Securities Based Crowd Funding: May 6, 2014

Raising Money from CrowdFunding:  ENET meeting, May 6, 2014  

 

A month from now, on Tuesday May 6, 2014 at 7pm, I will moderate a panel for the IEEE Entrepreneurs’ Network (ENET) on “Raising Money from CrowdFunding”.   The presentation will be at the group’s Waltham location:  Constant Contact, 1601 Trepalo Rd., 3rd Floor, The Great Room, Waltham, Massachusetts (Exit 28, I-95/Route 128).

 

In recent years, there has been increasing interest in new methods of online financing and ” crowdfundng” as a new means to bridge the funding gap. Crowdfunding is a means of raising capital through numerous small donors from the public often online, rather than working privately to raise large amounts from a small number of wealthy donors.

 

 

Our May meeting will explore crowdfunding from two separate approaches, with the focus of the meeting on the second approach – equity or securities-based crowdfunding authorized in the U.S. by the JOBS Act of April 2012.

 

The law would allow entrepreneurs to raise up to $1 million from small investors through registered broker dealers or newly authorized “investor portals”. The contributors would receive either equity or debt securities for their investments, with the money refundable if fundraising target is not met. However, for implementation of this second approach, the SEC has to first issue regulations to implement the law to make it completely effective.  To date, Title II of the JOBS Act is effective. Title II allows for much broader general solicitations and the registration of funding portals, with funding at this stage only by accredited investors.  When implemented, Title III of the JOBS Act would allow investment in startup companies by the general public within certain annual limitations based on the non-accredited investor’s income. There is expectation that SEC may issue final regulations which would implement Title III as early as this summer 2014.

 

We feature two speakers who are top authorities in this field.

 

  •  Mike Norman  — who lobbied hard for the JOBS Act, was present at its signing, and is Co-founder and President of WeFunder, a leading securities based investor portal. HIs company has made 13 investments since the law went into effect.  Mike will lead discussion on the different investment portals and the state of SEC progress on Title III implementation.

 

  • Christopher Mirabile  — who is co-Managing Director of Launchpad Venture Group, the largest angel group in New England and top-three ranked group in the U.S., has spoken frequently on crowdfunding’s strengths and pitfalls for early stage entrepreneurs. He will offer his own comments on funding portals and provide tips for entrepreneurs considering crowdfunding.

 

For more information on, or to register for this May 6, 2014 ENET event, go to http://www.boston-enet.org/meetings/raising-money-crowdfunding

 

Hopefully, these two great speakers and authorities on the current stage of equity crowdfunding  will be quite helpful to entrepreneurs  wand would-be entrepreneurs  for the small and early stage companies I represent.  Hope to see you at this great event four weeks from now!

 

*   *  *

 

Additionally, for those entrepreneurs who might want more information on and perhaps consider the other, currently much more widely used, method  crowdfunding  –  “rewards based” crowdfunding,  you may want to look over the slides from the ENET presentation I organized and moderated a year ago, on April 17, 2013, in Boston’s Innovation District  – “Online Financing and Crowdfunding”.

 

As said, this alternative  approach to crowdfinding is donation or “rewards based”.  It utilizes recently developed websites that raise money online.  These include Kickstarter, Indiegogo and RocketHub.  From these online platforms, companies, artists and entrepreneurs seek online donations or sale of pre-release products, generally offering rewards for donations but no debt or equity. Such fundraising campaigns have the added benefit of helping to build a fan base, customer base, and demand for the participant’s product or service.  In May 2012, the Pebble E-Paper Watch set a crowdfunding record, at that time raising over $10 million on Kickstarter.

 

The ENET panel I recruited for that evening featured two veterans of successful Kickstarter campaigns including the author of “A Kickstarter’s Guide to Kickstarter”, with both speakers walking the audience through the benefits, perils, process, and tips to succeed in a rewards-based crowdfunding campaign.  The third speaker is the cofounder and COO of RocketHub, another major platform for rewards based crowdfunding.

 

Those speakers were –

 

  • Jed Cohen  – a Founder and Chief Operating Officer of RocketHub, www.RocketHub.com – RocketHub remains one of the world’s largest and most successful crowdfunding platforms.

 

  • Nelson de Witt – author of  “A Kickstarter’s Guide to Kickstarter”  www.KickstarterGuide.com   Nelson is a three time Kickstarter (two successful, one failure.), and producer of the documentary film Identifying Nelson/Buscando A Roberto.

 

  • Halley Suitt Tucker –  founder and CEO of BoOkBoX.  Entrepreneur, writer, blogger, editor, and social media strategist, Halley  completed a fully funded Kickstarter campaign to write a novel about startup accelerators, called Founders Less Than Three.

 

To see the five sets of  slides from that evening when more than 100 attended ENET, go to – http://www.boston-enet.org/meetings/networking-evening-online-financing-and-crowdfunding

 

Again, hope this is helpful to early stage entrepreneurs.

If you have questions, let me know.

 

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