Jobs Act May Raise Billions for Start-ups, yet Crowdfunding’s future may still be in limbo

Jobs Act May Raise Billions for Start-ups, yet Crowdfunding’s future may still be in limbo

by | Sep 24, 2013 | Crowd Funding, Investing / Investors, Rainmaking / Deal Making, Uncategorized

On September 23, 2013, the Jumpstart Our Business Startups Act or JOBS Act, is a law intended to encourage funding of United States small businesses by easing various securities regulations went into effect. It passed with bipartisan support, and was signed into law by President Barack Obama on April 5, 2012. The sound of “the Jobs Act” going into effect was reminiscent of a 21 gun salute, as the sounds of continued email arrivals entering my inbox began promptly at 12:01 am yesterday morning.

The new rule lifts a longstanding ban on broadly advertising a private stock placement, a restriction that had been in place since the Securities Act of 1933, also known as the Blue Sky law. Companies use private placements to issue stock without registering the offering with the Securities and Exchange Commission. By avoiding registration, a company also avoids having to make the disclosures necessary if it were offering the stock to the general public. However, with a few exceptions, this stock may be sold only to an institutional buyer or accredited investors — as defined by the SEC is someone with annual income of at least $200,000 or net worth exceeding $1 million who is presumed to be a sophisticated investor. The company must file for a Regulation D, SEC exemption. A Regulation D offering is intended to make access to the capital markets possible for small companies that could not otherwise bear the costs of a normal SEC registration. Reg D may also refer to an investment strategy, mostly associated with hedge funds, based upon the same regulation (Title 17 of the Code of Federal Regulations, part 230, Sections 501 through 508).

What does this mean for startups and other entities looking to legally raise capital?

Companies:

  • Still must file a Regulation D exemption;
  • Must still file in the states whereas they are looking to raise the capitalization;
  • May solicit or generally advertise the investment opportunity;
  • Can only take investment dollars from accredited investors, whereas investor introduction came through general solicitation.

Crowdsourcing Portals:

  • Has limitations on the amount of capital raised on a per investor basis which are $2,000 or 5% (whichever is greater) for people earning (or worth) up to $100,000, and $100,000 or 10% (whichever is less) for people earning (or worth) $100,000 or more.
  • The Jobs Act Bill mandates reviews of financial statements for offerings between $100,000 and $500,000, and audits of financial statements for offerings greater than $500,000 (noting maximum offering of $1,000,000).
  • Can’t be used to raise capital for an investment fund.

To my amazement, I have only heard of a few companies preparing to take advantage of this new ruling. Ironically, I found most investment banking firms unaware that that this ruling existed or what impact if any it may have on their bottom line as more companies take their private capital offering into their own hands. It is my belief that in the next 5 years we will see billions in private funding’s under the Jobs Act. Moreover, I can see this ruling being combined with other government backed investment initiatives that could usher in a new economic bubble is several sectors.

Please feel free to comment and share.

Rekindling the past, I raised $1,000,000 using just Social Media

Rekindling the past, I raised $1,000,000 using just Social Media

by | Sep 17, 2010 | Media Funding, Mobile Technologies, Rainmaking / Deal Making, Social Media, Social Mobilization, Technology Innovations

Raising 1 million dollars social media

Post mortem of “dot com bomb”, I raised almost $1,000,000 using Social Media With a staff of 2, we spent our days and nights on bulletin boards, dating sites, directories, and even ICQ (old school chat). The end result, we received investment dollars as close as Atlanta and as far away as the Netherlands. It was an experience that I will never forget, and will hopefully attempt to repeat, just not in my living room, and at a larger dollar amount. 

Being a little older now, and a veteran within the social space, with over 16 years of internet media, with 6 of those years engaged in social media, I have a new vision, revenues, and an operating organization that I plan to take to the next level. Moreover, the archaic nature of yesteryear’s socialscape has greatly changed, as have the proliferation of more affluent users and ways to communicate. With that said I just completed my private placement (legal documentation to raise capital), filed my corporate taxes, and I am about to charge to the world of angel capital.

The project will perfect the art of automated social listening, consumer individualistic engagement, and social mobilization, on an unprecedented scale.

The practical applications such a technology are endless from putting butts in seats at a baseball game, generating political activism, real time polling, and even fund raising. 

Considering that my corporate strategy involves the identification, create engagement, and socially mobilize consumers, targeting angel investors should be easy.. or at least I will keep telling myself that until I believe it to be true… LOL. 

I will add a social funding widget to my blog, so you and I can keep track of my progress over the next 90 days. So raising a few million dollars in angel capital, doubling last years revenues, and doing it on a shoe string budget… yea, it sounds like an idea that could only come together on a Friday as I stare into the devilish eyes of Q4. 

Happy Friday, John