Tell Kickstarter not to allow bioengineered organisms.
Crowdfunding Signed into Law under JOBS Act. President Gives Small Business and Investors Access to Unprecedented Capital WASHINGTON DC — Today the President signed the Jumpstart Our Business Startups (JOBS) Act in to law. This bipartisan legislation fulfills the President’s call to reduce regulatory burdens that prevent many small and young businesses from raising capital – specifically by allowing crowdfunding, expanding mini-public offerings, and creating an “IPO On-Ramp” consistent with important investor protections. The legislation is remarkable, as it (rightly) reverses more than 90 years of restrictions on raising capital.
Crowdfunding’s benefits will now be felt around the country as small businesses and start-ups look not to traditional models of financing, but to the new ability of seeking investment from unaccredited investors for raising capital. Legislation creating an exemption for investments of up to the lesser of $10,000 or 10% of the investor’s annual income passed the U.S. Stacey Price Kimberlee Williams. Equity Crowdfunding Summit | Senate | Rulemaking | JOBS Act | Launcht. Full text of speech delivered by Freeman White to those assembled for the Senate Summit on Equity Crowdfunding on July 13th, 2012: Thank you all for taking the time to be here this morning. Thank you especially to Senator Brown and his staff as well as Senator Bennet and his staff for convening us all here today. We are honored to join you in discussing the important matters before us. We would like to start by acknowledging that all of us want to get this right.
I take your attendance here as an affront to any cynic who says that crowdfunding can’t be well regulated or that it will take too long to figure it out. Together we will figure it out, that is why we are here today. The reason we wanted this meeting to happen was so that we could examine the intent of the law and, through discussion, propose robust solutions that will clarify the law and make it work. This is the Fortune Magazine from August 1933, originally sold for one dollar per copy and ten dollars per year. Recap of CFIRA’s Historic “Development of Crowdfunding Regulations Symposium” | NowStreet Journal.
On Friday July 13, 2012, CFIRA, the leading regulatory advocacy group for the crowdfunding industry, hosted its first public forum wherein the nation’s key lawmakers, regulators, crowdfunding enthusiasts, entrepreneurs and investors all came together to discuss the rules that will eventually govern Crowdfund investing under the JOBS Act. Exemplifying the same collaborative principles that define the very essence of Crowdfunding and which led to the swift bipartisan passage of its legislation, CFIRA’s Development of Crowdfunding Regulations Symposium was hailed by many as a significant milestone in the progression of America’s capital markets. It was truly an honor for me to have participated in this historic event. Because I have been inundated with requests, highlighted below are a few revelations and predictions that emanated from the day’s discourse.
The outlook expressed by Andy Green, Legislative Counsel to U.S. CFIRA’s symposium was more than a gathering. Www.cgsh.com/files/News/3c1cae6a-6504-43c4-86df-7ac59783b3c7/Presentation/NewsAttachment/1fb0ec41-1f21-4def-8284-7b494846e0d5/The JOBS Act of 2012 - What Does it Mean for Foreign Companies.pdf. What has to happen before Crowdfunding goes legal (or how I quit worrying and learned to love the administrative process) An essential part of the due diligence on an offering of securities through Section 4(a)(6) crowdfunding or Rule 506(c) is ensuring that any previous issuances of securities (such as offerings to friends and family) are not defective.
For instance, if the securities were not authorized by the company's certificate of incorporation, or properly approved by the Board or existing shareholders, that issuance might be defective. If an earlier offering of securities was botched, that might wreck a planned crowdfunding round, requiring an expensive and time consuming unwinding of transactions and company decisions. CrowdCheck addressed this issue in an earlier blog...
Lawyers will know the name of Louis Loss, one of the gods of securities regulation. From one of his key works, writing about the Securities Act of 1933: In short, Congress did not take away from the citizen “his inalienable right to make a fool of himself.” It simply attempted to prevent others from making a fool of him. Www.sec.gov/info/smallbus/acsec/bradford_crowdfunding.pdf. We Dig Deeper into the JOBS Act and its Implications for Crowdfunding — Capitalist Exploits. 0 Flares Twitter 0 Facebook 0 Filament.io Made with Flare More Info 0 Flares × The excitement surrounding crowdfunding continues to grow. I’ve written about it several times, and a lot of questions have been raised by subscribers as a result. Recently a reader of ours, Sam Houghton, who also happens to be an attorney focusing on finance-related issues, corporate structuring and ownership transfer at Clark, Campbell & Lancaster, P.A. in Lakeland, Florida, reached out to me to help clarify and explain the important issues surrounding the JOBS Act and it’s implications for crowdfunding.
Sam has spoken on the subject numerous times in the past couple of months at events focusing on the new legislation. He rung me up during a rare lapse in his schedule, and I think you’ll find his insights valuable. What follows is one of the best primers on the JOBS Act and crowdfunding that I’ve seen… bias aside, of course! Sam: Sure, absolutely. Mark: So let’s jump in. Sam: Sure. Mark: WOW!! 3 Big Questions: Www.startupexemption.com/wp-content/uploads/2012/02/compromise-handout-copy.pdf. Www.nsba.biz/docs/crowdfunding_bill_comparison.pdf. Crowdfunding. The following framework is the foundation of HR2930, the Entrepreneur Access to Capital Act that passed the US House of Representatives 407-17 on November 3, 2011.
It is also the foundation for S1791, the Democratization of Capital Act submitted in the Senate soon after. President Obama also made reference to this framework in the American Jobs Act. This framework is the suggested rule under which the law should be made. At the bottom are the shared components EACH CFI site must have in order to register to offer crowdfunded securities to the public. If you wish to add additional components that you believe will increase transparency and reduce fraud, please email those suggestions to us. Any entrepreneur/business that does not meet the criteria outlined below or “graduates” from the framework would have to comply with existing SEC rules. Last Update: October 27, 2011 Amount & Class of Shares: A “funding window of up to $1M” for entrepreneurs and small businesses. Digg.
The New Crowdfunding Law: What Does it Mean? March 23, 2012FOR IMMEDIATE RELEASE 3 Entrepreneurs, 579 days, 1 Crowdfunding Law Now, What Does it All Mean? (Washington, DC) - The Jumpstart Our Business Startup Act (JOBS Act), H.R. 3606, passed the U.S. Senate on March 22, with overwhelming support (73-26). So what will the impact be, particularly as it relates to the CrowdFund Investing measure, for America’s entrepreneurs and small businesses?
According to the three entrepreneurs who developed the crowdfunding framework, which was the basis for the legislation, it means a new source of funding, more jobs and a greater chance of success for small businesses. The U.S. More small businesses will get funded Investors (who must first take a short quiz to make sure they understand that investing in a business is a highly risky endeavor with no guarantees) will pick apart the entrepreneur, the idea, the business model and the investment opportunity in an open manner with other members of the community. And why is this important? Other Links: JOBS Act passes House: What the new crowdfunding bill would mean for startups. The JOBS (Jumpstart Our Business Startups) Act that passed in the House today contains some big changes for crowdfunding startups.
It now moves on to the Senate. Right now, it’s illegal for a startup to solicit investors on platforms like Twitter or Kickstarter. But the JOBS Act would change that. For startups raising $1 million or less, anyone can now buy up to $10,000 or 10 percent of the annual income (whichever is less) in equity. (Anyone who wants to get in on the ground floor of my bonsai pets business, send your checks to WeWork Midtown, care of VentureBeat.) One of the principle drivers behind the IPO filings of Facebook and Zynga was the 500-shareholder rule, a vestige of the Securities and Exchange Act of 1934, which said that any company with more than 500 shareholders has to open its financials to the SEC like a public company. But under the JOBS Act, anyone who gives $10,000 or less will not count toward this limit. This is a huge win for companies like SecondMarket. United States Senate Committee on Banking, Housing and Urban Affairs : Hearings.
Tuesday, March 6, 2012 10:00 AM - 12:00 PM 538 Dirksen Senate Office Building [view archive webcast] will meet in OPEN SESSION to conduct a hearing entitled “Spurring Job Growth Through Capital Formation While Protecting Investors, Part II.” The witnesses will be: Mr. William D. Waddill, Senior Vice President and Chief Financial Officer, OncoMed Pharmaceuticals, Inc.; Professor Jay R. Ritter, Cordell Professor of Finance, University of Florida; Ms. Kathleen Shelton Smith, Principal, Renaissance Capital; Mr. Majority Statements Tim Johnson [view statement] Witnesses Panel 1 Mr. Senator Brown: The time to act on crowdfunding bill is now.
On Monday Massachusetts Senator Scott Brown (R) urged a Boston audience to pressure his Senate colleagues to bring his crowdfunding bill – or any crowdfunding bill for that matter—to a vote soon. The Senate Banking Committee will hold a hearing on the issue on Tuesday. The general idea behind the proposed legislation is to make it legal for individual investors to put some money — up to $1,000 or $10,000 depending on the bill — into startups in return for equity. Crowdfunding is the “crowdsourcing” take on start-up funding. “I don’t own this idea. Brown’s proposed “Democratizating Access to Capital Act” would make it easier for startups to raise capital in small increments from investors. Backers of this legislation maintain that the inability for small companies to raise capital hurts innovation and job growth. Amy Cortese, a proponent of local investing, said the slate of security laws discriminates against the non-wealthy. Obstacles remain. Crowdfunding Bill Stuck in the Senate.
United States Senate Committee on Banking, Housing and Urban Affairs : Hearings. SEC official recuses self from crowdfunding issues. Craig Newman: Is Crowdfunding The Next Big Thing or An Invitation To Digital Fraud? | Epicenter | Wired Column. It’s an innovative financial tool that has great promise and great peril. Crowdfunding could aid investors and small businesses, at a time when they both desperately need help.
Or crowdfunding could become an efficient, online means for defrauding the investing public. Its future is in the hands of Congress. Crowdfunding began over a decade ago, when struggling artists and musicians used this method to raise online donations from their fans. More recently, some start-ups and other small companies turned to this technique when traditional sources of capital dried up. Crowdfunding sites like Kiva, a non-profit micro lender, report that they have arranged upwards of $250 million in financings for small companies. There would undoubtedly have been far more crowdfunding in recent years, but this financial tool has been hobbled by U.S. securities laws.
Congress is now considering legislation to change all this and to allow smaller enterprises to sell their stock online. CROWDFUNDING - The CFO Report. Featured | Film Closings. I was (and remain) skeptical of crowd funding’s place within the traditional film funding model, but have been pleasantly surprised to see it recently perform adequately for two film related raises — both of which were to pay for lawyers. It’s always reassuring to see film making axioms play-out: in this case it’s that the only people who make money from every film are the attorneys.
The first one was to raise money for a securities attorney to petition the SEC to modify the accredited investors laws to allow crowd funding for films (something that I fear will be so fraught with fraud that producers will long for the respectable days of pre-crowdfunding film investment.) The raiswase successful and the fight is now on.
The second is posted at Kickstarter.com and was brought to my attention by Robert Redford’s article in the Huffington Post (which syndicates my posts as well.) Having made a social issue documentary (“Who Killed the Electric Car?”) Featured | Film Closings. 8 DEC 2011: The Senate introduced S.1970 (a bill to amend the securities laws to provide for registration exemptions for certain crowdfunded securities) and referred it to the Committee on Banking. The U.S. House overwhelmingly passed its first significant crowdfunding legislation, in the form of H.R. 2930, the Entrepreneur Access to Capital Act. The bill (now in the Senate) amends the Securities Act of 1933, by allowing entrepreneurs to crowdsource (online) up to $2 million per year in investment capital directly from individuals without having to register the investors with the SEC; however, the commencement and completion of the raise do need to be filed with the SEC.
Entrepreneurs (the “issuers”) must provide potential investors with audited financial statements in order to qualify for the $2 million cap, otherwise you are capped at $1 million. Individual investments from crowd-shareholders are capped at $10,000 (or 10% of their annual income), whichever is less. or. Making it legal: Crowdfunding bills navigate criticsa. The U.S. Congress is now considering a framework for capital formation allowing investment funds to be raised via crowdfunding platforms in exchange for equity. The crowdfunding legislation would allow unaccredited investors to invest small amounts in start-ups and small to medium-size businesses. Should a bill be passed into law that legalizes crowdfunding, it has the potential to disrupt and possibly re-shape the current venture capital market. However, despite the Entrepreneur Access to Capital Act (H.R. 2930) breezing through the House of Representatives with strong bipartisan support, similar legislation now faces an uncertain path in the Senate.
Criticism over lack of investor protection and fear of potential for fraud are the strongest objections. The exemption of crowdfunded capital from states’ registration requirements has been another cause for concern. Here, in part two of a two-part series, I discuss the major concerns and critiques of the bills. Allright, then. Crowdfunding - The Entrepreneur Access to Capital Act (H.R. 2930) | Congressman Patrick McHenry. LegalizeCrowdfunding.org. Startup Exemption. » crowdfunding Startup Exemption.
As published in Inc.com: The crowdfunding provisions have more than enough protections for investors, and they’ll give entrepreneurs the capital they need CrowdFund investing (aka equity-based Crowdfunding) is about to become the law of the land. Opponents have spent months screaming about how it would be an open invitation for investment fraud and a menace to small investors if it passed. Now that it has passed, it’s time to set those fears to rest. Crowdfunding will become a great source of funding for entrepreneurs and fully transparent way for investors to get in on the ground floor of what will be the greatest businesses of the future.
Every entrepreneur, at one time or another, has felt the pinch of the capital markets. Why is CrowdFund Investing so necessary? Only entrepreneurs with clean records need apply The law manages investors’ expectations Social media would enforce integrity Not so easy, right? Digg. Startup Exemption for Crowdfunding.
Crowd Investing | Wefunder. Www.sos.mo.gov/securities/files/AR-11-06_SecretariesSenateBankingLetterOnCrowdfunding.pdf. Both parties investing in 'crowdfunding' - Josh Boak. LLP | News & Insight | News Briefs | Article re Status of Crowd Funding Bills. The Fine Line Between Crowdfunding & An Illegal Securities Offering Part II: SEC Fines Ad Execs Over Pabst Stunt. Jeff Merkley - Fighting for Oregon in the U.S. Senate: Home. White House to ease IPO path. Sen. Scott Brown's crowdfunding bill has potential to change investment system in U.S.
Brown bill would let startups 'crowdfund' a round up to $1M. White House Press Release - Legalize Crowdfunding. [Crowd Leader: David Alan Grier] Understanding the Crowdfunding Bill. You Can Crowdfund a Politician but you Can’t Crowdfund an Entrepreneur? Testimony on Crowdfunding and Capital Formation, by Meredith B. Cross, Director, Division of Corporation Finance, September 15, 2011. SEC advisory panel concerned about crowdfunding.