SEC Issues Crowdfunding Alert

As the May effective date for the Securities and Exchange Commission’s crowdfunding rules draws closer, the agency has released a primer for investors who wish to participate in such ventures. On Tuesday, the SEC released an Investor Alert detailing the parameters – and potential risks — associated with crowdfunding. Companies can use crowdfunding to offer and sell securities to the investing public starting May 16. Funding portals could begin registering with the Commission in late January.  The alert notes that while anyone can invest in crowdfunding, there are numerous risks involved because crowdfunded projects are early-stage ventures, and there are limits to how much a person can invest during any 12-month period in these transactions.  The SEC alert notes the limits depend on net worth and annual income. If either your annual income or your net worth is less than $100,000, then during any 12-month period, you can invest up to the greater of either $2,000 or 5% of the lesser of your annual income or net worth.  If both your annual income and your net worth are equal to or more than $100,000, then during any 12-month period, you can invest up to 10% of annual income or net worth, whichever is lesser, but not to exceed $100,000.  Crowdfunding investments can only be made through an online platform, such as a website or a mobile app, of a broker-dealer or a funding portal; companies will be prohibited from offering direct crowdfunding investments. The Financial Industry Regulatory Authority, which is charged with regulating broker-dealers that intend to develop Internet funding portals, filed with the SEC on Oct. 22 its proposed rule changes for funding portals, including the registration rules. The SEC approved in January FINRA’s proposed Funding Portal Rules and related forms for SEC-registered funding portals that become FINRA members pursuant to the crowdfunding provisions of Title III of the JOBS Act and the SEC’s Regulation Crowdfunding. FINRA’s funding portal rules became effective on Jan. 29, which aligns with the effective date of the SEC’s registration rules under Regulation Crowdfunding. Funding portals are required to register with the Commission and to become FINRA members. The alert notes that investing in crowdfunding is different than being a shareholder in a publicly listed company. “For one thing, you cannot sell your shares at any time as you would be able to do if you held shares in a publicly listed company,” the alert notes. In fact, it states, the investor is restricted from reselling their shares for the first year, unless the shares are transferred to the company that issued the securities, to an accredited investor, to a family member, in connection with the investor’s death or divorce or other similar circumstance, to a trust controlled by the investor or a trust created for the benefit of a family member, or as part of an offering registered with the SEC.

Source: SEC Issues Crowdfunding Alert

Advertisements

Where Will Real Estate Crowdfunding Go In 2016? | Seeking Alpha

2016-11-25Real estate crowdfunding is an investment option that’s seeing phenomenal growth. Crowdfunding platforms worldwide generated $10 billion in capital for 2014, funding everything from startups to major commercial real estate projects like 3 World Trade Center in New York. Real estate investment is the fastest-growing segment of crowdfunding, expected to generate $2.5 billion by the end of 2015. This rapid growth has been spurred by changes in related SEC regulations, beginning with the 2012 JOBS Act. This opened the door to real estate crowdfunding to a wider pool of investors, including those who are considered “unaccredited.” This group accounts for more than 100 million people in the U.S., who have up to now been effectively shut out of CRE investment. Recent approval of the Act’s Title III rules removed more barriers to smaller investors. These will be enacted in 2016, and this will likely generate a wave of new activity for real estate crowdfunding.

Source: Where Will Real Estate Crowdfunding Go In 2016? | Seeking Alpha

Crowdfunding Startup Wefunder Plans Cross Country Amtrak Trip | Chicago Inno

A Y Combinator-backed startup that was influential in helping pass the JOBS Act, a new law that allows businesses to raise money from normal, everyday citizens, is taking a train across the country to fund local businesses and celebrate the beginning of the new rules taking effect. The Wefunder team is taking an Amtrak train from San Francisco to Boston for a two-week trip beginning March 2, stopping in several cities along the way–including Chicago. The goal is to find ambitions businesses, from startups, to restaurants, to boutiques, and highlight some of the best companies it comes across. Wefunder plans to meet with 100 businesses on its cross-country trip, and it will promote and feature 20 companies who will receive help launching their crowdfunding efforts. Companies will be able to raise up to $1 million once the new crowdfunding rules take effect on May 16. Wefunder says it plans to invest $100,000 of its own money in three of the businesses. It plans to stop in Chicago on March 10. Wefunder’s foudners Nick Tommarello, Mike Norman, and Greg Belote extensively lobbied the US Securities and Exchange Commission and Congress to get the JOBS act passed, and were in Washington, D.C. to watch President Barack Obama sign the bill in 2012. The JOBS act allows unaccredited investors to invest in startups, which previously was only available to banks and wealthy individuals. Wefunder provides a crowdfunding platform for startups, and it has funded 110 companies with $16 million. Wefunder was part of the winter 2013 Y Combinator class. The startup plans to stop in Portland, Seattle, Whitefish, Fargo, Chicago, Detroit, Cleveland, Pittsburgh, New York City, Providence and Boston on its cross-country trip.

Source: Crowdfunding Startup Wefunder Plans Cross Country Amtrak Trip | Chicago Inno

The Three P’s of Successful Crowdfunding – business.com

There is no denying that crowdfunding has passed fad status and is now a mainstay in the way that entrepreneurs raise cash to fund their business.

However, crowdfunding remains a very hit or miss method of raising finance as estimates for crowdfunding campaign success range from 20-40 percent (not all platforms publish data).

Further to this, launching a crowdfunding campaign takes a lot of time and effort. Many entrepreneurs have described raising through crowdfunding as a full time job, which can distract key employees from doing their day job.

undefined

Source: The Three P’s of Successful Crowdfunding – business.com

2016 Market Conditions with Chief Credit Officer of Realty Mogul

 

Toward the end of last year, I was reading an interesting piece on forecasts for 2016 and came across a quote on crowdfunding that read, ”Crowdfunding is attempting to buy into the dot-com culture and there is a slight disconnect. There will be a lot of entries and failures. Crowdfunding is a mile wide, but only an inch deep. There is a lack of credibility: no background checks, no scrubbing, no due diligence.” I thought to myself, “If he only spent a day in my chair, he would see that we have been digging trenches.” At RealtyMogul.com, we are committed to being one of the leading online marketplaces for real estate investing. As a result of prevailing market conditions, 2016 will prove to be the year of the “Selective Investor”. While other institutions will undoubtedly view this as a challenge, RealtyMogul.com views this as an opportunity to further expound upon our business plan and take advantage of investor selectivity.

Source: 2016 Market Conditions with Chief Credit Officer

CARV: The world’s first wearable that helps you ski better! by MotionMetrics — Kickstarter

Carv is the first wearable technology dedicated to skiing that speaks to you as you ski – it’s your digital ski coach.

Inspired by Olympic technology, Carv gives you access to the feedback and knowledge that only elite skiers have had access to so far. With an extremely thin smart insert, Carv measures your motion and pressure distribution and relays feedback through your earphones in real-time.

Carv connects wirelessly to your smartphone to give simple, actionable feedback to casualskiers and detailed metrics and analysis for advanced and professional skiers.

Carv lets you train, compete and challenge people with its detailed metrics and helps you improve your skiing with technique analysis.

How crowdfunding has made flipping houses a lot easier – LA Times

David Berneman isn’t developing an app. His company isn’t venture backed. In fact, his business is about as low-tech as it gets: He buys houses, fixes them up and flips them.

Source: How crowdfunding has made flipping houses a lot easier – LA Times