It’s no secret that investing in early-stage, private companies is extremely risky. As with any investment, investors need to balance this increased risk with an increased potential reward.

So what kind of financial returns should you expect - and demand - as an equity crowdfunding investor? 

While equity crowdfunding is still in its infancy, we can look at a combination of past early-stage investment performance along with some current equity crowdfunding results to begin to build a picture of what types of returns investors might seek.

After all, if there is only a minor boost in returns offered between passive public market index funds and the active efforts involved in screening equity crowdfunding deals, many investors will likely stick with ETFs and index funds.

First, we will look at some private market studies on Angel Investors and Early-Stage VCs that suggest early-stage investments have historically obtained an average ~26% Internal Rate of Return (IRR).

Next, since ear...more

With more than 90% of Seed and Series A startups failing to provide an exit for investors, investing money in an early-stage business is not for the faint of heart. To help entice more investors to risk their capital in early-stage ventures, the U.S. provides special tax relief for startup investors.

While startup investments can qualify for long-term capital gains, certain investments can qualify for even more preferential U.S. tax treatment - sometimes up to 100% tax-free gains.

The three tax sections of the Internal Revenue Code (IRC) that every startup investor should be aware of are:

• Section 1202 (gains)
• Section 1045 (rollovers)
• Section 1244 (losses)

We previously covered five key tax questions every startup investor must answer. Let’s now explore the potential federal tax write-offs from one of those questions in more detail.

Section 1202 - up to 100% exemption on QSBS gains (up to $10M or 10X cost basis)

The first startup investment tax benefit is under Section 1202 of the Int...more

Cannabis + Crowdfunding: The Future of Green Financing.

There is no money in growing cannabis. This is not a debate, it’s just a simple fact. There is a reason you’ve never meet a rich rice, banana, tobacco, watermelon and definately dairy farmer. Farmers are at the bottom of the revenue stream. Why is that? Commodities. Once something is commoditized farmers always get screwed. Yes, farmers do the hardest work/labor. However, who makes the most money in any commoditized ecosystem? Hint, it’s not retailers. So, if you’re question is, 

“Can I use Reg CF, Title III of the JOBS Act, to raise up to $1.07M dollar for my cannabis farm?” 

The answer is, “Yes, you can. But don’t do it. Cannabis cultivation is a dead industry”. I know. I know. How can something be a dead industry when its not even taken off yet? I said cannabis cultivation is a bad bet. You simply can’t scale as fast as the cigarette companies. However, there are many avenues to make money in the cannabis spa...more

Laundering Cannabis Cash to Pay Federal Taxes - A Proprietary Process. 

Note - this is an ad for the Ascendant Management Compliance Conference in Scottsdale, Arizona and the AvantPay Cannabis Conference in Washington, DC this September. Don’t waste your time reading it if you don’t want to make money in regulated cannabis industry. Thanks! - Samson 

In order to pay Federal Taxes many licensed, regulated, cannabis companies have to launder their cash. Why? Because banks will not open an account for a cannabis business due to cannabis being illegal at the Federal level. How exactly then do dispensaries, cultivators, retailers, transportation and other cannabis businesses pay Uncle Sam taxes if they can’t legally open bank accounts? The answer to that is a proprietary process. 

Too, the conversation really hits home and highlights the pain point that cannabis entrepreneurs face when you consider that without a bank account how do these small business owners do all the extr...more

In June, Facebook released its much-anticipated whitepaper for its cryptocurrency Libra Coin. What follows is my first impressions of what this means and why Facebook’s move is so interesting. I will admit I was betting on Amazon releasing a token before anyone else. Alas, they did not and instead Amazon has gone full on into the money transfer business in a tiny market called India. That though is a story for another time. Here are some of my initial thoughts regarding Facebook’s Libra Coin: 

1. Hedge Fund? Upon my initial reading of the Libra Coin white paper, I had a distinct feeling that the Libra Reserve was just a hedge fund. I felt this way because of the language of how the reserve works and the assets it would manage on behalf of the Libra Coin. Too, because the “nodes” of the network had to contribute $10M to be a validator or part of the network. To me that sounded like 70 entities and counting that each invested $10M into a fund. What does this fund do? Hedges risk assoc

Last week JP Morgan announced that it had developed its own cryptocurrency, the“JPMCoin”. Lost in the much of the noise about whether or not the JPMCoin is a real blockchain or cryptocurrency is the fact that, for mainstream blockchain adoption, the announcement is a big deal. Don’t get me wrong. The JPMCoin is no more a cryptocurrency than say Fortnight’s V-Bucks or your airline miles are. However, for blockchain the technology (even if JPMorgan isn’t actually using a blockchain) the mere mention of the possibility that blockchain like tech is being adopted by the 6th largest bank in the world, a meaningful way, is a big step towards mainstream adoption.

As you consider this here are a few points you can confidently share with your colleagues and friends:

1. The #JPMCoin isn’t a #blockchain or a #cryptocurrency
2. That doesn’t matter because JPMorgan’s modern day #DigitalAbacus does solve real business problems and proposes real operational cost savings,

Sponsored by: Blockchain SmartTech

Magic Whale Formula:

The 3 ingredients for attracting investors to your crowdfunding (ICO/STO) campaign  

Below is a redacted and slightly edited and updated version of a memo provided to a client regarding how to attract investors to their business, in mid 2017. For background, they’re a 5 year old private investment firm, whose stock is traded OTC and who invest in startups focused on blockchain tech. To further this model they were exploring additional ways to raise capital, specifically to acquire more startups. Below is a high level framework of what investor “whales” are looking for. This is not investment advice. These are redacted insights into what you should be considering if you’re looking to also engage potential investors in your business enterprise.

If you don’t have time to read it all, I’ll summarize: It still takes money to make money.

Note - all crowdfunding campaigns (regardless of if you call them ICOs / STOs) require a legitimate business model, ta...more