Showing 43 posts in Crowdfunding.
Inspiration Arises From Disaster: A Film Project Over a Decade in the Making
The ongoing pandemic has wreaked havoc on the film industry, with most theaters shut down in 2020. Even now, many blockbuster films have gone straight to streaming services.
One local filmmaker's vision began nearly a decade before the COVID pandemic. It all started with another tragic disaster, but from that disaster, a story unfolded and inspired a film project. Read More ›
Categories: Crowdfunding, Distribution, News
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Do I Need a Private Placement Memorandum to Raise Investment Capital?
The short answer is that it depends, but it is usually advisable and sometimes required. Let’s dig deeper.
Initially, let’s discuss what a PPM is. A PPM is a document that discloses information regarding the company that is seeking to raise investment capital. In some ways, it is like a business plan, but with detailed additions for investment risk factors, securities law provisions, and the proposed terms of investment. PPMs go by a variety of names – including confidential information memorandums (CIMs) and offering memorandums. Read More ›
Categories: Crowdfunding, Tax, Venture Capital/Funding
Title III Crowdfunding: What is a Funding Portal?
In a previous blog post, we discussed the key highlights of the new Title III crowdfunding rules. In short, businesses are now permitted (subject to certain rules and restrictions) to use equity crowdfunding to offer and sell securities to non-accredited investors.
One of the key investor protections of Title III is that crowdfunding transactions must take place through an SEC-registered intermediary – either a funding portal or a registered broker-dealer. Broker-dealers are likely to be hesitant to serve as an intermediary in a Title III crowdfunding campaign. The reason is that broker-dealers are subject to extensive rules and regulations. Broker-dealers usually pass along their regulatory compliance costs to customers. However, Title III crowdfunding campaigns involve such small amounts (i.e., $1 million or less) that broker-dealers will likely find it unprofitable to serve the market. Read More ›
Categories: Crowdfunding, Venture Capital/Funding
SEC Finalizes Long-Awaited Title III Crowdfunding Rules
The long awaited SEC Title III crowdfunding final rules have arrived.
The new rules will open the equity crowdfunding gates to non-accredited investors. Non-accredited investors include individuals: (A) with a net worth less than $1 million, or (B) who have an annual gross income of less than $200,000 (or $300,000 together with their spouse). In other words, businesses will now be permitted to utilize crowdfunding to raise capital by selling their securities to “everyday folks.”
Below are some of the key highlights from the new rules. Read More ›
Categories: Crowdfunding, Venture Capital/Funding
Financing Your Vision
What does a startup entrepreneur need to know about financing a company? The entrepreneur needs to work with an adviser or accountant to create a realistic budget. Watch the video below to learn more about your options.
Categories: Crowdfunding, Startup, Venture Capital/Funding
Fraudulent Kickstarter Campaign Leads to First-of-its-Kind FTC Legal Action
A drink cooler that doubles as a blender and stereo system. A card game called “Exploding Kittens” for “people who are into kittens and explosions and laser beams and sometimes goats.” A motion picture starring Kristen Bell. These are a few of the inventions and initiatives that have received the most funding on Kickstarter, the popular crowdfunding site.
Kickstarter is an online platform that allows project creators to seek financial backing. If people like a project, they can pledge money to make it happen. Funding on Kickstarter is all-or-nothing - a project must meet its funding goal to receive any money at all.
I have previously written about the tax implications of Kickstarter campaigns here.
While there’s always a risk that a project won’t make it from concept to completion, most backers have an expectation that their monetary pledge will be used in good faith and for its intended purpose. Read More ›
Categories: Crowdfunding, Venture Capital/Funding
Crowdfunding 101
What is crowdfunding? Is it legal? Learn the response to these questions and much more in this short video clip:
Categories: Crowdfunding, Venture Capital/Funding
Seeking Equity Investment? Know the Rules
The term “offer” is broadly defined under the securities laws as "every attempt or offer to dispose of, or solicitation of an offer to buy . . . for value." An offer, even without completion of the sale of securities, can run afoul of the securities laws.
An interesting case from 2011 punctuates this point and demonstrates the risks of unknowingly violating securities laws. Two advertising executives hatched an innovative, although imprudent, plan to purchase Pabst Brewing Company by offering to sell shares on Facebook and Twitter to cover the $300 million cost of the transaction. The campaign, which may have begun as simply a publicity stunt, was wildly successful, attracting five million pledging $200 million. A bit too successful, it turns out.
The SEC soon took notice and halted the campaign via a Cease and Desist Order due to a violation of securities laws by the ad men. They failed to register the public offering with the Securities and Exchange Commission (SEC) and could not meet an exemption. A settlement was reached and the men, who never actually collected any money, paid a fine and agreed to stop selling shares to the public.
The SEC, which has an entire enforcement unit devoted to Internet surveillance, is paying increasing attention to online activity. By law, public offerings - online or otherwise - must be registered with the SEC or meet an applicable exemption before promoters begin to offer or sell shares. Read More ›
Categories: Crowdfunding, Venture Capital/Funding
Michigan Enacts Law Allowing Local Stock Exchanges
On October 22, 2014, Governor Snyder signed Public Act 355 of 2014 into law. The cardinal rule of securities laws is that a person cannot sell a security unless the security is: (A) registered, or (B) exempt from registration. Public Act 355 creates a new exemption for secondary sales facilitated by a Michigan Investment Market. Read More ›
Categories: Crowdfunding, Venture Capital/Funding
Kickstarter and Crowdfunding can provide much needed business funds – and a big tax bill
Kickstarter is a crowdfunding platform for creative projects. It has helped a wide range of people fundraise to help finance a variety of projects. Often time people overlook the tax implications to successful Kickstarter campaigns. Check out our Tax Law Blog post to learn more about the tax implications>
Categories: Crowdfunding, Tax
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