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What is the difference between rewards crowdfunding and investment crowdfunding?
Rewards-based crowdfunding and investment crowdfunding are two different ways that people can use crowdfunding platforms to raise money for a project or venture. In rewards-based crowdfunding, backers of the project receive a reward, such as a product or service, in exchange for their support. In in... more
Rewards-based crowdfunding and investment crowdfunding are two different ways that people can use crowdfunding platforms to raise money for a project or venture. In rewards-based crowdfunding, backers of the project receive a reward, such as a product or service, in exchange for their support. In investment crowdfunding, backers receive equity in the company or a financial return on their investment.
*Written by OpenAI's ChatGPT*
less- Equity (RIC)
- Investor Education
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Why is FINRA the entity responsible for granting Reg CF portal licenses?
The Financial Industry Regulatory Authority (FINRA) is responsible for regulating the securities industry and overseeing broker-dealers in the United States. Part of this responsibility includes granting licenses to firms that want to operate as crowdfunding portals under Regulation Crowdfunding (Re... more
The Financial Industry Regulatory Authority (FINRA) is responsible for regulating the securities industry and overseeing broker-dealers in the United States. Part of this responsibility includes granting licenses to firms that want to operate as crowdfunding portals under Regulation Crowdfunding (Reg CF), which is a set of rules issued by the U.S. Securities and Exchange Commission (SEC) that allows small businesses to raise capital from a large number of investors through the internet. Because Reg CF is a federal regulation, it is up to FINRA to ensure that firms seeking to operate as crowdfunding portals meet the necessary requirements and are in compliance with the rules set forth by the SEC.
*Written by OpenAI's ChatGPT*
- Regulations & Compliance
- Funding Portals
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Could AI have an impact on the field of investment crowdfunding?
Yes, it is possible that AI could have an impact on the field of investment crowdfunding. AI can be used to process large amounts of data quickly and accurately, which could be useful for analyzing potential investment opportunities and making predictions about their success. Additionally, AI could ... more
Yes, it is possible that AI could have an impact on the field of investment crowdfunding. AI can be used to process large amounts of data quickly and accurately, which could be useful for analyzing potential investment opportunities and making predictions about their success. Additionally, AI could be used to automate many of the tasks involved in managing a crowdfunding campaign, such as identifying potential investors and tracking progress toward fundraising goals. However, it is also important to consider the potential drawbacks of using AI in this context, such as the potential for bias in decision-making and the need for effective regulation to protect investors.
*Written by OpenAI's ChatGPT*
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How is crowdfunding changing the real estate industry?
Crowdfunding has become a mainstream form of finance for real estate.
You can learn more about how in my new book, UNLEASHED, that you can access here, and in this article here that includes a link to a conversation I had with Tore Steen, founder and CEO of CrowdStreet.
... moreCrowdfunding has become a mainstream form of finance for real estate.
You can learn more about how in my new book, UNLEASHED, that you can access here, and in this article here that includes a link to a conversation I had with Tore Steen, founder and CEO of CrowdStreet.
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The JOBS Act was signed in 2012. Why is it taking so long for crowdfunding to take off? The JOBS Act was signed in 2012. Why is it taking so long for crowdfunding to take off?
I may be misunderstanding your question, but statistically Crowdfunding has exceeded every expectation in record time. CF has gone from a space synonymous only with Kickstarter (rewards and donation) supporters pledging an average of $35, to a dynamic marketplace where non-accredited investors previ... more
- Unclassified
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Where should I incorporate a benefit corporation?
@Brian Belley, @Jenny Kassan and @Sara Hanks, I wonder if you have thoughts about where to incorporate a benefit corp.
... more@Brian Belley, @Jenny Kassan and @Sara Hanks, I wonder if you have thoughts about where to incorporate a benefit corp.
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- Law & Legal
- Impact Investing
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- Reg CF
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What is the average amount that issuers spend on investor acquisition (for a Reg CF deal?)
This is a great question! @Brian Belley recently told me that the average investment via Reg CF is about $750. That suggests there is some room to budget for marketing. On the other hand, investors plopping down $100 leave very little room. I hear ranges of from 10 to 30% for marketing budgets. Usin... more
This is a great question! @Brian Belley recently told me that the average investment via Reg CF is about $750. That suggests there is some room to budget for marketing. On the other hand, investors plopping down $100 leave very little room. I hear ranges of from 10 to 30% for marketing budgets. Using 20% against the average of $750 would suggest the cost of investor acquisition is $150--far more than a common $100 minimum investment. I hope Brian or others can add more color to this conversation.
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Do you agree with Coinbase Chief Legal Officer Paul Grewal's adamant statement that Coinbase does not list securities?
Nope.
Many cryptocurrencies are issued with the clear intent to grow in value against the USD. That intent creates a valid question about whether the investment is a security. Other tests can easily allow a reasonable regulator to conclude a security is in play.
- Regulations & Compliance
- Blockchain
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Hi Brian, Thanks for helping the community by answering questions. Based on your personal experience with 200+ startup investments, how do you pick a startup with the limited data available and without understanding other competitors? I know there is no crystal clear...
Thanks for the question. Quick disclaimer: this is just my own personal preference and experience, this is not to be construed as investment advice! Each investor has their own reasons and criteria when investing, so you need to determine what that looks like for you.
When personally picking a compa... more
Thanks for the question. Quick disclaimer: this is just my own personal preference and experience, this is not to be construed as investment advice! Each investor has their own reasons and criteria when investing, so you need to determine what that looks like for you.
When personally picking a company to invest in, for me, it comes down to two primary things:
1. Does it match my investment thesis (e.g. my "why" for investing - whether it's a company I am passionate about, a market I think will be huge, a technology that I believe could change the world), and
2. Due diligence - e.g. are there any red flags? Are the deal terms fair? etc.
For point one: I recommend investors reflect on the reasons they are investing and what they want to achieve. Are you only looking to maximize financial returns? Do you care about social impact? Are you trying to support local small businesses?
For point two: personally, I follow a "5 T's" approach to due diligence. Due diligence is a topic that could fill volumes by itself, but you can read more about due diligence in two articles I wrote and videos I made:
Due Diligence Part 1 - https://crowdwise.org/crowd-investing-101/due-diligence-101-overview-for-crowdfunding-investors-part-1/
Due Diligence Part 2 - https://crowdwise.org/crowd-investing-101/due-diligence-101-part-2-the-1-reason-why-startups-fail-and-how-to-screen-deals/
There are also services out there that will aggregate and review deals to help investors scale their due diligence, such as KingsCrowd (disclaimer: I am currently VP of Product at KingsCrowd).
And ultimately, you should always go to the campaign page and read all the details, including all deal terms. Another gem of information on these pages are the investor Q&A sections. You can not only post your own questions to be answered by the founder, but you can read other insightful questions from potential investors of all backgrounds.
I always read the Q&A. You can learn a lot about the company and how they communicate and handle tough questions.
Happy investing!
less- Equity (RIC)
- Reg A+
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Hi Sara, you come recommended as a real expert in this field. I have a question that I'm hoping you can answer. During the Testing The Waters phase, is it possible to solicit feedback from a pool of potential investors on deal terms that would appeal to them in order to determin
Thanks!
Yes, you can solicit as to what terms people might find attractive, including valuation. I would generally include a disclaimer of some kind saying that just because something has been suggested it doesn't mean that will be reflected in the deal terms if you eventually make an offering.
&nbs... more
Thanks!
Yes, you can solicit as to what terms people might find attractive, including valuation. I would generally include a disclaimer of some kind saying that just because something has been suggested it doesn't mean that will be reflected in the deal terms if you eventually make an offering.
Sara
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- Funding Portals
- Reg A+
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