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Equities Crowdfunding is Finally Legal - NOW WHAT?


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Presentation for Royse University Webinar (June 24, 2016) to help investment bankers, entrepreneurs, inventors and issuers understand the new ways to raise capital through the "crowd"

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Equities Crowdfunding is Finally Legal - NOW WHAT?

  1. 1. Title III Crowdfunding is Finally Legal – Now What? Speaker, writer & influencer on topics relating to market structure, New Issues, FinTech, P2P & crowdfinance Delivered on June 24, 2016, Royse University Webinar By Dara Albright | | Twitter: @tothestoics
  2. 2. Crowdfunding is NOT begging – It is CrowdFINANCING | | Twitter: @tothestoics
  3. 3. | | Twitter: @tothestoics Crowdfinance is just like regular finance with one fundamental exception… Instead of capital coming from big institutions or Government entities, it is being raised by pooling small amounts of monies from a large crowd of individuals.
  4. 4. Equity Crowdfunding is the Rebalancing of Capital In its simplistic explanation, equity crowdfunding is nothing more than the rebalancing of capital from America’s corporate conglomerates and financial institutions to its entrepreneurs and small retail investors | | Twitter: @tothestoics
  5. 5. Rewards-based Crowdfunding • “Pre-product Sale” - Does not operate under securities laws • Anyone can crowdfund • No offering or investing thresholds • No filing requirements or filing fees • Great for: • Test Marketing • Brand Building • Attracting Customers • Gauging consumer demand ICOs “Intrastate Crowdfinanced Offerings” •Rule 147 (Section 3(a)11 of the Securities Act of 1933) •Most states require a notice filing* •Very limited reporting requirements* •Offering thresholds range from $1M to $5M in a 12 month period* •Unaccredited investors can participate in the offering as long as they are based in the same State as the issuer •Shareholders count towards Section 12(g) Registration Threshold •*Varies by State. As of this writing 33 states have enacted intrastate crowdfund legislation including: PPOs “Private Public Offerings” 506c • Reg D 506 (c) Exemption • Form D • No annual reporting requirements • No mandatory audited financials • No offering limits • Unfettered general solicitation • Investors must be verified accredited • Shareholders count towards Section 12(g) Registration Threshold • Intermediary is not required but if one is used it must be registered RACOs Reg A+ Crowdfinanced Offerings (Title IV) •Reg A •Audited financials for Tier II (certain States might require audited financials for Tier I) •Annual public reporting for Tier II, no ongoing public reporting for Tier I •Tier I: Offering amount is capped at $20M, Tier II: Offering amount is capped at $50M •Tier I is subject to State Review •Solicitation Allowed •Testing The Waters Allowed •Anyone can invest. Tier II unaccredited investors are capped based on income levels •Shareholders count towards Section 12(g) Registration Threshold •Intermediary is not required but if one is used it must be registered Reg CF Title III Crowdfunding • 4(a)(6) Exemption • Form C, Form C-U, Form C- AR • Annual reporting, Audited financials for offering exceeding $500K • Can’t raise more than $1M in a 12 month period • Limited solicitation (ie: tombstone ads directing investors to portals as opposed to offering) • Anyone can invest (investment amounts are capped at certain thresholds based on income levels and net worth) • Shareholders do NOT count towards Section 12(g) Registration Threshold • Must use registered intermediary • Keep in mind that Reg CF may change if HR 4855 (“Fix Crowdfunding Act”) is signed into law Which Crowdfunding Structure is Right for Your Startup? AL, AK, AZ, CO, DC, FL, GA, ID, IL, IN, IA, KS, KY, ME, MD, MA, MI, MN, MS, MT, NE, NJ, NM, OR, SC, TN, TX, VT, VA, WA, WV, WI, WY NOT INVESTING! No impact on cap table Great for local retailers or restaurants Great for a B2B play Ideal for more established businesses with large customer base
  6. 6. | | Twitter: @tothestoics
  7. 7. Resources Available for download at | | Twitter: @tothestoics