Pages:
Author

Topic: U.S. CrowdFunding Bill - page 2. (Read 7280 times)

legendary
Activity: 2506
Merit: 1010
November 26, 2012, 02:14:31 PM
#47
Well, it is looking like it doesn't do a whole lot.

Quote
Typical KickStarter deals won’t naturally transfer to equity crowdfunding and the vast majority of startup founders won’t receive any help at all from the JOBS Act.

And even what little it does do, it doesn't look like it will be happening anytime soon (nonetheless January 3rd like many were projecting back when President Obama signed the bill in April):


Quote
JOBS Act rulemaking is likely to be put on hold or at least slowed down in the interim.

SEC Chair Schapiro to Step Down, Likely Delaying JOBS Act Crowdfunding
 - http://www.crowdsourcing.org/editorial/sec-chair-schapiro-to-step-down-likely-delaying-jobs-act-crowdfunding/21974

[Edit: On a positive note, Bitcoin-enabled equity crowdfunding platforms (none of which are waiting for the SEC rules) are now here and more are  being developed with at least one particularly good implementation arriving real soon now.]
hero member
Activity: 743
Merit: 500
November 23, 2012, 05:26:33 PM
#46
newbie
Activity: 56
Merit: 0
November 23, 2012, 03:26:38 PM
#45
S.2190 the CROWDFUND Act passed in the Senate this past week.

This is good information to know.  Thank you!

Stuff like these regulations by the state make my head want to explode. I cannot express in words how pissed I got when I read the OP.

hazek, I quoted your response because my point above speaks directly to it.

Im sure they will let you invest unimited funds into the government ie "political donations"

It shouldn't be that long before someone creates a Kickstarter/BitCoin for taking down corrupt politicians and CEOs.  Wouldn't take much; a crowdsourced Wiki [that requires people to cite their sources] that also creates a ChipIn-like BitCoin fund to pay the court costs and the attorneys' fees.  Any court-awarded damages could go directly back to the users who invested in that fund, in whatever proportion they invested.  People could actually profit from sorting out all the corruption among corporations and politicians.  I mean, we are in a target-rich environment there.

Never gonna work. They'll kill you first. Do you really think that Jones is going to let any of the Negroes in his plantation organize against him?
newbie
Activity: 56
Merit: 0
November 23, 2012, 03:19:48 PM
#44
And the CROWDFUND act has guaranteed that legal crowdfunding is a stillborn venture.

Tadaaaaa, the magic of government protectionism of existing schemes.
legendary
Activity: 2506
Merit: 1010
November 23, 2012, 02:40:52 PM
#43
what the fuck does the bill do? i want 1-3 sentences...


Well, it is looking like it doesn't do a whole lot.

Quote
Typical KickStarter deals won’t naturally transfer to equity crowdfunding and the vast majority of startup founders won’t receive any help at all from the JOBS Act.
[...]
The JOBS Act is headed toward disappointment. I expect the average deal size will be around $500,000. This is not bad in itself, but it leaves out in the cold most startups.

 - http://www.cringely.com/2012/11/17/jobs-act-crowdfunding-is-unlikely-to-help-most-startups
420
hero member
Activity: 756
Merit: 500
October 07, 2012, 04:57:47 AM
#42
saying indiegogo was illegal before this bill?

IndieGogo and KickStarter aren't today giving out equity.  They are donation-based.

But they did introduce this concept of kickbacks to the backer, which usually ends up being a form of pre-selling the product. 

KickStarter is backing away from that model. 

IndieGogo is moving foward as an equity crowdfunding portal.

Both of them though have essentially been enabling crowds to fund companies that might not otherwise have been able to get funding.

they give gifts and props from the sets
legendary
Activity: 2506
Merit: 1010
October 07, 2012, 04:57:01 AM
#41
saying indiegogo was illegal before this bill?

IndieGogo and KickStarter aren't today giving out equity.  They are donation-based.

But they did introduce this concept of kickbacks to the backer, which usually ends up being a form of pre-selling the product. 

KickStarter is backing away from that model. 

IndieGogo is moving foward as an equity crowdfunding portal.

Both of them though have essentially been enabling crowds to fund companies that might not otherwise have been able to get funding.
420
hero member
Activity: 756
Merit: 500
October 07, 2012, 04:47:33 AM
#40
what the fuck does the bill do? i want 1-3 sentences...

Basically it lowers the bar as to who can get equity funding.  

Some of the projects on KickStarter or IndieGogo would never have passed muster with banks or angel investors, yet when these people put their ideas out there, there were actual potential users around the country and around the world who thought it was a good enough idea to drop $20 or $50 or whatever to see the idea be designed, built and sold.

Today chances of you as an non-established entrepreneur getting funding are much higher if you have wealthy friends or family.  You aren't allowed to put out a sign asking the public to invest in your business.  Even with Crowdfunding made legal, that will still true about the sign but at least you can list your startup with a crowfunding portal which is where your pitch is made.

Instead of needing to persuade a few wealthy investors that your idea will be more profitable than the next guy's idea, instead you can pitch to people like yourself who might uniquely see the same value in what your startup creates.  And they don't have to be wealthy -- they can invest $20 if they want, and can be from anywhere in the country -- not just local investors which nearly all startup funding historically has come from.

saying indiegogo was illegal before this bill?
legendary
Activity: 2506
Merit: 1010
October 07, 2012, 04:43:43 AM
#39
what the fuck does the bill do? i want 1-3 sentences...

Basically it lowers the bar as to who can get equity funding.  

Some of the projects on KickStarter or IndieGogo would never have passed muster with banks or angel investors, yet when these people put their ideas out there, there were actual potential users around the country and around the world who thought it was a good enough idea to drop $20 or $50 or whatever to see the idea be designed, built and sold.

Today chances of you as an non-established entrepreneur getting funding are much higher if you have wealthy friends or family.  You aren't allowed to put out a sign asking the public to invest in your business.  Even with Crowdfunding made legal, that will still true about the sign but at least you can list your startup with a crowfunding portal which is where your pitch is made.

Instead of needing to persuade a few wealthy investors that your idea will be more profitable than the next guy's idea, instead you can pitch to people like yourself who might uniquely see the same value in what your startup creates.  And they don't have to be wealthy -- they can invest $20 if they want, and can be from anywhere in the country -- not just local investors which nearly all startup funding historically has come from.
420
hero member
Activity: 756
Merit: 500
October 07, 2012, 12:57:10 AM
#38
what the fuck does the bill do? i want 1-3 sentences...
legendary
Activity: 2506
Merit: 1010
October 05, 2012, 10:15:40 PM
#37
I think this S.E.C.  rooting around here might have something to do with this. Says they will not be done with the regulations till 2013 so we might be written in. Bad part about it is we really have no say in what they write.

Technological progress waits for no three-letter agency.



Though not every bit of technological progress slides by without getting tripped up by one.


Nefario has, without a shareholder motion and in violation of the bylaws and GLBSE ToS, decided to close down GLBSE.
[...]

He is also illegally using user deposits to pay for his lawyer.

[...]

Since Nefario refuses to give complete details about his legal concerns and he has been acting strangely, I feel that it is somewhat possible that Nefario is working under some sort of plea bargain and is gathering IDs for future prosecution.
legendary
Activity: 2506
Merit: 1010
September 26, 2012, 03:06:14 PM
#36
I think this S.E.C.  rooting around here might have something to do with this. Says they will not be done with the regulations till 2013 so we might be written in. Bad part about it is we really have no say in what they write.

Technological progress waits for no three-letter agency.
sr. member
Activity: 448
Merit: 250
September 26, 2012, 10:53:03 AM
#35
I think this S.E.C.  rooting around here might have something to do with this. Says they will not be done with the regulations till 2013 so we might be written in. Bad part about it is we really have no say in what they write.
legendary
Activity: 2506
Merit: 1010
September 26, 2012, 12:07:48 AM
#34
You said it passed senate? I looked here and it said its has not

See photo above where POTUS signed the JOBS Act with the crowdfunding ammendment. 

Getting the laws changed took about three years since they began (ironically, with a plea to raise $1,000 from the crowd to write a proposal to get a change in the laws to occur).

But there were about half a dozen attempts with the same aim, including the attempt to get the crowd to buy the Pabst brewing company ( BuyABeerCompany.com, which the SEC shut down).

Here's a great article on the history:

 - http://www.crowdsourcing.org/editorial/how-crowdfunding-and-the-jobs-act-got-started-told-by-the-guy-behind-the-big-idea/19288/500
sr. member
Activity: 448
Merit: 250
September 25, 2012, 08:55:03 AM
#33
Hey with all this stuff about the S.E.C I read this posts, You said it passed senate? I looked here and it said its has not http://www.govtrack.us/congress/bills/112/s2190

It was sent to Committee, that is where most bills die lol.
legendary
Activity: 2506
Merit: 1010
September 25, 2012, 06:33:36 AM
#32
KickStarter made some significant changes with what types of projects they will allow.

Basically, the more risky projects are no longer welcome on KickStarter.

If you have to use a drawing, CGI or animation to show your product, you aren't welcome at KickStarter -- photos of actual prototypes only,

If you are looking for speculative buying through KickStarter of your first production run, you aren't welcome.  One "reward" per backer.   KickStarter is no longer pre-selling but instead back to providing donation-based "funding".

The equity crowdfunding won't likely have such restrictions, but KickStarter doesn't want to be an equity crowdfunding platform so they needed to make it less possible that there will be "capital at risk" from "investment" into products that never materialize.

 - http://www.crowdsourcing.org/editorial/kickstarter-bans-project-renderings-adds-risks-and-challenges-section-/19431


There was a question asking about what Bitcoin-related crowdfunding exists.  The response:


For donation-based crowdfunding:

 - http://www.BitcoinFunding.com  (though the service is being run anonymously, and there are allegations of it not being legit)

There's also:

 - http://www.Propster.me
 - http://www.PirateMyFilm.com
 - http://www.Booster.io

"[Still] Coming soon"...

 - http://bitcoinstarter.com

and some day coming back:

 - http://www.BitcoinChipIn.com

P2P Lending:

 - http://www.BTCJam.com

Of course, the "equity" markets for equity-based crowdfunding:

 - http://www.GLBSE.com
 - https://en.bitcoin.it/wiki/MPEx#Stocks
legendary
Activity: 2506
Merit: 1010
August 24, 2012, 04:32:54 AM
#31
Quote
The SEC missed its second deadline for lifting the ban on general solicitation and has now postponed the meeting for a week. It makes one wonder if the JOBS Act (and the jobs that could be created through it) will be tangled in a sea of red tape.

 - http://venturebeat.com/2012/08/22/crowdfunding-delayed-again-blasted-as-a-top-danger/


Quote
The North American Securities Administrators Association (NASAA) today released its annual list of financial products and practices that threaten to trap unwary investors.

New Threats

Crowdfunding and Internet Offers.

The 2012 JOBS Act makes significant changes to the methods startup businesses and entrepreneurs may employ to bring their ventures to the investing market, and investors must be wary of the attendant risks. Also, many more rules and mechanisms must be put into place for those changes to actually take effect. For example, the relaxed rules governing registration of relatively small securities deals, public solicitation for private funds, and disclosure of information to investors over the Internet are not yet written. So, the JOBS Act provisions related to crowdfunding, a much-publicized method for startups seeking capital, are not yet available – and will not be until sometime in 2013 – to legitimate businesses. Even when the relaxed rules and registration exemptions are effective, they will not make investments in small businesses less risky – just more prevalent. And the JOBS Act provisions do not eliminate fraud, an unfortunate common feature of Internet securities activity.

Many states and provinces report a recent increase in active investigations or recent enforcement actions involving Internet fraud, and JOBS Act-triggered activity is likely to elongate this trend. Investors must remember that small startups are among the riskiest of investment categories under the best of situations. The crowdfunding and Internet investing marketplaces in North America will develop and undergo major changes in the next year, and investors should monitor this emerging capital formation community with a wary eye.

 - http://www.nasaa.org/14679/laws-provide-con-artists-with-personal-economic-growth-plan/


That first article was written by Jason Best and Sherwood Neiss (who together helped write the House bill that was passed in March, before it become part of the JOBS act that was signed into law in April.).  In June I had the opportunity to talk with Jason.  What he knew of Bitcoin was what was the general overall message fed by the online media so he was a little surprised to learn that there already was equity crowdfunding using bitcoins.

I got to describe briefly GLBSE and how it uses bitcoin as the trading currency, such that neither the exchange nor the asset issuer necessarily know who the investor is, including from which country the investor hails.  When I explained that the cost to IPO was about $50 (BTC/USD was $6 at the time), he appeared to be amused.  When I then explained that there are even assets issued where the issuer is psuedonymous, that's when it even went past incredulity into annoyance.

I had purposely mentioned how this space had already moved well beyond what the JOBS Act (U.S. Equity-based Crowdfunding law) would permit.  I pointed out some contrasts.  With the equity crowdfunding law, Shares purchased are locked up for one year (except for sale back to the issuer or to an accredited investor).  Those investors cannot trade the equities they own on a secondary market during that lockup.

Another contrast is that the with the JOBS Act, equities offered via crowdfunding in the U.S. can only be purchased by those from the U.S.  

I pressed Jason as to why foreigners were ineligible to buy crowdfunded shares and his response was something to the effect that it was already nearly too much of risk trying to get the congress members and staff to grasp the crowdfunding concept.  If the bill were to include secondary markets and foreign ownership, they might not have been able to get it passed.

So the earliest you are going to be able realize the gain on an equity that was crowdfunded is no earlier than when you can first sell it  ... in 2014 at the earliest.

There wasn't much of a response then when I had stated that this online cyberequities system with no phsyical presence in any country wasn't something waiting on U.S. rulemaking to reach completion nor was it going to be getting altered once the rules come out so that it is compliant.

In hindsight, perhaps the reason I didn't get much of a response was because it really doesn't matter.  Really.  These aren't shares of ownership of incorporated entities, nonetheless even U.S. entities.  You aren't at risk of little old ladies investing in them.  This is not real equity and not real money.

I think as long as it is kept  out of FarmVille where anyone would notice it wil be left alone.
legendary
Activity: 2506
Merit: 1010
May 29, 2012, 05:05:06 AM
#30
Interesting read.

Croudsourcing.org's Eric Blattberg interviews Jeffrey Rubin.  Rubin practices corporate securities law. In addition he is chair of the federal regulation of securities committee of the business law section of the American Bar Association.

Excerpts:

Quote
I think that, as a concept, crowdfunding is very compelling. Why shouldn’t a small entrepreneur be able to raise money without getting involved in a thicket of federal regulation? But on the other hand, if this becomes a playground for sponsors who will exploit the lack of regulation, then it becomes a very tainted marketplace. It’s going to remain to be seen — say, a year or two after [crowdfund investing] becomes a reality — whether the returns on crowdfunding will be compelling. It will be interesting to see what percentage of crowdfunded companies simply don’t thrive, and even those that do, to see how many of them actually justify the risk involved in the investment.

Quote
Many people have food to put on the table, kids to educate, mortgages to pay off, and I’m concerned that the prospect for these people losing everything in crowdfunding ventures is significant. You know, the whole reason the securities laws are in place is to offer investor protection. I’m concerned that we’re depriving folks of those investor protections.

Quote
The other side of the coin is you’ve got a company that’s not bankable, has no history, that’s got a good idea and the people are ethical, so what are they to do? Why embroil them in a ton of red tape in order for them to raise money? I’m sympathetic to that, too.

Quote
After a year or two, if 95 percent of the companies that raised money crowdfunding are either insolvent or otherwise not operating, then it will turn out to be a pretty significant scam. I know that, in that instance, people will turn to the SEC and say, “What were you doing?”

 - http://www.crowdsourcing.org/editorial/the-dangers-of-crowdfunding-a-jobs-act-discussion-with-jeffrey-rubin/15030
legendary
Activity: 2506
Merit: 1010
May 20, 2012, 08:01:56 PM
#29
Here's an article from a Canadian news source, lamenting that they have not yet started down the equity crowdfunding road:

 - http://www.theglobeandmail.com/report-on-business/small-business/digital/web-strategy/crowdfunding-the-equity-divide-between-borders/article2433403/
legendary
Activity: 2506
Merit: 1010
April 15, 2012, 05:53:49 AM
#28
Public comments may be submitted here:
 - http://www.sec.gov/spotlight/jobsactcomments.shtml

The comments do require name and e-mail address and those are disclosed publicly, so keep that in mind if you are submitting anything.

I think I now understand why there was this understanding that "shares can't be sold" within the first year.  It might have to do with staying under the 500 unaccredited shareholders restriction.    So if you  were to start selling your shares to others in the public it wouldn't take long that in total there would be more than 500 unaccredited investors, and then certain (restrictive and expensive) reporting requirements come into being.

The expectation then is that the shares will be issued as being non-transferrable.
 - http://1billionangels.com/2012/04/13/summary-of-april-11-sec-panel-discussion-on-the-jobs-act/

Obviously, even when crowdfunding in the U.S. does start happening next year, it will not look like what investors and companies really want it to be.
 
Pages:
Jump to: