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Creative Alternative Financing – Crowdfunding & Crowdsourcing: Part I

On May 3, 2011, I participated in the panel discussion titled "Creative Alternative Financing - Crowdfunding & Crowdsourcing" at the 2011 MBE Annual Meeting organized by New York & New Jersey Minority Supplier Development Council. I was honored that my co-panelists were David Rose,...

Creating Alternative Financing – Crowdfunding & Crowdsourcing: Part II. What is Crowdfunding and Three Crowdfunding Models

Crowdfunding is a method of raising funds for a business venture or a project by requesting a small amount of money from a large number of people (typically through the Internet). An average amount of money raised is between $2,000 and $10,000. Crowdfunding is not a new phenomenon. We have seen it...

Creating Alternative Financing – Crowdfunding & Crowdsourcing: Part IV: Who is an Ideal Candidate for Crowdfunding?

In this post, I would like to summarize the information I posted previously about crowdfunding and discuss the kind of company or individual that would benefit the most from this type of financing. In the donor-based model of crowdfunding, it would be a person or a team with a creative novel idea, something...

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...

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....

JOBS Act: What Matters Most for Startups and VCs

The Jumpstart Our Business Startups Act (the JOBS Act), enacted in April this year, makes a variety of significant changes to securities laws, some of which relate to early-stage entrepreneurs, startup companies and venture capitalists concerned about fund raising with respect to their portfolio companies...

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 Case of SoMoLend: Crowdfunding Platforms and Other Startups Beware of Potential Securities Law Violations

SoMoLend – Social Mobile Local Lending – is a crowdfunding platform that has peer-to-peer lending technology that allows businesses to obtain loans from a network of lenders, typically located in the same geographic area (banks, credit unions, community-development financial institutions...

First Enforcement Action Taken Against Crowdfunding Site

For the first time, regulators are taking action against one of the many crowdfunding sites that have sprung up since the passage of the JOBS Act. The Ohio Division of Securities issued a notice of intent to issue a cease-and-desist order against the Cincinnati-based crowdfunding platform SoMoLend and...

SEC Crowdfunding Rule Proposal to be Announced Next Week

Bloomberg reports today that the SEC plans to announce long-awaited proposed rules on “crowdfunding” next week. There is no notice yet on the SEC website, but apparently the news outlet heard from those in the know. The Jumpstart our Business Startups (JOBS) Act of 2012 mandated that the...

SEC Releases Proposed Crowdfunding Rules

On October 23, 2013, the SEC finally approved (unanimously) and released for public comment the proposed rules implementing the crowdfunding provisions of the JOBS Act. The rules will not become effective, subject to any revisions, until the end of a 90-day comment period, meaning that the rules will...

Overview of Proposed SEC Crowdfunding Rules

by Trent Dykes and Nathan Luce Earlier today, the Securities and Exchange Commission (SEC) took an important step in making securities-based crowdfunding a reality for many small companies with the release of its proposed rules governing crowdfunding. The proposed rules, called “Regulation Crowdfunding...

Crowdfunding and EB-5: What Insights do the New SEC Rules Offer for EB-5 Practice?

On October 24, 2013 the Securities and Exchange Commission (SEC) released the proposed rules governing crowdfunding, which is an evolving method of raising capital through Internet and social media websites. Title III of the “Jumpstart Our Business Startups” (JOBS) Act and SEC’s proposed...

Thoughts on the Proposed Crowdfunding Regulations

On October 23, 2013, the Securities and Exchange Commission issued proposed regulations to implement Title III of the JOBS Act, which will allow for the public sale of securities using crowdfunding under an exemption from registration under securities laws. Since it has been some time since the regulations...

Which Crowdfunding is Which? A Primer

Many seem a little confused by the flurry of regulatory activity in Congress and the SEC the last few years when it comes to small business and capital formation. Regulation D? Regulation A? Kickstarter? Crowdfunding? Which is which? Here’s a few sentences so you can keep a scorecard: Kickstarter...

Crowdfunding Right Now (Fund Model, Broker-Dealer Model, Lending Platforms and Intrastate Offerings)

We are still waiting for the SEC to issue final rules with respect to the Title III crowdfunding that will allow the U.S. companies to issue up to $1 million in securities to non-accredited investors through the online funding portals. So, while we are all waiting, crowdfunding in the U.S. is alive and...

Recent SEC Interpretations Facilitate Intrastate Crowdfunding

The SEC has recently issued interpretations regarding Rule 147 . This rule provides a safe harbor under Section 3(a)(11) of the Securities Act of 1933, as amended, which exempts from federal registration securities offered and sold only to persons resident within a single state or territory, in which...

Crowdfunding Portals and the Securities Laws

The SEC has recently intensified its enforcement efforts against crowdfunding portals. The SEC's main focus is on these two legal issues: whether the crowdfunding portals offer and sell securities in unregistered transactions to US persons in violation of the Securities Act, and whether the crowdfunding...

Real Estate Crowdfunding

When speaking about equity-based crowdfunding, the U.S. securities laws do not differentiate among different uses of proceeds derived from raising funds through crowdfunding portals. The same securities laws apply to real estate crowdfunding as to crowhdfunding campaigns with a goal of investing into...

State Crowdfunding Surges Ahead

Let’s give one to the states. Often in their attempt to regulate securities offerings we find states a source of delay and frustration. However, given the snail’s pace at which the SEC is implementing crowdfunding rules mandated by the Jumpstart our Business Startups (JOBS) Act of 2012, many...

New Era of Capital Raising: Sorting Through the JOBS Act’s New Capital Raising Rules

by David Carroll Since the enactment of the Jumpstart Our Business Startups Act (the “JOBS Act” ) in 2012, the Securities and Exchange Commission (“ SEC “) has slowly been making its way through the titles to the JOBS Act to promulgate the final regulations for implementation...

SEC Adopts Final Crowdfunding Rules

On October 30, 2015, by a 3-1 vote, the SEC adopted final rules to permitting small companies to raise funds by selling shares to the investing public through crowdfunding offerings conducted on Internet fundraising portals. In this long-awaited vote, which represented the last remaining significant...

Let’s Give Title III Crowdfunding a Chance

It was in many ways the centerpiece of the Jumpstart Our Business Startups (JOBS) Act of 2012. At the signing ceremony all the President could talk about was the idea of “bringing Wall Street to Main Street.” And while the JOBS Act has many other terrific provisions, including the new Regulation...