News & Media | Sustainable Business

Crowdfunding Champions of Change Ceremony

Washington, DC (PRWEB) June 03, 2013

 

The White House hosted Kim Wales, Founder of Wales Capital and Board Member of the Crowdfund Intermediary Regulatory Advocates (CFIRA) along with other distinguished crowdfunding industry thought leaders for the Champion of Change Ceremony on June 4th recognizing entrepreneurs using crowdfunding to fuel growth.

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Next Generation Funding: $50K – $5MM

Oxford Valuation Partners, Crowd Valley and KPMG featured experts, Kim Wales, founder of Wales Capital, Douglas Ellenoff, senior attorney with the firm Ellenoff, Grossman & Schole, Nicolas Hodge, Partner at K&L Gates, Alejandro Cremades, founder of RockThePost, Vamsi Sistla, CTO of CrowdValley and an Angel Investor with the ARC Angel Fund and Daniel Miller, Co-Founder of Fundrise, who are at the cutting edge of this new field, Crowdfund investments. Together they discussed and debated the landscape of funding options and how quickly it changing. Driven by new SEC no-action letters and changes stemming from the JOBS Act that is permitting a broader scope of activity in the space outside of the traditional networks.  The current focus seems to be on platforms that link Accredited Investors and investment opportunities, while more retail options are being developed since the final rulemaking process for Title III remains underway.

http://crowdfunding-university-baruch-newyork-57.eventbrite.com/

OSC Staff Consultation Paper 45-‐710 Consideration

On December 14, 2012, the Ontario Securities Commission (OSC) published the OSC Staff Consultation Paper 45-710 Considerations for New Capital Raising Prospectus Exemptions. The Consultation Paper sets out four concept ideas for new prospectus exemptions in Ontario, together with a number of specific consultation questions. The concept ideas are: a concept for an exemption to allow crowdfunding subject to limits for issuers and retail investors, a concept for an offering memorandum exemption, a concept for an exemption based on an investor’s investment knowledge, and a concept for an exemption based on an investor receiving advice from a registrant.

Wales Capital participated in a forum along with other industry thought leaders such as Crowdfund Capital Advisors, SomoLend, Arctic Island, GATE Technologies, Nehemiah Investments, and Ellenoff Grossman & Schole, LLP.

Subsequently, Wales Capital provided comment letters to the OSC for consideration as related to a). Investment Size; b). Oversubscription; c). Two Business Day “cooling period”; d). Revenue Models; e). Rescission Period (Withdrawal Rights).

Read Comment Letters Here

Top 10 Most Influential in Equity Crowdfunding

Top 10 Most Influential in Equity Crowdfunding (via SBWire)

Omaha, NE — (SBWIRE) — 03/29/2013 — As Equity Crowdfunding is sitting at a standstill it will take an army of people to keep the momentum moving forward to get the laws passed and everyone on the same page. Equity Crowdfunding is coming up almost a year since the signing of the JOBS Act by president…

Bloomberg talks Crowdfunding with Kim Wales

Feb. 19 (Bloomberg) — On today’s “Money Moves,” Bloomberg Television focuses on alternative assets and places where investors are investing their money outside of the traditional stock and bond markets. Live with Kim Wales, the founder of Wales Capital, a strategic business advisory firm and Candace Klein, founder of SomoLend, a debt based crowdfunding platform.

Kim is the Chair of the Crowdfunding Professional Association (www.cfpa.org).  Candace Klein is the Co-Chair of the Crowdfund Intermediary Regulatory Advocates (www.cfira.org)

(Source: Bloomberg)

Watch live:

Calculating the odds: Crowdfund Investing

Kim Wales writes about the regulatory decisions looming for the JOBS Act and how instead of imposing heavy regulations that are likely to confuse the U.S. states and EU nations states; government should look at criteria for Intermediaries such as operational and financial transparency, security of information and payments, platform functionality and customer protection.

Read the article in the Cayman Financial Review Magazine

 

‘Crowdfunding’ Rules Are Unlikely to Meet Deadline

By ROBB MANDELBAUM

When the Jobs Act became law in April, supporters proclaimed a new era for small businesses seeking to raise money.

The “game changer,” as President Obama put it in the Rose Garden as he signed the bill, was a provision to let small companies “crowdfund” — that is, sell stock and other securities over the Internet directly to the public. “For the first time,” the president said, “ordinary Americans will be able to go online and invest in entrepreneurs that they believe in.”

But it now seems that dawn will break late on this new age of democratic investing. The Securities and Exchange Commission appears certain to miss its end-of-year deadline for issuing regulations to put the provision into effect. And with the departure of the S.E.C. chairwoman, Mary L. Schapiro, and three of her top deputies — including two who manage the offices writing the regulations — some in the nascent equity crowdfunding industry worry that it could be 2014 before their line of business becomes legal.

The delay has frustrated many crowdfunding backers. The 270 days that Congress gave the S.E.C. to write the rules “is not a suggested timeline; it is a Congressional mandate,” said Kim Wales, an organizer at Crowdfund Intermediary Regulatory Advocates, a lobbying group formed in April to represent the new industry, in an e-mailed statement. “The S.E.C. answers to Congress, not the other way around.”

Read more…
 
Originally published in the New York Times on December 27, 2012
http://www.nytimes.com/2012/12/27/business/smallbusiness/why-the-sec-is-likely-to-miss-its-deadline-to-write-crowdfunding-rules.html

How America Works: Crowdfunding for Equity (VIDEO)

By AnnMarie McIlwain, Founder and CEO, www.careerfuel.net

Tom Szaky is a 30-year-old successful entrepreneur with a high growth, $15 million business. He, like many, believes that crowdfunding for equity—a new vehicle for raising capital, expected to be available in 2013—will make it substantially easier for small businesses to get off the ground and/or take their business to the next level. Hear Tom describe how this new avenue for fundraising could have helped him when he started out 10 years ago and how crowdfunding for equity may democratize the investment upside of early-stage companies. For anyone who doesn’t understand what crowdfunding for equity is and why they should care, Tom will put you “in the know”!

Help us tell the Securities and Exchange Commission to make it happen- click here to sign a petition  telling the SEC that we need them to finish the regulations on time (by the end of this year!) so that we can start raising money for our businesses and create jobs.

AnnMarie McIlwain, Founder and CEO of CareerFuel, is a Board member of CFIRA, a leading advocacy group working with the Securities and Exchange Commission, the Financial Industry Regulatory Industry Regulatory Authority (FINRA) and other affected governmental entities to help establish industry standards and best practices for equity based crowdfunding.

Video Production by Mayer Dubinsky Videography

Will the New Crowdfunding Law Make a Difference to Your Business?

By AnnMarie McIlwain, Founder and CEO, www.careerfuel.net

If you are a small business owner or an aspiring entrepreneur you might be wondering what you need to know about the new crowdfunding law. If so, keep reading!

*The JOBS Act was signed into law on April 5, 2012. One of the Act’s provisions will allow startups to raise capital using crowdfunding. The basic idea is that entrepreneurs will be able to offer equity in exchange for investments in their startup. At present, startups can raise an unlimited amount of money using crowdfunding, but they cannot offer equity. Today’s incentives range from free product, to tee-shirts and karma.

*The Securities and Exchange Commission (SEC) has until December 31, 2012 to create regulations for how crowdfunding will be executed. Fall 2012 is the earliest time this might be completed, but realistically it is expected to take until year’s end.

*Money can only be raised through brokers or on Internet “funding portals” (such asKickstarter and HelpersUnite) registered with the government. Entrepreneurs cannot go directly to consumers to crowdfund for equity.

*Monies raised are dispersed  if they achieve their stated goal.  So, if a company’s fundraising goal is $500,000 in 30 days and they only raise $490,000 at the end of 30 days, then the company does not receive any funds and the crowdfunded investments are returned to the individual investors.

*Entrepreneurs can raise $1M every 12 months until they reach $10M in total assets.

*The entrepreneur can decide how much equity is being offered in exchange for the total investment being raised.

*The SEC will need to rule on whether any or all crowdfunding investors will count toward the 2,000-investor limit that triggers the requirement for a company to register its common stock and become a publicly reporting company. The JOBS Act, as written, does not limit the number of crowdfunding investors. If the SEC decides to include crowdfunded investors in the 2,000 investor limit, entrepreneurs will then need to limit the number of small investors (as in only 20 people can invest $200, 30 at $400, etc.). If this were the case, crowdfunding would be more like group funding.

*Any person who owns 20% or more of the company stock will be required to go through a background check, the details of which will be made public on the crowdfunding site (e.g., credit history, tax liens, etc.).

*Any money raised through family and friends prior to the first crowdfunding round will need to be disclosed.

*Investors will be limited to a total annual investment based on their net worth. For those with annual income of less than $100,000 or equivalent net worth, investments are limited to the greater of $2,000 or 5% of their income/net worth. For those whose annual income/net worth exceeds $100,000, they can invest 10% or up to $100,000.

*Regulations will require platforms to use a pop-up box, where investors will read disclaimers and take a quiz ensuring that they understand the high risk associated with such an investment.

*All social media forums will be connected to the crowdfunding platforms and openly shared. Questions raised by potential investors will be publicly available to read, as will the answers to these questions. This includes inquiries pertaining to the business model, financial projections, use of investment monies, etc.

*Entrepreneurs will be limited to solicitation via existing social media contacts. Email/Facebook/Twitter etc. contacts will be uploaded to the government-approved crowdfunding site that the entrepreneur has selected. Entrepreneurs will then solicit from those people via that specific site. Outbound marketing via email or public relations to previously unknown parties will not be allowed.

*Investments will be tracked by affinity circles (i.e., 1st degree is someone from the entrepreneur’s LinkedIn, Facebook, Twitter, etc. connections; a 2nd degree affinity is someone from a 1st degree connection and 3rd degree affinity is someone completely unknown to the entrepreneur but who came to the crowdfunding site).

*It is expected that the vast majority of investors will come from 1st and 2nd degree affinity circles.

Upon reviewing the current JOBS Act provision for crowdfunding, the key conclusion I draw is that it is not going to be as useful to small business America as I had hoped. Unless you have a large social network, savvy communication skills, and a well-conceived business plan, I am not sure that you would feel comfortable navigating these regulatory waters.  And would it be worth the time for a small dollar amount (say below $100,000)?

My guess is that existing businesses with a following are probably the most likely to succeed under the new crowdfunding law.

Maybe this is the way it should be?  I’m not sure, but time will certainly tell. And nothing will really get going until 2013.

A final note: Sherwood Neiss of StartUpExemption.com provided more insight on this subject than any other person I heard speak or whose articles I have read. He was one of the few laypeople “at the table” with Congress and The White House advocating for this law and advising on the details. I am very grateful to Sherwood for his time and input.