When it Comes to Investment Crowdfunding - Compliance Matters!

Jenny Kassan Jenny Kassan
Posted at 8/13/2021

What to Know Before You Take the Plunge

The investment crowdfunding marketplace is growing faster than ever before, and is projected to grow by $196.36 billion from 2021 to 2025.

Unfortunately, industry watchers have observed an alarming level of non-compliance with the most basic rules of Regulation Crowdfunding by both companies raising capital and the platforms hosting the campaigns.

Non-compliance can result in regulatory enforcement action and/or investor lawsuits.  So if you’re considering dipping a toe into the crowdfunding world, compliance should be at the top of your list.

In 2016, the SEC completed its rulemaking process for Regulation Crowdfunding.  It suddenly became possible for a business to list an investment offering on a platform, and anyone in the United States could invest in the offering.  But before doing that, the business, as well as the platform, must comply with some basic rules of the road.

According to a recent analysis, only a small minority ...more

Categories: Featured  |  Funding Portals  |  Regulations & Compliance
Tags:
  • Compliance
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Communications and publicity by issuers prior to and during a Regulation CF offering

CrowdCheck, Inc.
Posted at 5/11/2021

The idea behind crowdfunding is that the crowd — family, friends and fans of a small or startup company, even if they are not rich or experienced investors — can invest in that company’s securities. For a traditionally risk-averse area of law, that’s a pretty revolutionary concept.

In order to make this leap, Congress wanted to ensure that all potential investors had access to the same information. The solution that Congress came up in the JOBS Act with was that there had to be one centralized place that an investor could access that information — the website of the funding portal or broker-dealer that hosts the crowdfunding offering (going forward we will refer to both of these as “platforms”).

This means (with some very limited exceptions that we’ll describe below) most communications about the offering can ONLY be found on the platform. On the platform, the company can use any form of communication it likes, and can give as much information as it likes (so long as it’s not misleadin...more

Categories: Featured
Tags:
  • CF publicity
  • CF offering
  • issuers
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New Crowdfunding Rules Change the World--for Good!

Devin Thorpe
Posted at 3/23/2021

How would you like $5 million for your social enterprise?

The SEC this week raised the limits on equity crowdfunding to $5 million. This is huge.

The aggregate limit last was was just $1,070,000. The limits on accredited investors have been completely removed! So angel investors and venture funds can invest as much as they want right along with your other individual investors who may only put in $100.

Ordinary individual investors can also now invest more with limits tied to the greater of income or net worth rather than the lesser, meaning everyone you know can invest something--most can invest thousands of dollars legally.

There are lots of great resources available to help. If you have questions, put them in the comments and I'll answer those I can and I'll tag my expert friends to answer the ones I can't!

Let's rock this for good!!!

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Why tokenize securities?

PrimeTrust LLC
Posted at 3/1/2021

Many crypto enthusiasts imagine a world where everyone holds securities DRS (direct registration of securities) which have been issued/delivered in the form of tokens on a blockchain and trade them on exchanges. That's not going to happen.

Make no mistake, I'm a huge fan of tokenizing securities. I'll explain how, when and...most important...why.

Last week I spoke with the CEO of a large REIT. He'd spent over a million dollars on tokenization initiatives for his securities and, close to going live, he spoke with some of his investors (funds, insurance companies, cities and other institutional investors) and was stunned to learn they absolutely didn't care. So he shelved the project and continued issuing securities just as he always had. He asked me "why would anyone do this?"

Good question. Lets deconstruct the answer...

The problem that almost all real estate firms have, as well as private companies regardless of size, is that there is no secondary market for their securities. The cos...more

Categories: Featured
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Facilitating Capital Formation and Expanding Investment Opportunities by Improving Access to Capital in Private Markets

Crowdfunding Professional Association (CfPA)
Posted at 2/9/2021

Let's keep this available in our own archive! 

The amendments to Reg CF, Reg A, and other rules relating to capital formation utilizing exempt offerings have finally been published in the Federal Register, with an effective date of March 15, 2021.

Facilitating Capital Formation and Expanding Investment Opportunities by Improving Access to Capital in Private Markets
A Rule by the Securities and Exchange Commission on 01/14/2021

https://www.federalregister.gov/documents/2021/01/14/2020-24749/facilitating-capital-formation-and-expanding-investment-opportunities-by-improving-access-to-capital 

 

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Categories: Featured
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CrowdCheck’s Analysis of the New Exempt Offerings Rules: Testing the Waters comes to Reg CF

CrowdCheck, Inc.
Posted at 11/12/2020

While the costs of preparing an offering under Reg CF are significantly lower than other types of securities offerings, they can still be expensive in terms of professional and marketing fees prior to having any sense of whether the offering will be successful. The SEC heard the complaints from issuers on this point and have adopted a testing the waters provision that is substantially similar to that used in Reg A.

Under new Rule 206, issuers contemplating an offering under Reg CF may make written or oral offers to test the waters (“TTW”) prior to filing a Form C. Once the Form C is filed, the offering is live and no more TTW can be done. There is no restriction on the content of TTW communications, as there are for solicitations after the Form C has been filed under Rule 204(b), however, any TTW must include a legend containing the following:

(1) That no money or other consideration is being solicited, and if sent in response, will not be accepted;

(2) That no offer to buy the securit...more

Categories: Featured
Tags:
  • Crowdfunding Conditions
  • Regulation
  • Section 4(a)(6)
  • SEC
  • Securities Law
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2020 CfPA Chairman's Address

Scott McIntyre Scott McIntyre
Posted at 9/24/2020

Friday, September 11, 2020

Dear friends,

I am hopeful that my letter to you all today, of all days, will shine a ray of light through what has been an otherwise dark year for many Americans. Between the tragedy of a global pandemic needlessly costing countless people their lives, and the financial hardship that many families are just beginning to feel, we find ourselves at an unimaginable intersection where guidance, faith and endurance will determine our path forward, our collective future.

Unlike many addresses you may have endured in the past, this one will not pander nor preach. Instead, it will restate our promise, illustrate our achievements, and outline our plans in hopes that it will inspire you to take action in support of a higher mission we’re all familiar with—a more perfect union.

I present this letter as a partner in the unifying mission of personal, professional and communal success only made more attainable by the vision, labor and commitment of the many volunteers that...more

Categories: Featured
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The Republic Note Token - Is It a Good Investment?

Brian Belley Brian Belley
Posted at 7/11/2020

On July 16, 2020, Republic will officially launch its sale of the Republic Note profit-sharing token at a price of $0.12 per Note token. Accredited investors will be able to purchase the tokens under Reg D on July 16, while non-accredited investors will have to reserve their allocation of tokens and wait until the approval of the Reg A offering later this year.

While there is no arguing that Republic's Note token is innovative and pushing the industry forward, everyone has been asking me one question over the past few weeks. Is the Republic Note token a good investment? 

While this article is not investment advice and investors have different goals and risk tolerances, we will attempt to provide an independent analysis of whether the $0.12 per Note price is fairly valued or not for investors. We will perform a Discounted Cash Flow (DCF) analysis for optimistic, typical, and pessimistic scenarios to arrive at a rough valuation range for the Republic Note token.

To download a copy o...more

Categories: Featured
Tags:
  • note
  • republic
  • tokens
  • crypto
  • investing
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