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Creating Alternative Financing – Part III: Advantages and Disadvantages of Crowdfunding

Crowdfunding is just one of many ways of financing a business venture or a project. Like all other methods, crowdfunding has its advantages and disadvantages. Below I discuss some pros and cons of raising money through a donation-based crowdfunding platform. Pros In my opinion, the main and unique...

Legal Aspects of Crowdfunding

Today, I would like to discuss regulatory aspects of crowdfunding. There are several proposals now that aim to change existing regulation to provide small businesses with easier access to capital markets. One such proposal comes from the Sustainable Economies Law Center (SELC). In July 2010...

Could a Proposed Crowd Funding Securities Exemption Ever Catch On?

Recently, I came across an online petition proposing a new "Startup Exemption" to federal securities registration requirements. You can find the petition at this website: www.startupexemption.com . Like many other similar proposals, its goal is to ease the regulatory burden on small businesses...

Crowdfunding

It's hard to raise capital. The regulatory restrictions imposed by securities laws make it harder to do so. As any bright-eyed entrepreneur with a dream project will tell you, the lawyers and the securities laws make it very expensive and time consuming to raise capital for a small project. ...

Some New Financial Legislation is Moving Along

Four bills made their way through the Capital Markets and Government Sponsored Enterprises Subcommittee of the House Financial Services Committee. Private Company Flexibility and Growth Act (H.R. 2167) Access to Capital for Job Creators Act (H.R. 2940) Entrepreneur Access to Capital...

Bill Creating Crowdfunding Exemption from Securities Registration Passes U.S. House of Representatives

On November 3, 2011, the U.S. House of Representatives voted overwhelmingly to pass the Entrepreneur Access to Capital Act (H.R. 2930). The bill creates an exemption from the registration requirements of the Securities Act of 1933, adding a new Section 4(6).[1] This section provides that an offering...

What Does the Future Hold for Crowdfunding Legislation?

Previous, I summarized the Entrepreneur Access to Capital Act (H.R. 2930) , a bill which provides for a crowdfunding exemption to the registration requirements of federal and state securities laws. The bill was recently passed by the U.S. House of Representatives, and now awaits U.S. Senate action...

Crowdsourcing the Crowdfunding Exemption

There is a growing movement to create a new crowdfunding regime for raising capital. The models seem to draw inspiration from Kickstarter , a platform to fund creative projects. I say that because each time I see a draft bill it talks about an internet-based intermediary as part of the exemption....

The JOBS Act: Creating Jobs, or a Replay?

As the 1990s drew to a close Congress passed legislation signed by the President ensuring the deregulation of the derivatives markets. At the time CFTC Chairwoman Brooksley Born was one of the sole voices of dissent. Less than ten years that dissent proved prophetic as the most severe market crisis...

Final Senate Version of Crowdfunding

As we know, the Senate changed the version of the Jumpstart our Business Startups (JOBS) Act in only one way, they added an amendment, drafted by Sen. Merkley (but also supported by Sens. Bennet and Brown), which added more investor protections to the "crowdfunding" section of the bill...

Next Steps for the JOBS Act

The Jumpstart Our Business Startups Act, as amended by the Senate, was voted on by the House of Representatives yesterday and passed 380 to 41. That makes it a very bi-partisan bill, even though a ll 41 "Nays" were Democrats . If I remember my Schoolhouse Rocks song correctly, it's...

In Spite of What You May Have Heard, the Senate Just Effectively Killed Crowdfunding

This last week, the Senate passed the " JOBS Act ," leaving it one step away from final passage by Congress and Signature by President Obama. The JOBS Act contains a number of provisions which are aimed at reducing the securities compliance burdens of small companies and startups. One of...

Dick Phillips, Alan Berkeley and Stan Keller Discuss the JOBS Act.

On this edition, Dick Phillips and Alan Berkeley of K&L Gates and Stan Keller of Edwards Wildman discuss the JOBS Act (Jumpstart Our Business Startups Act), which was signed into law April 5 by President Obama. They provide an overview of the legislation and explore some of the controversies of the...

You Cannot 'Crowdfund' a Fund (in Case You Were Wondering)

Crowdfunding may provide an interesting way for some companies to raise capital. It's definitely getting a lot of the hype since passage of the Jumpstart Our Business Startups ( JOBS ) Act earlier this month. I've read articles talking about how crowdfunding is going to disrupt funding for...

Crowdfunding Under the JOBS Act: The Bottom Line Impact on Private Equity Issuers and Market Intermediaries

by Jonathan B. Wilson and Dianne L. Trenholm Excerpt: On April 5, 2012, President Obama signed the Jumpstart Our Business Startups Act (the "JOBS Act"), H.R. 3606, into law calling it "a potential game-changer" for startup companies. President Obama signed the JOBS Act just...

Crowdfunding: Who Will (and Who Won't) Be Doing It

Among the features of the recently enacted JOBS Act that has attracted the most attention are the legislation's provisions for "crowdfunding." Under these provisions, a company is permitted to raise up to $1 million during any 12-month period through an SEC-registered crowdfunding portal...

A Masterstroke of Some Kind: Crowdfunding and the JOBS Act

"Everyone agrees the title was a work of pure genius," says Dick Phillips of K&L Gates in a recent podcast , referring to the Jumpstart Our Business Startups (JOBS) Act. "It's impossible to vote against in an election year." When a law is so well named, it's important...

Lifeline or Rising Tide? Understanding Emerging Growth Companies under the JOBS Act

Laws don't often get their own parties. But for the irresistibly named Jumpstart Our Business Startups (JOBS) Act, President Obama held a rare public ceremony in the White House's Rose Garden in its honor. Even more notably, this party was quite bipartisan-Republican House Majority Leader...

The JOBS Act, a Year Later – Part 4: Online Angel Investment Platforms

This post is the fourth in a series examining the impact of the Jumpstart Our Business Startups Act (or JOBS Act) one year after its passage and focuses on the provisions related to online angel investment platforms. In the last post of this series , I discussed the progress of implementing the...

Crowdfunding Update for May 2013

We are still patiently waiting for the SEC to develop rules implementing the crowdfunding provisions of the JOBS Act. While we are waiting, the industry prepares for the crowdfunding transactions. Recently, two interesting articles about crowdfunding caught my attention. First, thecrowdcafe.com...

The JOBS Act, a Year Later – Part 5: Crowdfunding

This post is the fifth in a series examining the impact of the Jumpstart Our Business Startups Act (or JOBS Act) one year after its passage and focuses on the provisions related to crowdfunding. Previously in this series, I discussed the progress of implementing the JOBS Act, specifically Titles...

The JOBS Act, a Year Later – Part 7: Titles V and VI and Concluding Thoughts

This post is the seventh and final in a series examining the impact of the Jumpstart Our Business Startups Act (or JOBS Act) one year after its passage and focuses on Titles V and VI of the law and provides some final concluding thoughts. Titles V and VI of the JOBS Act are closely related in ...