Worthworm Launches First Web-Based Pre-Money Valuation System for Early Stage Ventures

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SEC’s Sunshine Act Meeting

Seal of the U.S. Securities and Exchange Commi...
Seal of the U.S. Securities and Exchange Commission. (Photo credit: Wikipedia)

 

 

 

SECURITIES AND EXCHANGE COMMISSION

Sunshine Act Meeting.

Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Pub. L. 94-409, that the Securities and Exchange Commission will hold an Open Meeting on Wednesday, October 23, 2013 at 10:00 a.m., in the Auditorium, Room L-002.

The subject matter of the Open Meeting will be:

  • The Commission will consider whether to propose rules and forms related to the offer and sale of securities through crowdfunding pursuant to Section 4(a)(6) of the Securities Act of 1933, as mandated by Title III of the Jumpstart Our Business Startups Act.

The duty officer has determined that no earlier notice was possible.

At times, changes in Commission priorities require alterations in the scheduling of meeting items.

For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact:

The Office of the Secretary at (202) 551-5400.

Elizabeth M. Murphy
Secretary

Dated: October 21, 2013

 

http://www.sec.gov/news/openmeetings/2013/ssamtg102313.htm

 

 

Contribution vs. Securities-based Crowdfunding

Image representing crowdfunder as depicted in ...
Image by None via CrunchBase

Fundraising Instruments: Which one is right?

It is important to understand the differences between the various Business Crowdfunding instruments we make available to you, and decide which is best for your company based on your business goals and needs.

The 2  top level categories are Contribution and Securities-based crowdfunding.

Contribution is non-investment funding. This model fits companies who have products or services that supporters and contributors are willing to pre-purchase, contribute to, or support for personal reasons.

Securities-based funding gives ownership, or a promise of future revenue to investors in equity or debt.

If you’re considering Securities-based funding, one of the first top level considerations to ask yourself is, which model fits your business best? Are you in a high risk innovation-oriented company, that has potential for exponential growth if successful? Or, is your business a more traditional service, like a brick and mortar business, that will have a consistent revenue model, but less potential for explosive growth and scaling?

Generally, businesses with exponential growth potential should look to raise Equity-based funding. For example, some technology and innovation companies that could sell in the future for a several times multiple of yearly revenues, can fit the profile of a company that should consider this funding model.

Companies that have a simpler and more predictable revenue stream are more likely to fit the Debt-based funding model. These companies produce consistent, sustained and predictable revenue growth, but typically don’t experience liquidity events like selling the company or going public.


Here are some quick tips to help you think through the best funding model for your business:

Contribution

  • Non-equity funding raised online
  • Contributors receive a non-monetary reward for helping fund and grow your business
  • Companies offer rewards or “offerings” in return for contributions
  • Best-suited for startups and young businesses who need early stage funding, but can be used for any stage of the business life cycle for small funding rounds
  • Available now

Equity

  • Companies offer equity shares in return for capital investment
  • Supporters become shareholders
  • Best-suited for established small and medium busineses who can show progress against major milestones, are in a growth phase, and can demonstrate exponential market potential backed by data
  • Expected to be available to accredited investors in early 2013 through Crowdfunder’s partnership with Gate Global Impact
  • Not yet available

Debt

  • Similar to a loan where supporters are repaid with interest on a set schedule
  • Supporters do not receive ownership shares in the business
  • Best-suited for established businesses with stable revenue and assets
  • Not yet available

Source: Crowdfunder.com

 

 

SEC Extends Comment Period for Section 506 Reg D Advertising Rules

Washington, DC – The Securities and Exchange Commission extended the public comment period for proposed, new rules that would govern how businesses can advertise equity offerings to accredited investors under Rule 506 Regulation D.

SEC

SEC

On July 10, 2013, the SEC issued rules that would lift the ban against general solicitations for Rule 506 Regulation D offering as mandated by Title II of the Jumpstart Our Business Startups Act.  The new rules lifted the ban effective September 23, 2013; however, the SEC also proposed for public comment additional rules that would regulate general advertising for Rule 506 offerings.

The comment period for the new rules closed on September 23, 2013, but on September 27, 2013, the SEC said it will reopen the public comment period.

Rule 506 exempts business from registering their securities with the SEC if they are offering and selling their equity only to “accredited investors” under Rule 501 of Regulation D. On July 10, 2013, the SEC also proposed, newadditional rules for public comment that would add restrictions to general solicitations.  The SEC’s new proposals would:

1.   Require the filing of a Form D no later than 15 days in advance of a general solicitation followed by a closing Form D amendment 20 days after the Rule 506 offering. The Crowdfund Intermediary Regulatory Advocates (CFIRA) commented to the SEC that the proposal is  ”inconsistent with the principles of the JOBS Act for general solicitation and advertising.”

2.  Require the placement of  a legend — that is, a disclaimer that the advertising is offering a private placement of securities — with any advertising. CFIRA noted that such a proposal would make it impossible to use services such as Twitter to make an offering.

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