Managing The Risks Of Crowdfunding

Crowdfunding Risk

By Evan Bundschuh, RPLU  & CrowdFund Beat Guest Editor, For new ventures looking to raise capital or test their market/product, crowdfunding has proven to be the go-to solution with an ease and excitement that other methods of funding lack. With that excitement though comes challenges. As a fairly young platform with a legal landscape that has yet to develop, the risks of crowdfunding are often overlooked. While the risks may seem invisible, mistakes are inevitable, as are the lawsuits and damages that follow. The challenge is forecasting when and where the potential dangers/disasters will arise (before they do) in order to protect your business, its directors, and…

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A Reflection of Online Money Lending


By Steve Cinelli , CrowdFund Beat Sr. Editor, @stevecinelli Some many months back, in fact prior to their listings, I wrote a piece questioning the lofty valuations of the marketplace lending platforms (LC and ONDK) as they entered the public markets.  The basic thesis was recognizing the fundamental business these platforms engaged, i.e., money lending, and how others in the same space, albeit not as “technology positioned”, delivered the same product and/or service, and I thus intimated that the newbies should be valued with similar metrics to the incumbent financial institutions. In observing the platforms’ performances over the last year, as well as evolving market conditions,…

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Crowdfunding Curriculum

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INTRODUCTION Four years after Congress passed the JOBS Act, requiring the relaxing of certain rules on raising funds, equity crowdfunding for non-accredited investors finally arrived May 16. According to The National Law Review, here are some of the most important facts to know:1 Non-public US companies may raise funds on the Internet from accredited and non-accredited investors alike. Crowdfunding must be conducted through SEC approved fundraising portals that are managed by registered broker-dealers (i.e., not a company’s own website). The amount raised cannot exceed $1,000,000 in a 12 month period. Individual investors with annual income under $100,000 are limited to investing the greater of $2,000…

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What’s Seed Equity CrowdFunding, known as “REG CF Title III”?


By Rod Turner  founder and CEO of Manhattan Street Capital, Crowdfund Beat  Guest Editor, The SEC’s new Title III Equity CrowdFunding rules went into effect May 16th. These new rules expand Equity CrowdFunding to allow investors at all wealth levels to invest in startup companies. In June 2015, the SEC also enabled groundbreaking new rules called Regulation A+ which allow anyone to invest in startups and more established companies that need to raise up to $50 million. The capital raising landscape is making its biggest shift in decades. We now have an online fund raising continuum that extends from startups raising seed capital of as…

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Crowdfunding: No Demo Days For Title III Issuers

No Demo Days

By Mark Roderick CrowdFunding Beat contributing editor and crowdfunding attorney  with Flaster/Greenberg PC. Crowdfunding is a marketing business. But when it comes to marketing an offering of securities by a Title III issuer, things get complicated. That’s why this is three times longer than any blog post should be. Why It Matters Section 5(c) of the Securities Act provides that an issuer may not make an “offer” of securities unless a full-blown registration statement is in effect, of the kind you would prepare for a public offering.         There are lots of exceptions to the general rule and Title III is one of them:…

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        BY Lauren Leibowitz, Principal at 1st BridgeHouse Securities, LLC, CrowdfundBeat Sr. Guest editor, On May 16, 2016, Equity (Investment) Crowdfunding will be available in the United States meaning anyone can invest into a private company that is listed on a FINRA member funding portal. Investing is no joke and should be approached cautiously. There are no guarantees; Investors bear the risk of losing their entire investment. If you are a loyal reader of my blogs, you know I keep harping on the importance of investors to thoroughly conduct due diligence and review all disclosures prior to making an investment. Issuers must not only release…

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Happy 3rd Anniversary CrowdFundBeat 2016 is “The Year of Equity CrowdFunding”

Happy 3rd

By Sydney Armani CEO & Publisher of CrowdFund Beat Media Group. Happy New Year!  “2016 The Year of Equity CrowdFunding”  It has been an active three years since we introduced CrowdFundBeat, as the voice of the crowdfunding industry.  In recognizing, the development of this nascent and disruptive methodology, we find it increasingly important to be a comprehensive beacon of news, opinion, and trends, as its impact is already being felt within the world on entrepreneurial endeavor and financial services.  We are in the early innings of this game, as we observe that the “crowd”, originally defined as natural persons, is now characterized by institutional investor…

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Data Services are Key to Equity Crowdfunding Growth

Data Services are Key to Equity Crowdfunding Growth

By Hector Botero  CrowdFundBeat Sr. Contributing  Editor, President & CEO at iCrowdNewswire, LLC This is Part 6 of a 6 part series on why Crowdfunding platforms are the new stock exchanges and why they will need to learn from exchanges like NASDAQ, NYSE and LSE to self-regulate and provide a wide range of ancillary services that help campaigns succeed and at the same time, create revenues for the platforms.  Thanks to the JOBS Act of 2012, investing in startups is changing in big ways. Two years ago today, Title II of the Jobs Act went into effect, allowing early stage startups the legal authorization they needed…

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4 Times When Hedge Funds’ Bets Resulted in Outsized Returns

4 Times When Hedge Funds’ Bets Resulted in Outsized Returns

By James Suh , Business Development at DarcMatter, CrowdFundBeat Guest Editor, Coveted for their ability to perform in adverse market conditions, successful global macro hedge funds opportunistically invest in instruments whose prices fluctuate based on economic and political shifts. Accurately predicting market trends to exploit temporary price deviations, the most profitable of these funds generate considerable publicity due to their outsized returns and the volatile, often contrarian, nature of their bets. Below are some noteworthy examples of major macroeconomic trends and the funds that had the foresight, fortune, or both to preemptively identify and capitalize on these significant events.         1. Carlyle Group and…

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Preparing for an A+ grade: the need for a clean audit


By Sara Hanks , CrowdFundBeat  Sr.contributing Guest Editor  CEO/Founder, CrowdCheck, Inc. Pretty much everyone knows by now that audited financial statements are required for offerings under Tier 2 of Regulation A. While the SEC doesn’t require audited financials (or any kind of review by outside accountants) for Tier 1, some states do require audited financials in Tier 1 offerings. But do you know what the audit letter is supposed to look like? That is important. Without getting too much into the weeds, the SEC requires that audit reports meet the requirements of Regulation S-X. And that means those audit reports must be “clean.” There can’t be any…

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Tax Implications of Crowdfunded Equity

Tax Implications of Crowdfunded Equity

SULLIVAN & WORCESTER TAX CLIENT ADVISORY With the passage of the JOBS Act and lifting the ban on general solicitation and general advertising by the Securities and Exchange Commission, webbased funding platforms now allow a company to raise equity from large numbers of investors, subject to certain restrictions, including, among others, shareholder thresholds, without the often prohibitive costs of a traditional IPO.   This newfound freedom is sure to excite many an entrepreneur and sponsor, both well-established and those at the beginning of their journey. That is, of course, until that old certainty— taxes—puts a sobering pall on all the fun. An entrepreneur or sponsor…

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Mountain XpressFaces in the crowd: WNC crowdfunding initativesMountain XpressON THE SPOT: The scenes in Luke & Jo will be shot chronologically, which will allow for more improvisation in the dialogue, according to the feature film's crowdfunding page. Andie Morgenlander and E [...]

AZCentral.comTiny companies lure investors under Arizona crowdfunding lawAZCentral.comInvestors who make bets under the state's one-year-old crowdfunding law certainly have the potential to get in on the ground floor, but they must be patient and might not receive any returns. Th [...]

BloombergCouples Desperate For Children Turn to Crowdfunding FertilityBloombergCrowdfunding has become a popular mechanism for many couples who can't afford the high costs of IVF, or adoption and surrogacy. “It's not an easy thing to share publicly,” says Crystal Barrett, 33 [...]

MarketWatchWhy a crowdfunding site is giving out $10000 scholarshipsMarketWatchCrowdfunding site GoFundMe announced Thursday that it will award $10,000 to 10 students with pages on their site that fundraise for education. The award is part of a contest the site held throughout Septemb [...]

Huffington PostReal Estate Crowdfunding's Pathway of ChangeHuffington Post“Crowdfunding is just the Internet,” stated Attorney Mark Roderick as he opened last month's RealCap Chicago. RealCap is an annual conference that joins crowdfunding leaders and innovators to propel th [...]

BBC NewsNHS trust 'relies' on crowdfunding to equip wardBBC NewsAn NHS trust has launched a crowdfunding appeal to buy equipment for a new hospital unit because "it cannot get started without donations". The Royal National Orthopaedic Hospital (RNOH) in Stanmore, n [...]

MottoIVF: More Couples Crowdfunding to Pay for Procedure - MottoMottoMore and more couples are turning to crowdfunding to fund costly in vitro fertilization (IVF) treatments, Bloomberg reports.More Couples Who Can't Afford IVF Are Turning To Crowdfunding For HelpRomperCouples des [...]

EntrepreneurIs Crowdfunding Right for You? Answer These 7 Questions to Find Out.EntrepreneurCrowdfunding is a popular and increasingly accessible way to put your prospective product or business in front of millions of people. And, thanks to the visibility of massive success stories, t [...]

Boing BoingCrowdfunding a bike-lock that squirts vomit-inducing antipersonnel gas when cutBoing BoingThe Skunklock is a $109 crowdfunded gadget that contains pressurized vomit-inducing gas the creators call "Formula D_1," and which is intended to induce immediate vomiting wh [...]

WestwordProgressive-Rock Band Marillion Pioneered CrowdfundingWestwordThat was the beginning of crowdfunding for us — and for every band, really.” When it came time for the recording and release of the followup to the 1999 record, Kelly and the band realized that one of [...]

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What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |