Monday, March 30, 2015

When it Rains, It Pours! The End of the Crowdfunding Regulatory Drought?

Benji's Blog, by Benji T. Jones

Wednesday, March 25, 2015 was a BIG day for crowdfunding in North Carolina.  After months (and years!) of waiting, lawmakers and regulators took steps that may drastically change the way North Carolina companies raise capital.

NC PACES Act:  On Wednesday, the long-awaited North Carolina Providing Access to Capital for Entrepreneurs and Small businesses (NC PACES) Act (SB481) was introduced to the General Assembly by Senators Barringer (R), Hise (R) and Gunn (R).  This new bill, which closely mirrors the NC JOBS Act proposal that easily passed the House in 2013 but stalled in the Senate, would allow North Carolina businesses to access capital locally and flexibly.
Benji T. Jones

Whether sourcing capital from the “crowd” through the use of the internet or through a more traditional “friends-and-family” approach, under the NC PACES Act, a North Carolina company that satisfies certain disclosure and procedural requirements could raise $1 million in a 12-month period ($2 million, if it delivers audited or reviewed financial statements) from any North Carolina resident, irrespective of his or her investment experience or wealth, subject to a $5,000 individual cap.   

Regulation A+:  Also on Wednesday—nearly a year-and-a-half since proposing regulations—the SEC approved final regulations to implement Title IV of the JOBS Act.  Often referred to as Regulation A+, Title IV required the SEC to adopt rules to create a new exemption from registration under the Securities Act of 1933 for offerings of up to $50 million dollars in a 12-month period. 

Generally, Regulation A+ as adopted by the SEC creates a two-tiered exemption:
  •  Tier I covers offerings of up to $20 million in a 12-month period, including no more than $6 million of securities sold on behalf of selling security holders; and
  • Tier II covers offerings of up to $50 million in a 12-month period (an increase from the current $5 million cap), including no more than $15 million of securities sold on behalf of selling security holders.
Tier I and Tier II share many common requirements.  For instance, certain types of companies (e.g., bad actors, investment companies, 1934 Act reporting companies, blank check companies) are ineligible to use Regulation A+.  Companies will be able to use “test the waters” communications under either tier.  In addition, companies will be required to file detailed disclosure documents with the SEC (which will be subject to the SEC Staff’s review and comment) under either Tier I or Tier II.  Although there will be procedures available to make initial filings on a non-public basis, ultimately all filings will be made electronically through EDGAR— the SEC’s electronic database (as compared to the paper-filing requirement under the old Regulation A regime). 

While there are still many details to parse through (the draft adopting release is over 450 pages long), the most significant differences between the Tier I and Tier II are as follows:
  • State Preemption: Tier I offerings are subject to the registration and qualification requirements of state law, while Tier II offerings are not. Practically speaking, this means that companies undertaking Tier I offerings would need to file and submit disclosures for review in each state where an offering takes place. Although there is a relatively new coordinated review system in place that could make this process less arduous than in the past, companies undertaking a Tier I offering would nevertheless become subject to additional procedural and substantive requirements imposed by the states.
  • Audited Financial Statements: Tier II offerings must be accompanied by audited financial statements, a requirement the SEC did not impose on Tier I offerings.
  • Investor Caps: Individual investors who are not accredited investors (as defined under Securities Act Rule 506 for private placements) typically will not be permitted to invest more than 10% of the greater of their annual income or net worth in Tier II offerings. Investors subject to this limitation would be permitted to self-certify to this fact.
  • Ongoing Reporting Requirements: Tier II issuers will be required to file scaled annual, semiannual and current reports through EDGAR.
These are exciting developments in the ever changing world of raising capital.  Although we still await word from the SEC on final rules implementing “crowdfunding” under Title III of the JOBS Act, many crowdfunding supporters believe that Regulation A+ could offer an alternative way to access the “crowd.”  Issuers will be allowed to use “general solicitation” under Regulation A+ and anyone (including non-accredited investors) may invest, subject to certain individual caps.
 
Absolutely, we need both! 

NC PACES and Regulation A+ provide companies with more flexibility.  There are significant differences between the two regulations, not only in the amount of funds that can be raised but in the cost and amount of time involved in completing a transaction.  Pursuing a Regulation A+ offering would not make sense economically for companies looking to raise smaller amounts (in terms of hundreds of thousands of dollars as opposed to tens of millions of dollars).  We would expect to see significant efficiencies in dealing with one local regulator, rather than with the SEC and the regulators of other states scattered throughout the country. 

NC PACES is, by design, targeted for the smaller local company, looking to raise a lower threshold of capital quickly and efficiently each year. 

There is room and the need for both Regulation A+ and NC PACES.  These regulations share a common spirit.  They both recognize that smaller businesses are, in Wednesday’s words of SEC Chairman White, “essential to the livelihood of millions of Americans, fueling economic growth and creating jobs.”  And they share a common purpose: to smooth the way for smaller companies to access capital so they can grow their businesses, while providing strong investor protections. 

Look soon for more on each of these developments.

If you have questions or comments, feel free to contact me by email at: benjisblog@smithlaw.com

The content contained on this blog does not provide, and should not be relied upon as, legal advice. It does not convey an offer to represent you or establish an attorney-client relationship. All uses of the content contained in this blog, other than for personal use, are prohibited.


Wednesday, March 25, 2015

NC PACES Act Crowdfunding Bill Filed in NC Senate Today

The North Carolina Providing Access to Capital for Entrepreneurs and Small Business Act (S481, the NC PACES Act) was filed today in the North Carolina Senate. The primary sponsors of the bill are Senator Barringer, Senator Hise, and Senator Gunn. The NC PACES Act is a state securties law exemption that enables a new way to finance start-ups and small businesses in our state known as investment crowdfunding.

Senate Bill S481 is the stand alone version of the NC JOBS/PACES Act that our working group reviewed and recommended back in January, and that the Governor and Commerce Secretary Skvarla have been promoting. The working group consists of the NC JOBS/PACES Act private sector team of attorneys and crowdfunding business experts, the NC Secretary of State Securities Division, and the NC Commerce Department. This bill is based on the original NC JOBS Act, with some enhancements recommended by the working group.

The North Carolina model allows startups and small business to raise capital as debt or equity, but with a couple of new ideas allowed by the exemption. Some key features of the exemption:

  • The exemption allows accredited or non-accredited North Carolina resident investors to invest in equity or debt offerings from a North Carolina company provided the disclosure, reporting, registration, and limits described in the exemption are followed.
  • A North Carolina company is allowed to promote the offering to North Carolina residents via the web or any other method provided the disclosure, reporting, registration, and limits described in the exemption are followed.
  • A North Carolina company may raise up to $1M with non-reviewed financials, or up the $2M with reviewed or audited financials.
  • Accredited North Carolina investors may invest any amount up to the offering limit, and non-accredited North Carolina investors may invest up to $5,000 annually per issuing company.

This is a financial investment model that is well understood by the start-up investment and small business services community. The NC PACES Act is also compatible with crowdfunding initiatives at the Federal level and with those being implemented in other states. Please see the FAQs for additional information about the bill. You can also see the text of the bill and follow the progress of S481.

Please contact your State Senator and express your support for S481, the NC PACES Act investment crowdfunding exemption.




Monday, March 9, 2015

2015 Can Be the Year for Intrastate Investment Crowdfunding in North Carolina

Investment crowdfunding is expanding at an explosive pace.

Let's take a look at a few of the investment crowdfunding sites. AngelList has just announced their 2014 results, where 243 startups raised $104M from 2,673 investors. On EquityNet.com you can see over 130 crowdfunding projects listed just in the biotech-pharma-healthcare segment. And that is just one of the market segments, and an important one for North Carolina. Another site, crowdfunder.com, already has over 83,000 investors, over 20,000 companies raising funds, and over $150M in funds raised so far. And investment fundraising is not just for tech startups, it works well for small business too, as shown here on circleup.com where a whole variety of small businesses have raised over $30M so far. That means small business and startups in market segments all across North Carolina can benefit from investment crowdfunding.

The North Carolina JOBS Act whch was passed in the NC House last session is the basis for a new bill coming to the legislature this year. The new bill is called Providing Access to Capital for Entrepreneurs and Small business Act (NC JOBS/PACES Act) and enables a new way of funding startups and small business in our state known as investment crowdfunding. This new version of the bill was reviewed and approved by the NC Secretary of State Securities Division, the NC Commerce Department, and the NC JOBS/PACES Act business team, and is now awaiting action by the General Assembly. The FAQs and other posts on the NC JOBS/PACES Act blog  provide details and analysis of what the bill does and how it will work. The NC JOBS Act legislation (H680) passed the NC House by an almost unheard of bipartisan vote of 103 to 1 in the 2013 long session. Unfortunately it got bogged down in the horse trading politics at the end of 2014’s short session, and was passed as part of two different larger bills, but was not brought up in the Senate as a stand alone bill before they adjourned. So we will have to try again in 2015, but if everything goes as expected, this year will be the year that intrastate investment crowdfunding will become a reality in North Carolina.

Over the last two years 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 fourteen states have intrastate crowdfunding exemptions in place, and several other states are in various stages of considering the idea. Here is the list along with their maximum allowed fundraising cap and maximum allowed non-accredited investor cap.

Georgia ($1M, $10,000)
Kansas ($1M, $1,000)
Michigan ($1M, $10,000)
Wisconsin ($1M, $10,000)
Indiana ($2M, $5,000)
Alabama ($1M, $5,000)
Colorado ($1M)
Idaho ($1M, $5,000)
Maine ($1M, $5,000)
Maryland ($100k, $100)
Oregon ($250K, $2,500)
Washington ($1M, $2,000)
Tennessee ($1M, $10,000)
Texas ($1M, $5,000)

Crowdcheck.com has a nice comparison chart 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 North Carolina Congressman Patrick McHenry, the original creator and sponsor of the the Federal JOBS Act, supports state based solutions like the NC JOBS/PACES Act.

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

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 and Japan.

Meanwhile, several types of investment crowdfunding have taken off like rockets in 2013 and 2014. 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 on sites like LendingClub and Prosper, and a third is real estate crowdfunding, where local real estate development projects are funded by the community crowd on sites like Realty Mogul and our own Triangle startup Groundfloor.

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.com 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 PACES Act investment crowdfunding exemption will be an important part of making it happen.

We ask you to support the NC JOBS/PACES Act when it comes up in the new session in 2015.


Support the North Carolina JOBS/PACES Act:

Saturday, February 28, 2015

The NC PACES Act – Signs of Spring for Local Financings?

Benji's Blog by Benji Jones

Just last February I was writing one of my last posts, offering hope for a thawing of otherwise frozen capital markets through the use of the intrastate offering exemption in North Carolina.  All we needed was the General Assembly to pass a bit of legislation--the Jumpstart Our Business Start-ups (the NC JOBS Act) (or former H680).  But the grips of winter hit the General Assembly during a very long “short session” and the deep freeze set in on the NC JOBS Act.  The bill (which passed the House in 2013 with near unanimous support) failed to make it out of the Senate or anywhere close to the Governor’s desk for signature.

Those of us supporting the NC JOBS Act sat frozen as we watched other states spring ahead of us.  Over a dozen states now have adopted intrastate crowdfunding provisions.  Champions of the legislation, such as the NC JOBS Act original House sponsor, former Rep. Tom Murry, fell in the November elections; leaving questions of whether there was any hope for the future of intrastate crowdfunding in North Carolina.
Benji Jones

But the power of entrepreneurship in North Carolina cannot be stopped by (yet another) February blizzard.  Despite the snowy ground, there are signs of Spring for North Carolina entrepreneurs and small business owners local companies in need of capital:  the North Carolina Providing Access to Capital for Entrepreneurs and Small businesses Act (NC PACES Act).

Although there are several similar bills currently under consideration, NC PACES is expected to be introduced to the General Assembly soon.  Touted by Governor McCrory as key for promoting start-ups, small business, and innovation in our state, this new bill, which is expected to closely mirror the NC JOBS Act bill, allows North Carolina businesses to access capital locally and flexibly.  Whether sourcing capital from the “crowd” through the use of the internet or through a more traditional “friends-and-family” approach, the NC PACES Act facilitates investment by North Carolina residents in North Carolina companies.  The NC PACES Act smooths the way for smaller North Carolina companies to access funds from local investors so they can grow their businesses here.

Access to capital creates jobs and promotes innovation, leading to new business ideas and further opportunities for growth in our State—creating a cycle of abundance for North Carolina entrepreneurs, North Carolina investors and North Carolina workers.

Look soon for a more detailed discussion of the NC PACES Act.

If you have questions or comments, feel free to contact me by email at: benjisblog@smithlaw.com.

The content contained on this blog does not provide, and should not be relied upon as, legal advice. It does not convey an offer to represent you or establish an attorney-client relationship. All uses of the content contained in this blog, other than for personal use, are prohibited.

Saturday, February 7, 2015

CED and CNBC Recognize the Investment Crowdfunding Future

The North Carolina Council for Entrepreneurial Development (CED) today published an editorial encouraging the NC legislature to move forward with the NC PACES Act investment crowdfunding bill. CED President Joan Siefert Rose writes:

"If state lawmakers approve two new economic development initiatives, North Carolina would improve its ability to boost employment the old-fashioned way: by home-growing jobs through entrepreneurship." and "... the N.C. Providing Access to Capital for Entrepreneurs and Small Business Act (NC PACES), is a crowdfunding bill designed to help start-ups and small businesses raise much-needed early stage capital."

Read more here: http://www.newsobserver.com/2015/02/06/4536562_fashioning-public-policy-to-help.html

In addition, today marks the day that investment crowdfunding has gone mainstream in the financial community. CNBC has just launched a website dedicated to the crowdfunding industry, including several new indexes for tracking developments in various target markets for crowdfunding. This means that investment crowdfunding has now grown large enough and strong enough to be considered a legitimate alternative asset class for investors. Visit the CNBC crowdfunding page here:
http://www.cnbc.com/id/100807099


Monday, February 2, 2015

WRALTechwire to Host Investment Crowdfunding Event on February 17th

WRALTechwire will host an investment crowdfunding event on Tuesday February 17th called Executive Exchange: Crowdfunding in 2015. The educational event is about the investment crowdfunding opportunity in North Carolina and will feature a keynote address by NC Commerce Secretary John Skvarla talking about the importance of crowdfunding as a new way to finance startups and small businesses and create new jobs in North Carolina. Passage of a crowdfunding bill in this session of the legislature is a key part of the Commerce Department's Innovation to Jobs Initiatives. Other speakers will address ways that crowdfunding can be used to raise funds. This event will be of interest to entrepreneurs, investors, and startup community members who want to learn more about investment crowdfunding. The event will be held at the NC State University Club, and begin with a buffet breakfast, followed by speaker and panel presentations. Click here to register.

Executive Exchange: Crowdfunding in 2015
Tuesday Feb. 17th 8:00am to 10:30am
NC State University Club
4200 Hillsborough St, Raleigh

Agenda:

•8 a.m.: Breakfast and networking
•8:30 a.m.: Opening remarks from WRAL TechWire Editor Rick Smith and sponsors
•8:35 a.m.: Investor Mark Easley, “2015 Can be the Year for Investment Crowdfunding in North Carolina,” including an introduction to the new NC JOBS Act for the 2015 session. Easley also will discuss other funding opportunities such as angels and angel list.
•9 a.m.: The Money Hunt - Entrepreneurs on the hunt for funding; how NCSU and the state is already helping. (John Hardin, Department of Commerce, head of Science and Technology grant program; entrepreneurs Justin Miller of WedPics, who has raised money from non-traditional sources and VCs, and John McDonald, who is seeking backers for his barbecue sauce; Lewis Sheats, director of NCSU Entrepreneurship Clinic.) Moderator: John Hardin. Q&A, time permitting.
•9:35 a.m.: Keynote - Commerce Secretary Jon Skvarla discusses “NC Commerce Department Innovation to Jobs Initiatives” with an emphasis on the importance of the investment crowdfunding initiative to startups and small business plus Q&A.
•9:55 a.m.: The Legal View - Panel discussion from attorneys on the legal challenges of crowdfunding; What's happening at the federal level; the SEC's impact on crowdfunding in N.C. Panelists: Jim Verdonik of Ward and Smith, Mitel Patel of Wyrick & Robbins, and Benji Jones of Smith Anderson Law. Moderator: Mark Easley.
•10:15 a.m.: The Rising Importance of Alternative Funding - The Council for Entrepreneurial Development's Joan Siefert Rose recaps findings in recent CED study about where all startup funding comes from.

The Buffet:

A breakfast buffet will be served including: scrambled eggs, raspberry-Nutella stuffed french toast, home fries, turkey sausage patties, peach-strawberry salad and mini-cinnamon rolls with cream cheese icing.


NC Investment Crowdfunding Update - Governor McCrory and Commerce Secretary Skvarla Support Passage of a Crowdfunding Bill this Session

Governor Pat McCrory and Commerce Secretary John Skvarla both support the passage of a crowdfunding bill this session, and work on getting a bill passed is in progress.

The 2015 North Carolina legislative session has convened. The first new version of the bill has been filed called the Start-Ups Act/New Markets Tax Credit (House Bill H14) and is sponsored by Representatives B. Brown, Bryan, Jeter, Jones, and S. Martin. This bill has two parts. The first section is the same as the NC JOBS Act bill H680 investment crowdfunding exemption previously passed by the House. The second section is a tax credit bill called the New Markets Tax Credit Act of 2015. Here is the text of H14.

In addition, a companion bill has been filed in the Senate called the Jump Start Business Startups/New Markets Credit Act.(Senate Bill S35) It is sponsored by Senators Rick Gunn;  Ralph Hise;  (Primary) Andrew C. Brock;  Ben Clark;  Warren Daniel;  Joel D. M. Ford;  E. S. (Buck) Newton;  Louis Pate;  Ronald J. Rabin; This bill has two parts. The first section is the same as the NC JOBS Act bill H680 investment crowdfunding exemption previously passed by the House. The second section is a tax credit bill called the New Markets Tax Credit Act of 2015. Here is the text of S35.

A second crowdfunding bill has been filed, sponsored by Representatives Millis and Collins known as the NC Intrastate Private Capital Act (H63). This bill is a stand alone version of an investment crowdfunding exemption, which is very different from the original H680 NC JOBS Act. Here is the text of H63.

It is anticipated that additional filings of the crowdfunding exemption may also happen in the House and/or Senate, including a standalone version known as the NC PACES Act. Work on these alternatives is in progress.

More coverage can be found on WRALTechwire and at Triangle Business Journal.






Tuesday, November 18, 2014

The NC JOBS Act is Coming Back in 2015

The NC JOBS Act, which will enable investment crowdfunding of small businesses and startups by both accredited and non-accredited investors in North Carolina, is expected to make a comeback in the legislature in 2015. The bill passed the NC House in the last long session by a vote of 103 to 1, but got bogged down in this year's short session by politics and horse trading in the NC Senate. The NC JOBS Act team will be working with the legislative sponsors to re-file the bill in the new session in 2015.

The fall elections impacted the bill somewhat as the chief sponsor and House Commerce Committee Chairman Representative Tom Murry lost his re-election bid, but we are grateful to Representative Murry for all his efforts to put this bill together and get it passed in the NC House. The bill had 18 other sponsors in the House last time around and we anticipate broad bi-partisan support in the new session. We also encourage the NC Senate to take up consideration of the bill on its own merits this time. If the Senate can find a way to do that, the NC JOBS Act exemption should be available to help businesses and investors grow the North Carolina economy and create jobs in 2015.

Texas Launches Intrastate Crowdfunding

Yesterday a new intrastate crowdfunding exemption very similar to the NC JOBS Act went into effect in Texas, which is one of over a dozen states that have passed similar laws over the last year and a half. Texas is the largest state so far to implement the exemption, and like North Carolina, it is a good sized state with a strong tech sector, a growing small business sector, low taxes, and generally attractive business climate. The exemption will give Texas a great new way to help finance small businesses and startups, and create jobs. We need to implement this in North Carolina as soon as possible.

The Texas State Securities Board website has details about the Texas Intrastate Crowdfunding Exemption. It also has some interesting information for prospective investors.

A new press release from Front Page PR outlines some of the benefits for the Texas economy that will come from investment crowdfunding in that state. We can look forward to similar benefits here in North Carolina once the NC JOBS Act has been enacted.

November 17, 2014 07:35 ET

Front Page PR Targets New Texas Crowdfunding Portals

Offers Texas Crowdfunding Portals (TCPs), Texas Equity Private Placement Issuers & Texas Investors Guidance on the Best Strategies to Launch and Market Successful Crowdfunding Campaigns in Texas

AUSTIN, TX--(Marketwired - Nov 17, 2014) - Today a new Texas Crowdfunding Exemption Rule goes into effect that will give the state yet another financial tool to encourage more people with creative ideas to start new businesses in Texas. For the first time in 80 years, businesses will be able to sell equity shares in their business to more than 20 million unaccredited investors who live in Texas via new online Texas crowdfunding portals using general solicitation.

"Already armed with a zero income tax, low overall tax burden, sensible regulations and low housing costs, Texas is now armed with an even more powerful financial tool, Equity Crowdfunding," said Robert Hoskins, Front Page PR's Crowdfunding Director. "This new small business financing tool will be the key to helping businesses, entrepreneurs, and new startups in Texas raise venture capital by selling equity shares in their companies to Texas residents."

Similar to the way that powerful and exclusive Silicon Valley venture capital firms built their wealth during the 1990s by betting on high-tech startups, every legal resident in Texas can now legally become a micro venture capitalist by investing up to $5,000 per deal in local Texas startups and existing businesses. As crowdfunded deals begin to go public, the wealth and economic development that will be created in Texas will be hard to match.

Texas offer investors a wide variety of industries to choose from including apps, aerospace, aviation, communications, information technology, bio-tech, life sciences, clean-tech, energy, oil & gas, high-tech, video games, film, entertainment, music and many other promising industries.
Already home to 1.7 million small businesses, gaining access to a market of 20+ million new potential investors combined with the SEC's legalization of general solicitation will make Texas the best and easiest place in America to start a new business and raise venture capital.

And the seeds for a bumper crop of new Texas Crowdfunding Portals are already being planted. SeedInvest.com/Texas, TexasCrowdfunding.com, TexasEquityShares.com are already in the various stages of building their new crowdfunding portals and filing their applications with the Texas State Securities Board, but soon they will be harvesting their first round of Texas crowdfunded startups.

"SeedInvest has worked primarily with angel, venture capital and other accredited investors to match them up with startups in Texas such as Virtuix, based out of Houston," said Marc Nathan, SeedInvest's Managing Director of Texas. "But the Texas crowdfunding exemption will allow us to reach a much wider audience of unaccredited investors."

"There are many great companies that connect technology startups with sophisticated investors, but we're focused on working with businesses that want to build and grow with support from investors in their own backyard," said Amy Forsyth, Texas Crowdfunding's CEO. "To accomplish this goal we're taking a different approach than most and plan to focus on featuring local small businesses and early-stage companies that are often overlooked, undervalued and under capitalized."

"Our crowdfunding portal will be seeking high-tech crowdfunding equity issuers that are focused on Internet technologies, e-commerce, smartphone apps, digital properties and platforms, Software as a Service (SasS), etc.," said Dusty Brogdon, Texas Equity Shares' CEO. "We are seeking to serve mid-tier crowdfunding equity issuers with a minimum project value of $200,000+ with a long-term goal of taking the business public within two years."

"Texas is about to see a dramatic surge in demand for Texas crowdfunding portals, equity private placement issuers and investors. Front Page PR is ready to help these companies bring their products and services to the Texas marketplace," Hoskins continued. "Armed with the right community outreach programs needed to educate entrepreneurs and investors on the new crowdfunding rules, the possibilities for small business formation and growth in Texas will be limitless."

Front Page PR provides a portfolio of crowdfunding marketing communications services, which will be instrumental in bringing these new crowdfunding portals to life and helping them launch successful crowdfunding campaigns for their fundraising campaign managers, including:
  • Crowdfunding portal selection
  • Crowdfunding deal structure
  • Crowdfunding disclosure documents
  • Crowdfunding profiles and pitch videos
  • Community outreach strategies
  • Advertising campaigns
  • Email marketing campaigns
  • PR/media relations campaigns
  • Investor education programs



Tuesday, August 19, 2014

Intrastate Crowdfunding is Officially Dead in North Carolina - For Now

We are sad to report that the NC JOBS Act, which would have enabled intrastate investment crowdfunding of small businesses and startups in our state, is now officially dead. After the original crowdfunding bill (H680) passed the NC House last year by a vote of 103 to 1, the bill fell victim to political gamesmanship in the NC Senate. The Senate leadership tried repeatedly to attach other more controversial legislation to the NC JOBS Act, and each of those attempts failed either in the Senate or when sent back to the House. The final attempt today was a bill entitled H1224, which bundled together 6 other provisions for sales taxes and corporate welfare along with the JOBS Act, and was also tied to two other bills that would provide amendments to H1224 if it was passed. A very contentious debate about the other provisions in the bill raged over the last week between the Senate and the House, in committees, and in the caucuses, with the ultimate result a final vote today of 47-54 against the bundled bill. This was the final bill to be considered by the legislature for the current session, which will adjourn tomorrow.

The failure by the NC Senate to bring up H680 as passed by the NC House for a vote on its own merits represents a significant lost opportunity for North Carolina small businesses, startups, and everyday investors. Ever since 2008, it has been extremely difficult for small business to get funding from banks and other sources, and the NC JOBS Act would have enabled a significant new source of funding all around the state, all while not costing the taxpayers a dime. Many other states have already passed similar crowdfunding exemptions over the last year, and businesses in those states are beginning to benefit. North Carolina was an early leader in proposing this idea, and the merits of it are clearly understood by state governments around the nation. Unfortunately the North Carolina Senate seems to have little interest in helping the small business community.

The NC JOBS Act team would like to thank all of those who supported this effort along the way, including chief sponsor Representative Tom Murry, Speaker Tillis,  Lt Governor Forest, the many sponsors from the NC House, the Triangle startup community, small business around the state, and the over 15,000 visitors to this blog who were tracking this effort, emailing and calling the legislature with their support, and spreading the word about the opportunity. We appreciate everything you did to help out.

Perhaps after the election this year, the new version of the NC Senate will be a bit wiser next time around.



Wednesday, August 13, 2014

New Report Shows Crowdfunding Success Increases Follow Up Venture Funding

A new report from CB Insights, which covers the Venture Capital industry, shows that startups that have successful crowdfunding campaigns have a much better chance of attracting follow on venture funding. In a post about the report on WRALTechwire today, editor Rick Smith points out:

"Are North Carolina startups missing out on potential investments from venture capitalists because the state's general Assembly has yet to pass crowdfunding legislation?
A new report would indicate that's the case.
CB Insights, which tracks the venture capital industry, documents for the first time in a report out this week the importance of crowdfunding to startups not only for initial capital but also as a way to ignite interest from institutional investors. 
A copy of this report should be sent to every North Carolina Senator where the NC JOBS Act crowdfunding bill - passed overwhelmingly by the House - is caught up in a larger piece of legislation. (Our WRAL Capitol Bureau team says no action is expected anytime soon, by the way.)"

The post on WRALTechwire includes an excellent summary of the report. The full report can be read online.

We urge you to send the link to the WRALTechwire post and CB Insights Report to your NC Senator and the Senate leadership immediately, and ask the Senate to pass H680, the NC JOBS Act crowdfunding bill now!

Contact information for NC Legislators:

Representative Murry
 Tom.Murry@ncleg.net
 Office: 919-733-5602919-733-5602

Senator Berger
 Phil.Berger@ncleg.net
 Office: 919-733-5708919-733-5708

Senator Gunn
 Rick.Gunn@ncleg.net
 Office: 919-301-1446919-301-1446

Senator Meredith
 Wesley.Meredith@ncleg.net
 Office : 919-733-5776919-733-5776

Senator Rucho
 Bob.Rucho@ncleg.net
 Office: 919-733-5655919-733-5655

Senator Rabon
 Bill.Rabon@ncleg.net
 Office: 919-733-5963919-733-5963

Senator Apodaca
 Tom.Apodaca@ncleg.net
 Office: 919-733-5745919-733-5745