While We Wait for the SEC on Crowdfunding, UK Sees Success

Here in the U.S., we continue to wait for the SEC to issue regulations before we can use investment based crowdfunding under the JOBS Act. In the meantime, investment crowdfunding has been available in the UK for two years.

Crowdcube, a UK based crowdfunding portal, recently released its results after two years of operations: Read about Crowdcube's success ›

Categories: Crowdfunding, Venture Capital/Funding

FINRA Issues Voluntary Interim Form for Equity Crowdfunding Portals

On January 10, 2013, FINRA (the Financial Regulatory Authority) issued a voluntary Interim Form for Funding Portals.  Under the JOBS Act, once the SEC adopts its crowdfunding regulations and equity crowdfunding becomes legal in the United States, equity crowdfunding portals will be required to become members of FINRA.  FINRA currently regulates broker-dealers. 

In the meantime, FINRA is requesting confidential information from equity crowdfunding portals that it can use to help it develop the rules it will impose on portal members.  Click here for the FINRA release and link to the form.

Categories: Crowdfunding, Venture Capital/Funding

No Movement Yet On Crowdfunding Regs

The SEC has a very large task ahead of it in order to complete adoption of the regulations required under the JOBS Act.

One provision of the JOBS Act permits general solicitation of investors by a company if only accredited investors are allowed to invest.  This will permit the use of  a web portal or other electronic platform for the solicitation of accredited investors.  Congress gave the SEC a deadline of July 4, 2012 to adopt regulations specifying the steps a company is required to take in order to clearly establish that each investor is accredited.  The SEC proposed these regulations on August 29, 2012.  Because the SEC had invited comments before the proposed regulations were issued and those comments were factored into the proposed regulations, we had anticipated that final regulations would issue soon after expiration of the comment period. Read More ›

Categories: Crowdfunding, Venture Capital/Funding

Crowdfunding (Non-Investment) May be a Good Fit for Some Businesses

The JOBS Act, which became law on April 5, 2012, included for the first time in the U.S., a legal structure that will permit the use of general solicitation in connection with small, non-registered investment offerings in the context of crowdfunding.  The SEC still needs to adopt implementing regulations before this funding vehicle becomes available and the market decides if it is viable.  This will take several months, if not a year.  In the meantime, and even after investment crowdfunding becomes available, regular, non-investment crowdfunding may be a viable alternative for your enterprise. Read More ›

Categories: Crowdfunding, Venture Capital/Funding

When will Investment Crowdfunding Finally be Available?

The JOBS Act, which became law on April 5, 2012, included for the first time in the U.S., a legal structure that will permit the use of general solicitation in connection with small, non-registered investment offerings in the context of crowdfunding.  The SEC still needs to adopt implementing regulations before this funding vehicle becomes available and the market decides if it is viable.

The title of the JOBS Act dealing with crowdfunding sets out a framework, but requires the SEC to fill in the details by adopting regulations.  There are far too many topics for which the SEC is required to adopt regulations to provide a complete list in this article.  But examples include regulations that: Read More ›

Categories: Crowdfunding, Venture Capital/Funding

Why Investment Crowdfunding May Not be as Bad as they Say - Part II: What About All Those Investors?

The JOBS Act, which became law on April 5, 2012, included for the first time in the U.S., a legal structure that will permit the use of general solicitation in connection with small, non-registered investment offerings in the context of crowdfunding.  The SEC still needs to adopt implementing regulations before this funding vehicle becomes available and the market decides if it is viable.  This will take several months, if not a year.  But in the meantime, the naysayers are hard at work, proclaiming their opinion that crowdfunding is a dangerous idea.

From the perspective of the company seeking funding, many "experts" are sounding the warning that it is a very bad idea for a small, early-stage company to have a large number of small investors, which is likely to happen if capital is raised through investment crowdfunding.  These experts are not wrong that this is a concern, but we believe that the risks can be managed in such a way as to make investment crowdfunding a viable vehicle to raise capital. Read More ›

Categories: Crowdfunding, Venture Capital/Funding

Why Investment Crowdfunding May Not Be As Bad As They Say - Part I: Will Rampant Fraud Abound?

The JOBS Act, which became law on April 5, 2012, included for the first time in the U.S., a legal structure that will permit the use of general solicitation in connection with small, non-registered investment offerings in the context of crowdfunding.  The SEC still needs to adopt implementing regulations before this funding vehicle becomes available and the market decides if it is viable.  This will take several months, if not a year.  But in the meantime, the naysayers are hard at work, proclaiming their opinion that crowdfunding is a dangerous idea.

This article is in response to the widely publicized belief that crowdfunding is nothing but an invitation for fraud.  This is of concern primarily for investors.  Many advisors to investors are sounding the alarm.  From the beginning of time there has been and always will be fraud.  But is crowdfunding investing really higher risk than all other types of investment?  We think probably not.  Here's why. Read More ›

Categories: Crowdfunding, Venture Capital/Funding

Crowdfunding Flies Through Congress

It caught most observers by surprise, but the Jobs Act, which includes a Title authorizing crowdfunding, passed the U.S. Senate on March 22.  The bill replaced the House's provisions relating to crowdfunding with the Senate's more restrictive version.  The House passed the Senate's version of the Jobs Act on March 27 and President Obama signed it on April 5. Read More ›

Categories: Crowdfunding, Venture Capital/Funding

U.S. Senate Begins to Move on Crowdfunding

On Tuesday, March 6, the U.S. Senate Committee on Banking, Housing and Urban Affairs held a hearing on Spurring Job Growth Through Capital Formation While Protecting Investors, Part II.  There is a stated intent to take up the capital formation bills in the near future.  Crowdfunding is one of several areas being considered to improve the capital formation climate. Read More ›

Categories: Crowdfunding, Venture Capital/Funding

Crowdfunding May Be Stalled in U.S. Senate

After the U.S. House of Representatives passed a crowdfunding bill in November, it appears that the crowdfunding concept has stalled in the U.S. Senate.  Two alternative bills have been introduced in the Senate, both of which would create greater regulatory roadblocks than the House bill, substantially limiting the ability of most start-up and seed stage companies to utilize crowdfunding to raise capital.  It has been reported that at the committee hearings in December, most of the testimony focused on concerns about the potential for fraud, rather than the importance of access to capital and the need for job creation.  So far in January, no further action has been taken by the Senate on the crowdfunding bills.

Categories: Crowdfunding, Venture Capital/Funding