The day before Halloween the SEC gave entrepreneurs a treat by passing final rules to enact Regulation Crowdfunding. The SEC rules will allow the offer and sale of up to $1 Million of securities through crowdfunding over a 12 month period. Who is eligible? Any company except for the foregoing is eligible to use the…

Since the 19th century companies have used third parties, whether individuals or companies, in their fund raising efforts. Today, companies ranging in size from start-ups to private equity funds rely on finders to help them raise money. Overall, this has been positive for capital formation, especially on the lower end of things. Nevertheless, a minority…

The Securities and Exchange Commission released a compliance guide on Regulation A+ for small businesses last week. The guide is only useful for very sophisticated small businesses and their advisors. The compliance guide does provide some context and resources for the securities law practitioner. The guide can be found at: http://www.sec.gov/info/smallbus/secg/regulation-a-amendments-secg.shtml

Background In situations where companies are considering an investment form an institutional investor, the concept of liquidation preference will be certain to come up. The investor will want certain privileges and protections in exchange for making an investment in a start-up or early stage company. These privileges and protections can take many forms but the…

Fads come and go and some need to go. Convertible notes are one such fad. The idea sounds great to a startup. All you have to is issue debt to investors and if you cannot pay it back at maturity your debt converts into equity. You do not have to make any payments until maturity….

Overstock.com recently filed a registration statement with the SEC to register its securities for sale to the public. The novel part is the fact that the securities offered will be represented by digital stock certificates. According to the filing these are …”uncertificated securities, the ownership and transfer of which are recorded on a cryptographically-secured distributed…

Colorado’s governor signed an equity crowdfunding bill into law Monday. The bill allows intrastate equity crowdfunding of up to $5,000 for non-accredited investors. Under the new law companies have to disclose their business concept and risk factors to investors, and commit to spending 80 percent of crowdfunding money inside Colorado. More and more states are…

Recent articles and news coverage have demonstrated that there is a lot of confusion about what crowdfunding is and is not. To shed some light on this topic let’s look at the history of crowdfunding. History Crowdfunding as a concept and practice has been around since the late 19th century. Some might argue that it…

The Los Angeles Business Journal interviewed a few executives and early stage investors to get their reaction. The topic was crowdfunding rules and the new Regulation A+ from the SEC. http://labusinessjournal.com/news/2015/apr/12/capital-gain/?page=1&

Etsy, the online market place for crafts and hand- made items, recently filed a registration statement with the SEC as part of its IPO. Etsy’s IPO is shining a light of sorts on the whole issue of B corporation certification and maybe confusing people about the different types of corporate entities. B corporation certification What…

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