechanism we have had in place is not a natural extension of these business processes. We have had a large proportion of the entrepreneurial class being underserved by the capital needed to fund or grow their ventures. This was because the current legal landscape prohibited it.  However, today if a tech startup or business needs capital they have modern technology at their disposal that enables them to leverage their social networks in order to fund their startup or grow their businesses.

As a result of the Great Depression, regulatory actions were taken that imposed limits on where entrepreneurs can seek funding. Fueled by fear and desperation, the risks and power of investing in our nation’s business opportunities were removed from the public and placed in the hands of banks and wealthy investors. Because most people did not have access to these investors, small business, and startup financing became a function of bankers and collateral, not innovation and market demands.

Fortunately, this flaw in our funding landscape has been mended. Through the actions of a few ambitious and determined men, decades-old financial regulation have been amended to reflect modern capabilities and economic reality. Today, markets don’t just function to determine which businesses survive, but also which businesses are born.

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Niess, Zak Cassady, Best

Sherwood “Woodie” Neiss, Jason Best, and Zak Cassady-Dorion are not politicians, they are not lobbyist, nor are they D.C. insiders. The men behind, perhaps the most important policy change of our lifetimes, are entrepreneurs. The three Thunderbirds are businessmen with experiences that awarded them with intimate knowledge about the needs of startups and the pains of raising capital. They did not just embark on a political journey, they instead created The Startup Exemption and to tackled head on the problem, making regulatory change. Their historic campaign lasted just 460 days, culminating in the framework that was adopted and signed into law by president Obama in April 2012.

The journey began with a problem that had been widely acknowledged, but was never addressed. The impact the group has and will continue to have is the direct result of their development of a solution with the collaboration of stakeholders and early thought-leaders like Kevin Lawton, Danae Ringelmann, and Steve Cinelli in the form of a framework that would later go on to become a part of the JOBS Act

In the halls of congress, the trio of entrepreneurs were an anomaly and there was doubt and pessimism that the group could accomplish their task at all, especially not with the absence of a large war chest and an army of lawyers. But perhaps that is exactly why the political neophytes were able to accomplish their lofty goal in a year and a half, instead of the five to ten policy experts predicted.

Those on The Hill turned out to be people that understood technology and how to leverage it, not the technological laggards that policy makers are commonly portrayed as. The group also discovered that they had tapped into a problem with universal support. During a time with an alarming unemployment rate, flat GDP growth, and a slowdown in the flow of cash from banks to small businesses, D.C. lawmakers were happy to be met with a solution for the biggest problem facing the nation.

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Sherwood Neiss, Karen Kerrigan , Jason Best, Douglas Ellenoff on May 16th, 2016 Capitol Hill in DC

In May 2016, Regulation Crowdfunding of the JOBS Act went live and the startup exemption become law. Over half a year later, we have seen a steady and methodical adaptation of the innovation. Jason and Sherwood are now principals at Crowdfund Capital Advisors (CCA), where they advise governmental leaders and stakeholders, like the SEC and the World Bank, on how to draft and implement crowdfunding in order to ignite job creation from the grassroots level.

When asked about the adoption of the regulation so far, the pair expressed optimism and satisfaction. They see success by how it is being embraced by the industry, thoughtfully and with care to ensure the integrity of the law is upheld and the balance of investor’s and entrepreneur’s needs and concerns are maintained. The crowdfunding community looks to amend the laws to further strengthen the fit between the needs of the entrepreneur and the laws regulating them.

Amendments to the original rules are coming to a boiling point. The Fix Crowdfunding act, proselytized by many within the crowdfunding world, aims to make the exemption more friendly and appealing to issuers by raising the limits on funds that can be raised, enabling the use of special purpose vehicles, and removing liabilities away from portals for the issuers who use their services. While any changes to the regulation are being carefully scrutinized to ensure adequate investor protection, Sherwood believes the regulatory bodies are motivated to support job growth by empowering entrepreneurs with access to capital. They will do so with the data and case studies that have been collected since the first iteration of the law went live in May 2016.

Jason and Sherwood’s outlook crowdfunding is bright, they see a thriving asset class which creates a new path to capital for underserved entrepreneurs who collectively make up the largest non government source of employment.

It is for these efforts and their continued commitment to the progression of Crowdfunding, that Sherwood Neiss and Jason Best are being honored as the 2017 Crowdfunding Person of the Year.

 

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HR 3784 – SEC Office of Small Business Advocate – Is Now the Law of the Land

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

On December 16, 2016, President Barack Obama Signed into Law HR 3784 – SEC Office of Small Business Advocate, creating an independent Office of Small Business Advocate at the SEC, reporting directly to the full Commission and Congress. This legislation was first introduced into Congress in October 2015, where it was originally co-sponsored by former House Representative John Carney (D-Del) (now Governor-Elect of the State of Delaware) and Congressman Sean Duffy (R-Wisc) and was passed unanimously by the House of Representatives in 2016. It was passed unanimously by the U.S. Senate on December 9, 2016, as part of a flurry of year-end bills passed by the Senate before it recessed for the year.

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The bill had broad industry support upon its introduction in October 2015, including the U.S. Chamber of Commerce, the National Venture Capital Association, National Small Business Association, Small Business Investor Alliance, SBEC, and the Crowdfunding Professional Association (CfPA), of which I served as its Chair and President at the time.

Remarkably, this Bill passed Congress unanimously without the support of the SEC. In testimony from SEC Chair Mary Jo White before the Senate Banking Committee in June 2016 she was asked by the Senate bill co-sponsor, Heidi Heitkamp (D-ND), whether she supported this legislation. Her response:

 “We currently have the Office of Small Business Policy within the Division of Corporate Finance. I am an advocate for small business.” 

A roundabout way of saying “no” – it seems to me.

In the past I have referred to this bill as the missing title of the JOBS Act of 2012. Though it parallels to a large extent to the SEC Office of Investor Advocate – part of the Dodd Frank Act of 2010 – the need for this legislation goes back decades.

The successful passage of this law was the result of the participation and support of many individual and groups. However, I am proud to have had a major role in initiating this legislation, among other things:

  • I was the first person to publicly advocate for this legislation, in Feb 2014, in an article published on Crowdfund Insider.
  • I met with former SEC Commissioner Daniel M. Gallagher in June 2014 to advocate for this bill.
  • I was cited by Commissioner Gallagher in a public address (Note 36) by Commissioner Gallagher given at the Heritage Foundation in September 2014 where he advocated for the need for a permanent Office of Small Business Advocate.
  • I worked with the original sponsor, Rep. John Carney (D-Del) (now Governor-elect of Delaware) in drafting this legislation prior to its introduction in Congress.
  • I assisted in procuring the initial Republican co-sponsor – Rep. Sean Duffy (R-Wis).

A special thank you is in order for SEC Commissioner Gallagher. Without his public and vocal support for this legislation it might have taken many more years for this historic legislation to become a reality.

A copy of the Bill can be found here.

For those of you who want to dig deeper on this subject, here is some background material on the Bill and my role in its journey:

http://www.crowdfundinsider.com/2016/12/93592-sec-small-business-advocate-moves-closer-reality-senate-passes-bill/

http://www.crowdfundinsider.com/2016/11/92607-unstacking-deck-smes-washington-call-sec-small-business-advocate/

This entry was posted in Capital Raising, Corporate Governance, Corporate Law, Crowdfunding, General, Regulation A+ Resource Center, SEC Developments and tagged , , , . Bookmark the permalink.

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.

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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.

“Live” US Election and Crowdfunding

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CrowdFund Beat News Wire,

The Crowdfunding Professional Association is proud to host a first ever open discussion on how federal elections may affect our maturing industry.

Hosted by several members of the CfPA board of directors and a group of distinguished industry colleagues, join the discussion on election day, Tuesday, November 8th at 2pm Eastern time by dialing (866) 922-3257 or (206) 315-1752. Passcode 151328.

Featured participants include Brian Korn, Richard Swart, Scott McIntyre, Georgia Quinn, Mark Roderick and Anthony Zeoli.

2016 US Election coverage

OTC Markets Group and CrowdFund Beat to Host Regulation A+ Bootcamp in New York City

facebook_regabootcamp-1 NEW YORK, Oct. 26, 2016 /PRNewswire/ — OTC Markets Group Inc. (OTCQX: OTCM), operator of financial markets for 10,000 U.S. and global securities, and CrowdFund Beat, a news and information source for the crowdfunding market, today announced they will co-host a Regulation A+ Bootcamp on November 10 at OTC Markets Group’s headquarters in New York City.

 

The one-day workshop will provide startup companies and entrepreneurs with expert guidance on how to raise capital under Title IV of the Jumpstart Our Business Startups (JOBS) Act, also known as “Regulation A+,” which allows small companies to raise up to $50 million annually in crowdfunded offerings from accredited and unaccredited investors.  Speakers will include legal, accounting and other crowdfunding industry experts, including:

  • Kim Wales, Founder and CEO of Wales Capital, who will provide an overview of the state of the Reg A+ market
  • Doug Ellenoff, Partner at Ellenoff Grossman & Schole LLP, who will discuss legal considerations involved in a Reg A+ offering
  • Ron Miller, CEO of StartEngine Crowdfunding, Inc., and Darren Marble, CEO of CrowdfundX, who will discuss equity crowdfunding portals and marketing an offering
  • Craig Denlinger, Managing Partner of Artesian CPA and CrowdfundCPA.com, and attorney Mark Roderick of Flaster Greenberg PC who will provide an overview of the numbers, valuation and legal structure to be considered in a Reg A+ filing
  • Scott Purcell, Founder and CEO of FundAmerica, LLC, who will talk about the escrow process
  • Crowdfunding industry expert Dr. Richard Swart, Chief Strategy Officer of NextGen Crowdfunding, who will address how Reg A+ has evolved
  • Attorneys Seth Farbman and Yoel Goldfeder of VStock Transfer, LLC who will discuss selecting a transfer agent and depositing shares into brokerage accounts
  • Jason Paltrowitz, Executive Vice President of OTC Markets Group, who will discuss investor considerations and how and where a company’s Reg A+ securities can become publicly traded.

The event will conclude with a group discussion and question-and-answer session with Jonathan Frutkin of The Frutkin Law Group, Sam Guzik of Guzik & Associates, Brian Korn of Manatt, Phelps & Phillips, LLP, Blaine McLaughlin of VIA Folio™, a division of FOLIOfn Investments, Inc., and Jonathan Wilson of Taylor English Duma LLP.

Attendees will be able to ask questions and schedule one-on-one meetings with the speakers.

“It has been over a year since Reg A+ became effective, yet still there are questions about how it works and what is needed to make a Reg A+ offering successful,” said Jason Paltrowitz, Executive Vice President of Corporate Services at OTC Markets Group.  “Our boot camp is designed to answer some of those questions and provide small businesses and entrepreneurs with step-by-step instructions on how to conduct a Reg A+ offering and take their company public.  We are thrilled to partner with CrowdFund Beat on this initiative and look forward to an exciting event.”

“What’s most important is we have data over the past year on Reg A+ that will be shared by the conference’s panel who are the who’s who of the crowdfunding industry.  This boot camp is really about trends and where things are going forward,” said Sydney Armani, Publisher of CrowdFundbeat.com.

To register for the event or for more information, visit http://www.regapluslist.com/.

About OTC Markets Group Inc.
OTC Markets Group Inc. (OTCQX: OTCM) operates the OTCQX® Best Market, the OTCQB® Venture Market, and the Pink® Open Market for 10,000 U.S. and global securities.  Through OTC Link® ATS, we connect a diverse network of broker-dealers that provide liquidity and execution services.  We enable investors to easily trade through the broker of their choice and empower companies to improve the quality of information available for investors.

To learn more about how we create better informed and more efficient markets, visit www.otcmarkets.com.

OTC Link ATS is operated by OTC Link LLC, member FINRA/SIPC and SEC regulated ATS.

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About CrowdFund Beat

CrowdFund Beat is the Crowdfunding Industry’s go-to source of Smart Content for all news and trends Crowdfunding related.  With an extensive online video library, CrowdFund Beat is the Worldwide source of information.  The company also produces two marquee Industry Conferences: The Silicon Valley Fintech Conference in Silicon Valley and The Fourth Annual Conference and Workshop, held at the National Press Club in Washington.  This year CrowdFund Beat is commissioning a robust written and Video Report of where the Industry is heading called 2020 Outlook Crowdfunding Industry Report, to be Published in January, 2017.

Media Contacts:
OTC Markets Group Inc., +1 (212) 896-4428, media@otcmarkets.com
CrowdFund Beat, LLC, +1 (888) 580-6610, news@crowdfundbeat.com

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SOURCE OTC Markets Group Inc.

Related Links

http://www.otcmarkets.com

REPORT: Equity Crowdfunding – Risks and liabilities as the industry matures

 

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BY Ronald Kleverlaan Crowdfunding strategy, CrowdfundingHub, advisor European Commission, co-founder European Crowdfunding Network

Within the rapidly-expanding alternative finance industry, equity crowdfunding is emerging as a popular method of growth finance. Equity crowdfunding is a mechanism by which a broad group of investors can fund start-up companies and small businesses in return for equity.

In collaboration with UK insurance company AIG, the researchers of CrowdfundingHub worked together with leading European experts from SyndicateRoom, Seedrs, AIG, CrowdCube, Invesdor, Twintangibles and Legal Alternative to create a state-of-the-art overview of the Equity Crowdfunding industry.

Summary of report

Introduction: The rise and rise of equity crowdfunding

Overview of the growth of the equity crowdfunding industry globally and in Europa.

Chapter 1: Latest developments in equity crowdfunding

Secondary markets, business angels and equity crowdfunding, growth in deal sizes, serial crowdfunding and DIY crowdfunding campaigns.

Chapter 2: Striking the right regulatory balance

Investor protection versus access to finance for companies. Do regulations help or hinder the growth of the equity crowdfunding industry? What will be the impact of Brexit on the equity crowdfunding industry.

Chapter 3: Tackling investor protection

Direct shareholder versus nominee structure, due diligence and cross-border considerations

Chapter 4: Mind the gap: Risks and liabilities associated with crowdfunding platforms

Risks and liabilities associated with crowdfunding platforms, insurance as mechanism for sustainable growth of platforms and fraud risk case studies.

Download free report:

The full report can be downloaded here: Equity Crowdfunding – Considering potential risks and liabilities as the industry grows and matures.