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Equity crowdfunding 101
This document provides an overview of equity crowdfunding and resources for companies seeking to raise funds through this method. Key points include: - Title III of the JOBS Act allows companies to raise up to $1 million annually from non-accredited investors through equity crowdfunding portals. - Popular equity crowdfunding portals mentioned that are based in Austin include MicroVentures and NewChip. - Costs associated with an equity crowdfunding raise include portal fees of 5-7% of funds raised, marketing costs of 5% of funds sought, and legal/accounting fees of $10,000-$25,000. - Other crowdfunding models mentioned include
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- 1. Tapping into thePower of the Crowd This Photo by Unknown Author is licensed under CC BY-NC-SA
- 2. Equity Crowdfunding 101 ByLaura Lorek, publisher of Silicon Hills News @lalorek @SiliconHillsNew
- 3. Ways Companies Fund Their Ventures This Photoby Unknown Author is licensed under CC BY-SA
- 4. What is Equity-based Crowdfunding •In May of 2016 – Title III of the JOBS ACT went into effect – making it possible for companies, ranging from restaurants and bars to video game makers and software companies to raise funds through equity crowdfunding portals from mom and pop investors. • Anyone can invest up to $2,000 a year in equity crowdfunding companies. • Under previous regulations, only accredited investors or high net worth individuals could provide equity investments in startup ventures under the SEC rules.
- 5. Investors Can Investas Little as $100
- 6. How Much Cana Company Raise? • The rules allow companies to raise up to $1 million annually through online equity-based crowdfunding portals.
- 7. Austin Resources forEquity Crowdfunding MicroVentures – based in Austin and San Francisco – founded in 2009, the platform gives both accredited and non-accredited investors access to invest in startups. Over $85M has been raised on our platform to date. NewChip – aggregates crowdfunding deals in one place. This startup has raised more than $2 million in seed funding to create a new marketplace for investing. LOHAS Capital – helps companies do equity crowdfunding deals
- 8. Registered Crowdfunding Portalsin Texas BUSINESS FUNDING LLC 2100 WYCHWOOD DRIVE AUSTIN TX 78746 CRUDEFUNDERS PORTAL TEXAS, LLC 1700 POST OAK BLVD SUITE 600 HOUSTON TX 77056 MASSVENTURE INC. 110 E. HOUSTON STREET 7TH FLOOR SAN ANTONIO TX 78205 (That’s down from 10 platforms when Texas approved equity-based crowdfunding in 2014. Source: Texas State Securities Board)
- 9. Benefits of EquityCrowdfunding Another source of capital outside traditional angel investing and VC route. Engage directly with customers and they become owners and advocates for your company. Offer non-voting common stock and the backers do well when the company is sold or has an IPO. An unaccredited investor raise can be hosted by an approved crowdfunding portal
- 10. Costs Associated withEquity Based Crowdfunding Portal and broker-deal fees – a percentage of the capital raised – 5 percent to 7 percent and sometimes higher for some portals. Campaign marketing costs – about 5 percent of the amount the company is seeking to raise might be spent on marketing costs like producing a quality video, newsletter and email marketing and more. Legal and accounting costs - $10,000 to $25,000 depending on the amount raised and the complexity of the deal
- 11. Top Equity-Based CrowdfundingPortals MicroVentures (Austin & San Francisco) WeFunder (Boston) SeedInvest (New York City)
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- 15. Other Equity CrowdfundingSites AngelList CircleUp Fundable Crowdfunder EquityNet EarlyShares LocalStake
- 16. NewChip Crowdfunding aggregation site basedin Austin – called the “kayak of crowdfunding” and seeking to create a new investment marketplace. Currently doing its own crowdfunding raise on WeFunder Recently closed on $2 million in seed stage funding
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- 18. Other Ways toRaise Money from the Crowd GoFundMe Patreon Crowdrise Give Charitable LendingClub
- 19. Thank You to Our Sponsors •Egan Nelson • Silicon Hills Lawyer • Galvanize • Silicon Hills News