Sunday, April 6, 2014

Investment Crowdfunding Can Become a Reality in North Carolina This Year

The North Carolina JOBS Act enables a new way of funding startups and small business in our state known as investment crowdfunding. The FAQs and other posts on www.jobsnc.blogspot.com provide details and analysis of what the bill does and how it will work. The legislation (H680) passed the NC House by an almost unheard of bipartisan vote of 103 to 1 last June, and is now pending in the NC Senate for the short session beginning May 14th. So if everything goes as expected, 2014 will be the year that intrastate investment crowdfunding will become a reality in North Carolina.

Over the last year here in the U.S., there have been a number of important developments in the investment crowdfunding exemption story. Many states are following in the footsteps of Kansas and Georgia, who were the first to implement in-state investment crowdfunding exemptions by regulation, and North Carolina, where we were the first to introduce an exemption by legislation.

As of today seven states - Kansas, Georgia, Michigan, Wisconsin, WashingtonIndiana, and Alabama - have intrastate crowdfunding exemptions in place, three states - North Carolina, Florida, and Texas - have legislation pending, and five more including Idaho, Colorado, Maine, Maryland and New Jersey are in various stages of considering the idea. Here is a comparison of several of these intrastate crowdfunding exemptions. 

Many more states are expected to join the intrastate investment crowdfunding movement because it grows the economy from the ground up and creates jobs locally.  And here is a statement from North Carolina Congressman Patrick McHenry, the original creator and sponsor of the the Federal JOBS Act, on why he supports state based solutions like NC JOBS

In the startup community, which is so important for North Carolina in both the technology and life sciences markets, a report in Entrepreneur Magazine says that crowdfunding is the fastest growing source of funding for startups. In addition, accredited investor crowdfunding sites like AngelList and FundersClub have proven how effective they can be in providing funding for high growth startups. As an example, just one of the investment crowdfunding sites called EquityNet has over 130 investment crowdfunding projects listed just in the biotech-pharmaceutical-healthcare category.

So what else has changed since last year?

Crowdfunding in general, and investment crowdfunding in particular have been growing very rapidly in the US and around the world. The biggest donation and rewards based site Kickstarter just announced that they surpassed $1B in pledges to crowdfunding campaigns hosted on their site.  Entrepreneur Magazine calls the growth of crowdfunding ‘epic’ and says the crowdfunding economy has tripled in 3 years and was over $5.1B in 2013. They also expect crowdfunding to provide a $65B boost to the world wide economy in 2014.

In the United Kingdom, where investment crowdfunding has been legal for over 3 years, the investment site CrowdCube has announced their stats on their 3rd birthday in 2014:
         
“The platform has raised £19.9 million (around $33 million) for 103 businesses, which Crowdcube anticipates will add 1900 jobs over the next three years. Darren Westlake, the company’s cofounder and CEO also mentioned that the company grew by 562 percent on the year before, and it sees over 100 applications per month. The company has 60,000 registered members.”

And that is just one of the many investment crowdfunding platforms operating in the UK, other parts of Europe, and in Australia.

Meanwhile, several types of investment crowdfunding have taken off like rockets in 2013. One is investment crowdfunding in startups for accredited investors on sites like AngelList, another one is called Peer-to-Peer (P2P) lending, where people get personal loans from the crowd, and a third is real estate crowdfunding, where local real estate development projects are funded by the community crowd.

Many more market segments are just beginning to use investment crowdfunding as a financing method. And venture capitalists are making major investments in a wide variety of crowdfunding platforms and services around the nation, because they see this as a major growth industry in the financial sector coming down the road.  A report by nowstreetwire has more details on these trends.

So what does all this mean to North Carolina?

It means we can benefit from these trends by helping our small businesses and startups to participate. We can make it much easier for them to find funding. And that funding will help them grow and create jobs. The NC JOBS Act investment crowdfunding exemption will be an important part of making it happen.

Support the North Carolina JOBS Act:

If you have not yet done so, now is the time to contact your state Senators with an email of your support for  H680, the NC JOBS Act. It is very easy to do using the links we give below.
If you have any questions or comments, please email the JOBS NC Crowdfunding Team at jobsnc@nc.rr.com or contact Representative Murry’s office at murryla@ncleg.net.


Why I Support North Carolina's Proposed Crowdfunding Law, the NC JOBS Act by Joe Wallin

In the post below, the highly respected crowdfunding legal expert Joe Wallin of Seattle explains why intrastate crowdfunding exemptions like the NC JOBS Act are needed and have several crucial advantages over the Federal JOBS Act. Joe recently led the effort to get a similar intrastate crowdfunding exemption signed into law in Washington State.


“Why I Support North Carolina’s Proposed Crowdfunding Law, The NC JOBS Act”
By Joe Wallin

The North Carolina General Assembly has a unique opportunity in front of it right now. It can pass a state-specific crowdfunding law known as the North Carolina JOBS Act.

You can read the bill here, which has already passed the NC House by a vote of 103 to 1.

The bill would allow North Carolina businesses to raise up to $1 million during any 12-month period from North Carolina residents in a crowdfunding campaign, and up to $2 million with audited financials. The funds could be raised from non-accredited investors, as well as accredited investors.

Joe Wallin
The bill has a good chance of passing in a form that would actually be usable. It also strikes the right balance between capital formation and investor protection.

The trouble with securities law exemptions on the books today is that many of them are not usable — except at great and impractical expense to businesses that want to use them. This puts entrepreneurs who want to raise money in a difficult spot, slows down or completely inhibits their ability to raise funds, and hampers economic growth.

This is the reason almost all startups raise money solely from accredited investors under what is known as Rule 506 of Regulation D. If you raise money under that rule, as long as you take money only from accredited investors, there are less complex and less costly requirements than other exemptions.

For example:

  • Rule 506 does not require companies to work with a registered broker-dealer (which is required under the federal crowdfunding law). 
  • Rule 506 does not require a company to have audited financials (which is required under the federal crowdfunding law if you are raising more than $500,000). 
  • Under Rule 506, you have to file a form known as Form D, but it is a short form, and you don’t have to file it until 15 days after you actually raise money. So, if you don’t succeed in raising money, you don’t have to file the form. 

Rule 506 is practical and usable, and that is why a very high percentage of financings fall under it. Other laws passed over the years to try to allow companies to raise money through the sale of securities languish on the books unused because they are impractical.

Of course, the trouble with Rule 506 is that you have to limit your offerings to accredited investors. There is no ability under Rule 506 to raise small amounts of money from lots of people, including non-accredited investors, in a crowdfunding campaign.

If you don’t know any accredited investors, raising funds can be tough. A real slog. Like persistence hunting.

Enter state level crowdfunding. Several states have realized that to support startups and small and emerging growing businesses, they need state securities law exemptions that are more usable and practical, yet balance capital formation with investor protection in a reasonable way. Wisconsin and Michigan passed state crowdfunding bills. Both Kansas and Georgia have regulations in place. (See Bill Carleton’s web site statecrowdfundinglaw.com for detail on the various state initiatives).

It is time for the North Carolina Senate to pass the NC JOBS Act in the short session beginning in May.

The North Carolina bill, H680, is sponsored by a bi-partisan group including Representatives Murry, Moffitt, Shepard, Hastings, R. Brawley, Brody, Brown, Cotham, Faircloth, Harrison, Jones, S. Martin, McGrady, R. Moore, Ramsey, S. Ross, Samuelson, Setzer, and Steinburg..

It is an important bill. It would send a signal to the entire world that North Carolina takes the business of starting and growing companies seriously, and is willing to amend its laws to bring them up to date with the 21st century.

You might ask: Isn’t a federal crowdfunding bill on the horizon? Shouldn’t we just wait for that?

The answer is no. The federal bill is too complex.

It will cost companies a lot to raise money in compliance with its requirements. For example, suppose you want to raise $1 million under the federal bill. You’re probably going to have to spend something on the order of $250,000 in legal, accounting and broker fees to raise the cash. That’s impractical. It doesn’t make sense. Unfortunately, the federal bill is going to go the way so many prior attempts to write sensible laws have gone. I suspect it will not be used nearly as much as advocates hoped. This is truly unfortunate.

But states have the opportunity to put their own laws in place that will actually work.

The NC JOBS Act would not put companies trying to raise money in such a difficult spot.

Joe Wallin is an attorney at Davis Wright Tremaine in Seattle. He’s the editor of the Startup Law Blog.




If you have not yet done so, now is the time to contact your state Senators with an email of your support for H680, the NC JOBS Act. It is very easy to do using the links we give below.
If you have any questions or comments, please email the JOBS NC Crowdfunding Team at jobsnc@nc.rr.com or contact Representative Murry’s office at murryla@ncleg.net.

Wednesday, March 5, 2014

CED Hosts Crowdfunding Panel at 'Raising the Dough' Series Event

The influential and respected North Carolina Council for Entrepreneurial Development (CED) will host a seminar called "Raising the Dough" for entrepreneurs looking for funding. A panel on crowdfunding including an overview and discussion of the NC JOBS Act will be included during the first session on March 11th. You can register for the event here.

About CED

CED's Mission: To identify, enable and promote high-growth, high-impact companies and to accelerate the entrepreneurial culture of the Research Triangle and North Carolina.

CED is a community of people inspired by entrepreneurship, and includes a wide range of members including start-up companies, more mature growth-stage firms, investors, service partners, academics, and individuals. All who wish to be part of this dynamic enterprise are invited to participate. CED  was founded in 1984, and later incorporated as a 501(c)3 nonprofit organization, to identify, enable and promote high-growth, high-impact companies and accelerate the entrepreneurial culture of the Research Triangle and North Carolina.  CED provides education, mentoring and capital formation resources to new and existing high-growth entrepreneurs through annual conferences, forums, workshops and programs on entrepreneurial management and finance.

Support the North Carolina JOBS Act:

If you have not yet done so, now is the time to contact your state legislators with an email of your support for  NC JOBS. It is very easy to do using the links we give below.
If you have any questions or comments, please email the JOBS NC Crowdfunding Team at jobsnc@nc.rr.com or contact Representative Murry’s office at murryla@ncleg.net.

We Need Your Help with the North Carolina Crowdfunding Act

Dear friends and supporters of the North Carolina small business and startup communities:

We are in the final stages of making investment crowdfunding a reality here in North Carolina with the passage of H680, the North Carolina JOBS Act. It has already passed the NC House last session by a vote of 103 to 1. We need your help to push it over the finish line in the NC Senate.

Please call and email your expressions of support to the Senate Leadership and your own NC Senator. Senator Berger is Senate President Pro Tem, Senators Gunn and Meredith are the co-chairs of the Commerce committee, and Senators Rabon and Rucho are the co-chairs of the Finance committee. Please ask them to move H680 forward. Senators Pate, Brown, and Tillman are part of the Senate leadership, and Lt Governor Forest is also Senate President. The bill needs action by the Senate Commerce and Finance Committees, and a floor vote in the Senate before the end of the short session, which will begin on May 14th, 2014.

Senator Berger
Phil.Berger@ncleg.net
Office: 919-733-5708

Senator Gunn
Rick.Gunn@ncleg.net
Office: 919-301-1446

Senator Meredith
Wesley.Meredith@ncleg.net
Office : 919-733-5776

Senator Rabon
Bill.Rabon@ncleg.net
Office: 919-733-5963

Senator Rucho
Bob.Rucho@ncleg.net
Office: 919-733-5655

Senator Pate
Louis.Pate@ncleg.net
Office: 919-733-5621

Senator Brown
Harry.Brown@ncleg.net
Office: 919-715-3034

Senator Tillman
Jerry.Tillman@ncleg.net
Office: 919-733-5870

Lieutenant Governor Dan Forest
hal.weatherman@nc.gov
Office: 919-733-7350

Here is a suggestion for an email or phone conversation:

“I am (  ) with (  ). I am contacting the Senator with regards to H680, the NC JOBS Act. This bill, which creates a new way to fund startups and small business using investment crowdfunding, is a great opportunity to create jobs and improve the economy in North Carolina. It passed the House by a wide bipartisan vote of 103 to 1, and has support from the startup and small business communities of North Carolina. This bill needs action from the Senate during the short session and I urge you to pass this bill. Thanks for your support of NC JOBS and the small business community.”

Thanks for your help, and please forward this request to your contacts in the startup and small business communities.

Best regards,

NC JOBS Act of 2014 Team

Support the North Carolina JOBS Act:

If you have not yet done so, now is the time to contact your state Senators with an email of your support for  H680, the NC JOBS Act. It is very easy to do using the links we give below.
If you have any questions or comments, please email the JOBS NC Crowdfunding Team at jobsnc@nc.rr.com or contact Representative Murry’s office at murryla@ncleg.net.

Wednesday, July 31, 2013

The North Carolina JOBS Act Moves to the Senate in 2014

As of today, we are halfway to our goal of passing the North Carolina Jump Start Our Business Start-ups (NC JOBS) Act. There is excellent support around the state and around the nation for this new type of financing for small business and start-ups using investment crowdfunding, and the bill passed the North Carolina House by an almost unheard of bipartisan vote of 103 to 1. The North Carolina Senate leadership was busy with some very important tax and budget issues and ran out of time to consider it this session. NC JOBS is a pro-small business, pro-jobs, bipartisan bill that doesn't cost the taxpayers a single penny and which allows North Carolina residents the opportunity to invest in their own future and economy in a safe and fair way, so we are confident it can get through the Senate next session.

The good news is, the NC JOBS Act is alive and well. The bill will still be active in the Senate when the North Carolina Legislature convenes next year in what is known as the 'short session' beginning on May 14, 2014. That means we will still be able to implement this opportunity in North Carolina, but it will be delayed until then.

In the meantime, we would like to thank all of our many supporters and friends who have helped us with this effort over the last 5 months, including the team that created the bill, the excellent advice and assistance we got from many experts in the crowdfunding industry nationwide, and the thousands of enthusiastic small business owners, start-up community members, and potential North Carolina investors who followed our progress on the blog and provided us with encouragement. North Carolina has an excellent and rapidly growing start-up community and we are proud to be a part of it.

We would also like to thank the crowdfunding platforms that have expressed an interest in coming to North Carolina to get this program off the ground. We can still do that under the accredited investor crowdfunding models now coming on-line, so we would encourage our partners to consider proceeding with this step in North Carolina. Please contact us to discuss in more detail if you have interest.

We would also invite supporters who have interest in doing something similar in their own state to contact the NC JOBS Team and we would be glad to share our experience and advice. Studying this blog and using the links to the legislation would be a great place to start. Then let us know what questions you have. So far Georgia and Kansas have gotten it done, and we would encourage you to help investment crowdfunding become a reality across the nation.

Onward to 2014, and thank you for your support.

Best regards,

The NC JOBS Crowdfunding Team


Thursday, June 20, 2013

NC JOBS Act Passes NC House with Near Unanimous Support

The North Carolina House of Representatives today passed the NC JOBS Act (H680) with near unanimous bipartisan support by a final vote of 103 to 1. Next stop is the North Carolina Senate. The NC JOBS Act is an intrastate exemption which enables a new way to finance small business in North Carolina using investment crowdfunding.

 Support the North Carolina JOBS Act:

If you have not yet done so, now is the time to contact your state legislators with an email of your support for NC JOBS. It is very easy to do using the links we give below.
If you have any questions or comments, please email the JOBS NC Crowdfunding Team at jobsnc@nc.rr.com or contact Representative Murry’s office at murryla@ncleg.net.


Wednesday, June 19, 2013

North Carolina Technology Association (NCTA) Announces Support for the NC JOBS Act

NCTA
North Carolina Technology Association


June 18, 2013


The Honorable Tom Murry
North Carolina House of Representatives
16 W. Jones Street, Room 2121
Raleigh, NC 27601-1096

Re: H680 - NC JOBS Act

Dear Representative Murry:

Thank you for introducing H680, the NC JOBS Act of 2013, which enables a new form of financing for small business called investment crowdfunding. The North Carolina Technology Association is the statewide industry group for the tech sector, representing over 600 member companies that employ over 100,000 North Carolinians. We agree that the intrastate investment crowdfunding exemption as defined by H680 represents a great opportunity to fund new technology companies and create more jobs in North Carolina.

We like the fact that the exemption is a safe, fair, and easy to implement version of investment crowdfunding that is similar to the Reg D 506 funding model that is already used by hundreds of North Carolina start-ups every year. We also like the fact that the investor and small business protection requirements in the Act have been reviewed and enhanced by the North Carolina Secretary of State's Securities Division, the NC Bar Association Securities Committee, and crowdfunding industry experts including the NC JOBS crowdfunding team.

North Carolina has a reputation as a technology center and a great place to start a business, and the NC JOBS Act will make it even better. We urge all North Carolina legislators to support the NC JOBS Act.

Sincerely,

Brooks Raiford
President & CEO
North Carolina Technology Association
http://www.nctechnology.org/





Support the North Carolina JOBS Act:

If you have not yet done so, now is the time to contact your state legislators with an email of your support for NC JOBS. It is very easy to do using the links we give below.
If you have any questions or comments, please email the JOBS NC Crowdfunding Team at jobsnc@nc.rr.com or contact Representative Murry’s office at murryla@ncleg.net.


Tuesday, June 18, 2013

North Carolina's Council for Entrepreneurial Development (CED) Publishes Post about the NC JOBS Act

The influential and respected North Carolina Council for Entrepreneurial Development (CED) has published a guest post about the NC JOBS Act called North Carolina's Intrastate Crowdfunding Legislation by Mark Easley and Steve Reaser of the NC JOBS Team. The post provides a summary of the key features and benefits of NC JOBS.

About CED

CED's Mission: To identify, enable and promote high-growth, high-impact companies and to accelerate the entrepreneurial culture of the Research Triangle and North Carolina.

CED is a community of people inspired by entrepreneurship, and includes a wide range of members including start-up companies, more mature growth-stage firms, investors, service partners, academics, and individuals. All who wish to be part of this dynamic enterprise are invited to participate. CED  was founded in 1984, and later incorporated as a 501(c)3 nonprofit organization, to identify, enable and promote high-growth, high-impact companies and accelerate the entrepreneurial culture of the Research Triangle and North Carolina.  CED provides education, mentoring and capital formation resources to new and existing high-growth entrepreneurs through annual conferences, forums, workshops and programs on entrepreneurial management and finance.

Support the North Carolina JOBS Act:

If you have not yet done so, now is the time to contact your state legislators with an email of your support for  NC JOBS. It is very easy to do using the links we give below.
If you have any questions or comments, please email the JOBS NC Crowdfunding Team at jobsnc@nc.rr.com or contact Representative Murry’s office at murryla@ncleg.net.

Thursday, June 13, 2013

Crowdsourcing.org Publishes an Overview of the NC JOBS Act

The popular and influential crowdfunding industry website crowdsourcing.org has published a post about the NC JOBS Act called A Look at North Carolina's Intrastate Investment Crowdfunding Legislation. The guest post was written by Mark Easley and Steve Reaser of the NC JOBS Team, and provides a very good summary and overview of the key features and benefits of NC JOBS. Crowdsourcing.org is a respected and excellent source for information and news on crowdsourcing and crowdfunding from around the world.

Support the North Carolina JOBS Act:
If you have any questions or comments, please email the JOBS NC Crowdfunding Team at jobsnc@nc.rr.com or contact Representative Murry’s office at murryla@ncleg.net.

Friday, June 7, 2013

Smart Money Entrepreneurs Becomes the First Investment Crowdfunding Platform to Announce Support for NC JOBS Act

Here is the first formal announcement by a major investment crowdfunding platform pledging their support for the NC JOBS Act. Jeremy Andrews is the CEO of Smart Money Entrepreneurs (http://sme.vc), based in New York City, which specializes in equity and debt crowdfunding campaigns. Jeremy has pledged to create a fully compliant NC JOBS website which will allow North Carolina startups and existing businesses to use investment crowdfunding to finance their business with the help of North Carolina investors. In addition, Jeremy has some exciting news regarding a new crowdfunding oriented incubator he plans to open soon in the Raleigh/Durham area called Match Capital. Thanks to Jeremy and his team for partnering with North Carolina.

June 1st, 2013

To: Representative Tom Murry
NC House of Representatives
16 W. Jones Street, Room 2121
Raleigh, NC 27601-1096

From: Jeremy Andrews
Founder and CEO, Smart Money Entrepreneurs
http://sme.vc

Why We Support the NC JOBS Act of 2013
and Why NYC Entrepreneurs Are Calling North Carolina Their New Home

Dear Representative Murry:

I am contacting you to express my support for the NC JOBS Act of 2013 which enables a new form of financing for small business called investment crowdfunding. I am pleased to announce that my investment crowdfunding company, Smart Money Entrepreneurs, is ready to move forward with our plans to provide both equity and debt crowdfunding services to North Carolina as defined by NC JOBS.

A couple of weeks ago, I had the privilege of traveling to North Carolina to meet with members of the NC JOBS team as well as several prominent entrepreneurs in the Raleigh/Durham area.  While the area is well known for its sustained entrepreneurial growth over the years, I traveled to the state not knowing what to expect.  I must admit, it can feel as if New Yorkers are surrounded by a bubble, unaware of any events or activities that happen to take place outside the city.  It is no surprise that many entrepreneurs I have spoken with over the past few months were excited about coming down to Raleigh/Durham, but knew little about the entrepreneurial activity beforehand.

The Raleigh/Durham entrepreneurship ecosystem is alive and well, and has been for quite some time.  According to Forbes, Raleigh/Durham is #2 of the top 25 places to “Launch A Career” and the best place for female entrepreneurs.  While I read about what Raleigh/Durham had to offer, seeing it first hand was absolutely incredible.  Granted Raleigh/Durham has a history of hosting great companies like IBM, Cisco, SAS and RedHat in their state, and now many startup communities are sprouting up and startups are thriving here.

Besides enjoying the beauty and majesty of the state, the goal of my trip was to better understand how SME and Match Capital could work with North Carolina as you prepare to pass the NC JOBS ACT.  To recap, the federal JOBS Act was passed on April 5, 2012 by President Obama with the intention of bringing much needed capital to startups and small business.  While sites like Kickstarter and Indiegogo were able to operate legally before the JOBS ACT was signed into law, sites like SME and Match Capital that allow unaccredited investors to put capital in a business for an equity or debt have been denied this privilege since the 1930’s.

At SME and Match Capital, we always believe that the implementation of the JOBS Act could and should ultimately be offered on a state by state basis.   Currently four states, Kansas, Washington, Georgia, and North Carolina have either passed or are in the process of passing legislation and exemptions allowing unaccredited investors to invest.

I am also pleased to announce that we will soon be opening a facility in the Raleigh/Durham area for Match Capital, our new crowdfunding incubator. When we started Match Capital early this year, our goal was to help great entrepreneurs get the funding they needed to create jobs and foster innovation and economic growth.  We believe it is up to the entrepreneurs in the state of North Carolina to show the rest of the country that great startups are employing people, creating economic wealth for the local NC community, and fostering real innovation in a variety of high growth industries.  Creating a safe environment in which the NC community can fund startups to foster this growth is the main focus of Match Capital and SME.  As we look to break ground this summer in NC, we wanted the crowd to become heavily involved with Match Capital, and have set up a crowdfunding campaign here.   With the help of the crowd, North Carolina will become the premier state in the nation allowing unaccredited investors to place capital into startups via equity and debt.

We are currently recruiting some of the best entrepreneurs from NYC and California to come to North Carolina to be part of this crowdfunding process with us.  At SME and Match Capital, we are excited about bringing the first successful investment crowdfunding deals in the US to North Carolina and appreciate your support of this innovative movement.

Sincerely,
Jeremy Andrews

Jeremy Andrews is the Founder of Smart Money Entrepreneurs (SME), an equity/debt crowdfunding platform and is also the founder of Match Capital Ventures, a crowdfunding incubator in Raleigh/Durham, NC.

Jeremy also created a blog post about NC JOBS.

Trenia Today is the owner and founder of Trenia Today International Inc., a consulting and coaching firm specializing in helping small business owners and entrepreneurs benefit from digital marketing practices.

You can find out more about SME and Match Capital by going to: SME.VC  or MATCHCAPITAL.VC
You can connect with Jeremy and Trenia on Twitter or Facebook

Support the North Carolina JOBS Act:
If you have any questions or comments, please email the JOBS NC Crowdfunding Team at jobsnc@nc.rr.com or contact Representative Murry’s office at murryla@ncleg.net.