What if I told you the only thing standing in the way of large-scale prosocial economic development was you?

What if I told you the only thing standing in the way of large-scale prosocial economic development was you?

Few people know about the potential of Investment Crowdfunding to save the middle class and bring back the unique character and charm of our individual states, cities, and towns.

Investment Crowdfunding is a newer tool that allows the American people to fund the innovations and enterprises they want to see in their communities and in the world.

Crowdsourcing itself is not new. Virtually every society has developed some type of crowd sourced solution to economic scarcity, such as micro-lending groups and cooperative business practices. But prior to a national model like Regulation Crowdfunding, it was difficult to have broad coverage of high impact solutions.

Today, we want to begin in earnest the discussion about the use of Investment Crowdfunding in our states, cities, and towns to bring about enterprise solutions and job creation from within those places. We are talking big. We are talking about a path to save the middle class on our own, community by community, without interference from Washington or Wall Street.

Our case study will be the newly launched Crowdfund Montana platform and the Pacific Northwest Rural Broadband Alliance (PNWRBA) offering.

Montana is known for many things: breathtaking vistas, a rugged can-do spirit, and really terrible internet service.

PNWRBA is a company that was co-founded by a native Montanan, Elvis Nuno, who returned home after receiving an education and professional experience in the telecom and wireless ISP industry. Elvis has specialization in network engineering, automation, and cloud engineering, and together with co-founders Kevin Mesiab and Jacob Dobie, is on a mission to bring affordable and reliable internet service to Montana and other rural states.

To kick things off, there will be an online launch of Crowdfund Montana and the PNWRBA offering on Wednesday, October 20th from 12 – 1 PM Mountain Time. Please join us for a discussion about taking our economic health in our own hands and a lively Q&A session. Click here to register.

 

Next, the Angels of Main Street Due Diligence Learning Cohort featuring Pacific Northwest Rural Broadband Alliance will be held on Mondays at 5 PM Pacific Time/8 PM Eastern Time starting Monday, November 1st to Monday, December 6th. Angels of Main Street Community Manager Amy Short, a successfully exited entrepreneur and investor, will host a series of interactive discussion sessions designed to take the mystery out of direct investing. This group learning opportunity will flow as follows, based on a 5-6 week schedule with one Zoom-based 90 minute meeting per week. Changes to the schedule will be made when necessary to suit the emergent nature of the group learning experience:

Week 1: Introductions: topic of due diligence, principles, methods, and introductions among members of the group

Week 2: Review of offering: Group goes through the offering together. All documents are available online at https://crowdfundmontana.com/campaigns/uqipv02

Week 3: Review of offering: Issuer (Pacific Northwest Rural Broadband Alliance) goes through the terms of the offering with the group and answers questions

Week 4: Review of offering: Securities lawyer and CEO of Crowdfund MainStreet, Michelle Thimesch, goes through the offering documents with the group and answers questions

Week 5: Group suggests further questions for issuer, and if ready, group wrap-up

Week 6: Additional answers to questions and group wrap up, if desired

There is no obligation to invest and the conversation is open to EVERYONE! Come join us and get inspired to direct your hard earned savings into the prosocial solutions you long for. Contact amy@jennykassan.com to join this inclusive learning cohort.

When it Comes to Investment Crowdfunding—Compliance Matters!

When it Comes to Investment Crowdfunding—Compliance Matters!

What to Know Before You Take the Plunge

The investment crowdfunding marketplace is growing faster than ever before, and is projected to grow by $196.36 billion from 2021 to 2025.

Unfortunately, industry watchers have observed an alarming level of non-compliance with the most basic rules of Regulation Crowdfunding by both companies raising capital and the platforms hosting the campaigns.

Non-compliance can result in regulatory enforcement action and/or investor lawsuits.  So if you’re considering dipping a toe into the crowdfunding world, compliance should be at the top of your list.

In 2016, the SEC completed its rulemaking process for Regulation Crowdfunding.  It suddenly became possible for a business to list an investment offering on a platform, and anyone in the United States could invest in the offering.  But before doing that, the business, as well as the platform, must comply with some basic rules of the road.

According to a recent analysis, only a small minority of offerings listed on Regulation Crowdfunding platforms are compliant!  

 

Crowdfunding compliance—what to watch for 

To offer securities under Regulation Crowdfunding, you must complete a federal Form C (also known as the offering statement).  The form takes about 60+ hours to properly complete and is designed to provide all the information investors need before deciding whether to invest.  Without this documentation, investors would essentially be going in blind.

A properly prepared Form C protects the business that is raising funds from future lawsuits from investors who claim they did not receive the information that was supposed to be disclosed.

In addition to the Form C, there are requirements for additional reports after you complete your raise.

Failure to comply with these requirements can result in private litigation—all of the investors in a non-compliant offering are entitled, at a minimum, to rescission.  In a rescission, the company must return the proceeds of the investment to the investor and pay interest.  The company may also be subject to enforcement actions by federal and state regulators.

If you fail to comply with all of the regulations, you create a potential liability for your company which would have to be disclosed to all future potential investors.

The effort of making sure you are compliant on the front end is well worth avoiding the potential nightmare scenarios if you don’t!

 

What to expect from a regulation crowdfunding platform

With compliance top of mind, it’s essential to seriously examine the level of compliance and transparency your platform of choice is practicing. 

At a minimum, here are a few helpful questions any investor or entrepreneur should ask before choosing a crowdfunding platform:

  1. What efforts are they taking to meet the regulatory requirements?
  2. Do they prepare the Form C for the companies that list on their platform?  If so, what is the training of the person that prepares it (is that person a lawyer)?
  3. If the platform prepares your Form C and it is found to be deficient, does the platform cover the resulting litigation and other expenses?

Compliance isn’t optional—it’s a must

As investment crowdfunding continues to grow, so do the concerns surrounding regulation and compliance and the likelihood that private lawsuits and public enforcement actions will become commonplace.

If you’re interested in connecting with one of our team members to discuss how we can support you with planning and implementing a compliant fundraising campaign, complete our Interest Form.

It’s Official!

It’s Official!

Things just got a lot easier for you if you are looking to invest or raise money via Investment Crowdfunding. The following is a summary of changes that went into effect on March 15 and will improve Investment Crowdfunding for both companies and investors:

  • The maximum amount that companies can raise each year is $5M, up from $1.07M.
  • The investment cap no longer applies to accredited investors. They are free to invest any amount they choose.
  • The formula for determining the investment cap for non-accredited investors has improved. If an investor has income or net worth below $107,000, the investment cap is the greater of $2,200 or 5% of the higher of income or net worth. If the investor has income and net worth above $107,000, they may invest up to 10% of the greater of income or net worth, up to $107,000.
  • A new ‘Test the Waters’ rule allows companies to solicit interest in an offering prior to the filing of the mandatory Form C.
  • The use of Special Purpose Vehicles is now permitted. This will be useful for companies that are concerned about having a large number of investors on their cap table.
  • The temporary relief measure allowing companies to raise up to $250,000 without the need for reviewed financials has been extended to offerings started before August 28, 2022.
  • The SEC has clarified that offline oral communications with investors are permitted providing the communications are compliant.
  • Communications about the terms of the offering may now include progress (% of goal reached, for example) in addition to the amount of securities being offered; the type of security being offered (debt or equity); the price of the securities; and the closing date of the offering. All communications must include a link to the campaign.

We Want You…

We Want You…

…to join Angels of Main Street!

It should come as no surprise that the power of our voices grows when we control where money flows. This simple fact is the reason that Angels of Main Street, an investment community that anyone can join, is working to move investment dollars to the people and communities that have been overlooked by the mainstream small business funding ecosystem. 

What makes us think that collectively we can shift massive amounts of money to women and BIPOC led companies? Believe it or not, 2020 was a game-changing year for Investment Crowdfunding, the most scalable alternative we have to venture capital. Investment Crowdfunding attracted $239.4 million in investments in 2020, up from $134.8 million in 2019. And it is predicted that the crowdfunders will invest at least $500 million in 2021.

While it is true that these numbers pale in comparison to investments made by venture capital firms in 2020 ($156.2 billion, up from $138.1 billion in 2019), venture capital funding went to only 11,000 companies with the average investment exceeding $14 million.

Even though the very wealthy are investing ever increasing sums in search of their unicorns, they are not expanding significantly into diverse founders and industries. This will be up to us.

Remember, virtually every adult can participate in Investment Crowdfunding while only about 8% of us are eligible to invest in a venture capital fund. If only 1% of the wealth held in stocks, savings, and retirement accounts were shifted from big banks and Wall Street, we would have a funding ecosystem worth hundreds of billions of dollars. Think of all the inequities we could reverse by simply democratizing what, and who, gets funding.

Angels of Main Street is the place to go if you are ready to dip a toe into investing directly in businesses you love.  We provide an educational curriculum and support our diverse community of investors to work together to make their investments count.

If you have money invested on Wall Street (which is where 99.9% of regular folks’ investments are), your money is not doing anything to contribute to the productive economy.  We would love to help you shift just a small percentage of your investment dollars to businesses that are making the world a better place, innovating, and creating community wealth.

We hope you will consider joining us!  Please click here to learn more and join now.

Leap Before You Feel Ready

Leap Before You Feel Ready

Last month, the third annual Conscious Company World-Changing Women’s Summit was held in Sonoma, CA. As Crowdfund Mainstreet co-founders, both Jenny Kassan and I were honored to each be named to the list of 43 World-Changing Women in Conscious Business for 2020.

The summit was attended by 250 female/women-identifying founders, CEOs, executives, and entrepreneurs involved with conscious businesses. The event focused on authentic conversations around two prominent themes: 1) listening to and trusting your instinctual wisdom as a woman and business leader, and 2) understanding, challenging, and overcoming the complexities of racism in business and beyond—both issues that are increasingly important as we challenge the status quo and take the concept of conscious business and conscious leadership to new heights. 

Confidence is an outcome of taking action, not a prerequisite for it.

The need for more women in business leadership is undeniable. Research and logic have long confirmed the fact that women have much to contribute to our companies and communities, but it can be daunting to fight the stereotypes and the patriarchy along the way to becoming the change we want to see in the world. Storied women leaders such as Missy Park of Title Nine, Tami Simon of Sound True, Cheryl Contee of Do Big Things, and Jane Wurwand of Dermalogica were in attendance and shared their experiences on finding their leadership styles and successfully growing their companies.  

Each of these women came to leadership in their own way, but all learned to listen to and trust their unique voices. All seemed to have an early grasp of the fact that confidence is an outcome of taking action, not a prerequisite for it. The message was clear—if you wait around until you have the confidence to make the changes that need to be made, you will surely perish in inertia. We cannot afford the loss of so many voices. A better way, as Jane Wurwand of Demalogia says, is to accept the fact that “You don’t know how to do something until the first time you do it. You didn’t come out as a baby knowing how to make a casserole—but you figured it out!” There is a freedom to fail forward and innovate when you adopt a beginner’s mindset. We will get to equality and inclusivity a lot faster if we learn to consistently leap before we feel truly ready.