Thursday, Sep 27 2012 7:45AM to 10:30AM
Don Minges and Dain Dulaney
222 South Church Street
Charlotte, NC 28202
“Crowdfunding”- Pros and Cons of this New Funding Path for Startups
Date: Thursday, Sept 27, 2012
Location: Packard Place, 4th Floor
222 S Church St
Charlotte, North Carolina 28202
Time: 7:45 am to 10:30 am
Skeptics have called the JOBS Act the "Wild West of Investing" and predict that crowdfunding will dramatically increase the number of investor rip-offs. As always, every investor should use extreme care and due diligence before investing. And, entrepreneurs should be very cautious about pursuring a crowdfunding path.
The Jumpstart Our Business Startups Act, or JOBS Act, is intended to provide new avenues for high growth entrepreneurs seeking capital, but its practical implications will take some time to develop. While the JOBS Act does have provisions to ease the regulatory burden of the initial public offering process and other regulatory changes for later stage companies, the focus of this communication is on those provisions that impact capital opportunities for early stage entrepreneurs and investors.
Crowdfunding. The JOBS Act creates a specific “crowdfunding” exemption for companies raising equity capital but gives the SEC until early December 2012 to create the rules governing such offerings. Crowdfunding sites (such as Kickstarter) are currently being used to raise money (but not sell securities) by collectingsmall amounts of money from a large number of people. The JOBS Act creates the opportunities for similar sites to be created for equity capital raises, subject to the following:
- $1M Annual Limit. A company may only raise up to $1M in a 12 month period from small investors who may not meet the “accredited investor” standards currently in place.
- Crowdfunding Websites. The transaction must be conducted through a crowdfunding website.
- Company Filings with the SEC. The company will be required to make certain SEC filings.
• A New Funding Option (But Buyer Beware). Crowdfunding does offer a new avenue that companies raising capital will need to explore but there are substantial challenges with a large, unsophisticated shareholder base relating to communications and corporate approvals that will need to be considered.
• Later Financings and Exit Considerations. Having a large number of unaccredited or unsophisticated investors in their shareholder base may affect a company’s ability to obtain later round funding from venture capital or other institutional investors and to sell or restructure the company.
Without the Regs in place yet, this event is intended to be strictly informational about the JOBS Act and Crowdfunding and what we have learned to date, including real case studies. We have had some local success stories as well.
We intend to hold a more formalized event on Crowdfunding once the Regs are issued, which is most likely Q1 2013.
Don Minges has done extensive research on this topic and will share much of what he has learned to date. Dain Dulaney will represent the legal implications of crowdfunding.
Bios for Don Minges and Dain Dulaney below:
7:45 am – 8:30 am Registration and Networking
8:30 am - 10:30 am Crowdfunding Discussion presented by Don Minges and Dain Dulaney
Program Cost: BIG Members and Rev Tech Lab companies Free
Guests $30 in advance, $40 at the door
Registration: RSVP to firstname.lastname@example.org or register below.
Dress Attire: Business casual