Thursday, November 27, 2014

Jobs Act to simplify capital raising boosts crowd funding

By Financial Times - Tracy Alloway
The Nasdaq logo is seen on the exterior of the Nasdaq MarketSite in New York, in this April 2, 2013©Brendan McDermid/Reuters
Nasdaq: going for its own slice of the private market
On a cloudy day in October, dozens of crowdfunding professionals gathered at a hotel in central San Francisco to discuss the up-and-coming sector. More than 150 years after thousands flocked to the US west coast to prospect for precious metals, crowdfunding is presenting another gold rush of sorts.
Buoyed by new US regulation and the advances of modern technology, crowdfunding platforms are developing momentum and potentially providing investors with hefty returns.
“People in this room are going to make a lot of money,” Mark Roderick, a lawyer who specialises in crowdfunding and who sponsored the San Francisco gathering, told the assembled throng.
To their supporters, such platforms represent the democratisation of a financial sphere hitherto reserved for professional investors. To their detractors, they are a lightly regulated minefield rife with the potential for fraud.
The incumbent financial institutions – particularly the big stock exchanges that have dominated equity-raisings – view the rapidly evolving crowdfunding landscape as providing both competition and opportunity.
Kickstarter and Indiegogo, which have used the power of the internet and social networks to create a place where people can donate money to start-ups and other projects, are perhaps the best-known platforms.
In places such as San Francisco, the crowdfunding possibilities are potentially limitless, with myriad loans, debt and land purchases up for grabs.
The effects of the “Jumpstart Our Business Startups” legislation passed by US lawmakers in 2012 are likely to increase the popularity of such crowdfunding portals substantially.
Known as the “Jobs Act”, the new law is meant to simplify the complex web of rules that govern US capital raisings and securities sales and will allow equity and debt raising to take place on crowdfunding portals.
Crucially, the act paves the way for platforms such as Kickstarter to move away from their traditional model of exchanging money for small gifts and allow donators to take equity stakes in the projects they are funding.
Yet large swaths of the act, including the provision that would allow crowdfunding platforms to raise equity, have yet to be implemented by the US Securities and Exchange Commission. The SEC appears to be concerned that loosening securities laws could lead to a wave of crowdfunding platforms with the potential to defraud investors.
In the meantime, the pillars of the Jobs Act that have been finalised have so far proved to be an opportunity for large stock exchanges, which are using them to augment their bread-and-butter business of facilitating public listings.
Under the Jobs Act, the number of shareholders a company is allowed to have before being required to register its stock with the SEC has been raised from 500 to 2,000.
The act has also lifted a long-time ban on “general solicitation” of private placements – a rule that limited certain deals to a select group of professional, or “accredited”, investors.
Sensing the winds of change, both Nasdaq OMX and the New York Stock Exchange – the two biggest US exchanges – have created their own private market offerings to take advantage of the changes introduced by the Jobs Act. NYSE has invested in ACE Portal, a platform that connects investors, broker-dealers and private companies, to help capture its own slice of the growing private market. Nasdaq created Nasdaq Private Market, or NPM, earlier this year.
“Companies are definitely staying private longer,” says Jeff Thomas, NPM vice-president of sales. He estimates that during the late 1990s, companies would wait three to four years from founding to listing; now they might remain private for as long as a decade.
As for longer-term disintermediation by crowdfunding platforms once the entirety of the Jobs Act is implemented, most financial industry professionals are hopeful that the emerging industry will complement their existing business rather than disrupt it.
Peter Williams, chief executive of ACE Portal and a former investment banker, says: “Theoretically there is a risk, but there is a lot that incumbent investment banks do – it isn’t just matching investments with investors.” He adds that banks are responsible for performing due diligence, managing regulatory issues and sourcing transactions.
In San Francisco, home of Silicon Valley and its army of venture capitalists, the sense of excitement over crowdfunding possibilities is palpable. Yet there is concern that a nascent industry could be tainted by a few bad apples.
“I’m going to ask you, as you go out and crowdfund, just to bear in mind these risks,” Mr Roderick said at the gathering. “We can all help make it work and, conversely, if there are bad actors, we can really ruin it.”

Thursday, October 2, 2014

Stelios launches £1m crowdfunding campaign for property start-up, easyProperty

Sir Stelios Haji-Ioannou is hoping to raise £1m from armchair investors to launch his new online estate agent

Sir Stelios Haji-Iannou has launched a new crowdfunding campaign to raise £1m in start-up capital for easyProperty, the latest venture in the easyGroup portfolio of companies, which aims to change the way people buy, sell, let and rent property.
Prospective investors have two weeks to invest the total amount in exchange for a 1.5pc stake of the firm. This results in a price per ordinary share of approximately £7.13.
easyProperty is a new online estate agent concept from the Greek-Cypriot billionaire, who founded low-cost airline easyJet in 1995. With this start-up, Sir Stelios is attempting to challenge the industry incumbents by offering unbundled, individually priced property services at huge discounts.
Users will be able to pick and choose from a range of easyProperty services, including advertising on property portals, professional photography, tenancy agreements, accompanied viewings, as well as mortgages, insurance and conveyancing, and pay a single one-off fee with no admin charges or commission.
Sir Stelios has teamed up with Robert Ellice, formerly of estate agency Clarke Hillyer, to bring the new venture to market.
“Traditional agents have got to wake up to the modern world – it’s adapt or die,” Mr Ellice, who is chief executive of the new company, has said.
easyProperty will launch across the UK later this month. It joins existing player Zoopla, which is attempting to wrest control from traditional estate agencies.
The service will initially focus on lettings before expanding the offering to sales in the summer of 2015 and then expanding internationally across Europe.
With 10,000 properties already pre-registered, the site aims to be letting around 4,000-5,000 homes a month by the end of this year.
Alongside the Crowdcube investment round, easyProperty is also fundraising for a further £6.5m from private investors. The business raised £4.5m in February of this year to fund initial development.

Thursday, September 4, 2014

Kickstarter's cooler crowd funds $13,000,000

The  COOLEST is a portable party disguised as a cooler, bringing blended drinks, music and fun to any outdoor occasion.

A 21st Century Cooler? It's about time!

Regular coolers are boring, break easily and are a hassle to haul around just to carry the ice. The COOLEST cooler is 60 quarts of AWESOME packed with so much fun you'll look for excuses to get outside more often.
Maybe you want to use the built-in ice crushing blender to whip up some margaritas or smoothies on your next boat trip or tailgate?

Maybe you just want to always have music on hand with the waterproof bluetooth speaker or want to recharge your electronics with the built in USB charger?

Monday, June 9, 2014

Kickstarter relaxes crowdfunding project rules

Crowdfunding site Kickstarter has relaxed its rules about which projects can be placed on its site.

By Leo Kelion Technology desk editor for BBC

Owlet Care's smart sock for babies was rejected by Kickstarter
Owlet Care smart sock
Indiegogo allowed cosmetics start-ups on its site when they were banned on Kickstarter 
However, weapons, drugs, pornography and political fundraising remain prohibited.The change ends outright bans on cosmetics, eyewear, electronic surveillance equipment and all health, medical and safety products.
The New York-based firm said it wanted to "simplify" its rules. The move may also help it compete against rivals.
Alternatives, including Indiegogo and UK-based GoGetFunding, ban illegal and deliberately misleading projects, but otherwise take a more relaxed policy.
"Indiegogo's 'open-door' policy does have some drawbacks but it has proved that crowdfunding has much wider applications than the rather narrow rules which Kickstarter has had until now," said Barry James, founder of the UK-based Crowdfunding Centre advisory service.
"It's also shown that it's open-by-default nature helps enormously in the evaluation of projects and the early detection of any attempted fraud."
However, Nesta - an innovation-focused charity that has researched the crowdfunding industry - warned that the move carried risks.
"Kickstarter has had a reputation for being one of the more difficult platforms to get on, and I think the effect will be bad news for its rivals in the short term as it starts picking up the sort of projects it rejected in the past," its senior researcher Liam Colllins said.
"But I'd expect this to lead to an increased failed-project rate and potentially more issues with late delivery of rewards.
"The question is whether its brand is strong enough so that it can afford this and still enjoy market dominance."
Software check
Kickstarter has attracted more than $1bn of pledges since it began operations in 2009.
Members of the public only hand over cash if a project hits its funding target. They do not get a stake in the business but may qualify for a reward, such as an early release of a product seeking cash.
The site makes money by taking a 5% cut of the total amount raised and also charges a payment processing fee.
Its chief executive Yancey Strickler blogged that the new rules are based on three principles that projects should abide by:
  • They must create something that can be shared with others
  • They must be honest and clearly presented
  • They cannot raise funds for charity, offer financial incentives or include any of the items on the slimmed-down "prohibited" list
In addition the firm is now offering creators the ability to launch their projects without having them approved by a member of Kickstarter's staff.
Instead the client can request that a software-based check is carried out to speed up this process.
This involves an algorithm checking that the rewards, funding goal and other information comply with the site's rules.
Mr Strickler noted that this option was only being made available to about 60% of projects now, but he intended to widen it to others soon.
He added that some clients might still prefer to speak to a community manager for tips on how to maximise their chance of success.
Rejected smart sock
One example of a product previously rejected by Kickstarter but accepted elsewhere is a smart sock for babies. The site rejected Owlet Care's device - which promises to transmit data about an infant's heart rate, skin temperature and position to an associated app - in 2012.
The start-up eventually raised more than $140,000 (£83,560) via a campaign using Selfstarter's crowdfunding platform before going on to obtain a further $1.85m from private investors.
Kickstarter stressed that its change in policy would not, however, be a free-for-all when it came to health-related tech.
"The new way to look at it is not about medicine/health/safety," spokesman Justin Kazmark said.
"But it's specifically [a ban on] any item claiming to cure, treat, or prevent an illness or condition - whether via a device, app, book, nutritional supplement or other means."

Friday, February 7, 2014

Woody Harrelson aims to replace paper with a $5,000,000 crowd fund

By James de Rin - Crowd Source Capital © – February10th 2014

Meet Matthew McGrath the dynamic CEO of Canadian based Optimize Capital Markets, a new equity crowd funding platform for projects, looking for a capital requirement from $3 - $5 million. With a drill down background in high net worth & private wealth management from his years at Bank of Canada his vision is to build over the next 3 years, the leading “equity crowd funding platform” on Canadian soil.

With the help of due diligence, and proven business models his pre-selected projects for funding are not pipedreams, pre-orders or legal begging.  For your minimum investment of $25,000 and in this particular instance aimed mainly at institutional investors you will receive stock in the company for a minimum investment of $250,000.

While Kickstarter and Indiegogo have conquered the rewards space of crowd funding, the equity crowd funding space is still up for grabs! There is a global race on to conquer “the financial disruption” of raising money for companies, through crowd funding in return for stock. Crowdcube has done well in the UK using a membership loop-hole for equity ownership through a crowd fund. 

But in the US and Canada, crowd funding markets dwarf the UK. There they have paved the way for the culture of crowd funding which is success centric for your idea or project!
One such project that went live on December 11th 2013 on OCM’s platform was Prairie Paper Ventures, Inc. It comes with good credentials, a Hollywood star, who has put his money where his mouth is. One, Woody Harrelson who is currently on HBO in True Detective and recently on our cinema screens in Hunger Games: Catching fire and in edgy films like Rampart. What you might not know about him is that he is an advocate for the environment. Not only is he a vegan but he is passionate about recycling and saving the planet. So much so that he started a company to do just that. After 15 years in business and now in profit, PPV Inc is looking for expansion capital.

OCM’s platform is looking to raise $5,000,000 for a 20% equity stake which values the company at $25,000,000.

Is it profitable and how did OCM get involved?  

Well with a presentation by Woody Harrelson, Jeff Golfman (see picture) a leading eco titan and Clayton Manness, a former provincial Minister of Finance for Canada to lend credibility and after careful due diligence by Matthew McGrath’s team they agreed that with PPV Inc’s track record, expansion capital was a good investment for the platform.  It’s only early days, but the response is positive. With contracts in place with companies like Staples and Unisource and a product made from waste straw into paper they are on track to raise their required capital. 

It’s ironic! On December 11th 2013, the LA Times had an Op Ed by Nicholas A. Basbanes on the paperless society how we were supposed to not use paper anymore...Yet as the LA Times said there are 20,000 identifiable uses of paper and International Paper has just increased their sales by $1.8 Billion to $27.8 Billion for 2012. The average American uses more than 748 pounds of paper a year.

What does Prairie Paper Ventures Inc do?

A private company based in Winnipeg and in business for 15 years. It makes paper from wheat straw 80% and 20% from recycled wood fiber. The paper's brand name is Step Forward Paper. It is produced in India because there is no eco mill in North America and Europe available. So PPV outsources production and acts as a distribution company for now. The business plan is to build a 100% tree free mill on the Prairies which will be eco friendly, without chlorine and eco friendly taking advantage of farm waste's millions of tonnes of wheat straw.

So with a timely launch and a disruptive business model Matthew McGrath aims to raise $5,000,000 from a minimum of 20 high net individuals. It’s an exciting time for raising finance through the crowd. 

Thursday, February 6, 2014

RealtyShares Enables Crowdfunded Property Investment With Bitcoin

 (@dannybradbury) | Published on February 4, 2014 at 19:52 GMT | InvestorsLifestyle,News

Crowdfunding real estate venture RealtyShares is now taking bitcoin-based investments.
The site, founded in June last year, enables small investors to get into real estate by pooling their money with others. The crowdfunding investments include family homes, commercial properties, and apartment complexes.
Each property is purchased under a separate limited company (LLC), and investors in the property are given a share of the rent on a monthly or quarterly basis, based on their investment. When the property is sold, they are also awarded a share of that profit.

CEO Nav Athwal said that the decision to take investments in bitcoin was driven by a significant base of non-domestic investors. 10-15% of the people investing in US property through RealtyShares are from outside the country.
The company signed with Coinbase as its payment processor, and integrated with its API. “Some international investors specifically asked for the feature,” Athwal said.
RealtyShares is treating the bitcoin investments as pure currency, and will not be holding a position in bitcoin. As it does with Overstock, Coinbase will immediately convert incoming bitcoin payments to fiat currency based on the current market exchange rate.
For the first million dollars in bitcoin-based investments, Coinbase is providing its conversion service for free. After that, it will charge a 1% conversion rate for all bitcoins sent to RealtyShares.
When transaction fees are charged, the crowdfunding real estate investment site will swallow the transaction fee itself, although depending on volume, it may reconsider that in the future, Athwal said.
There is no secondary market for shares, and investors are committed to a contract for at least six months, and up to seven years.
Returns on property investments will vary according to a number of parameters, including the type of property, and the type of investment. One option is to be a direct owner of a property, for which Athwal forecasts (but doesn’t guarantee) returns of 8-9% annually.
The other option is to take a debt position, in which you invest in the LLC rather than the property directly. The LLC then takes a mortgage or promissory note, which reduces the investor’s risk, as they are investing in the company rather than directly in the asset, Athwal said.
“We’re the first platform that lets you use bitcoin to invest in something other than bitcoin,” concluded Athwal. “Bitcoin is generally treated as an asset as opposed to a currency. We enable investors and BTC holders to put it into something tangible like real estate.”

Monday, December 9, 2013

The Next Big Thing: Where Crowdfunding and Investing Meet

written by Northwestern Mutual Voice - Forbes

It's what many investors dream about: getting in at the ground floor of the next Apple or Facebook. Thanks to the 2012 Jumpstart Our Business Startups (JOBS) Act and a recent decision by the Securities and Exchange Commission (SEC), some investors may be one step closer to uncovering such an opportunity through a new type of investing called equity-based crowd funding.
Crowd funding is part of a worldwide phenomenon that leverages the power of the Internet to pool the resources of people (the “crowd”) in support of a project. “There are two main models for crowd funding: donation- and equity-based,” said John Mroz, Investment Consultant for Northwestern Mutual Wealth Management Company. “Donation-based crowd funding (think websites like KickStarter and IndieGogo) is when people donate funds in exchange for tangible, non-monetary rewards, such as a copy of the company’s computer game or the promise of a future service or perk when the project is completed. In contrast, equity-based crowd funding is where investors contribute early-stage funding to a company in exchange for an equity stake in the business.”
Donation-based crowd funding has seen tremendous growth in the last few years. In fact, industry insider Massolution reported that crowd funding volumes are estimated to reach $5.1 billion in 2013, an increase of 89 percent from 2012. Many expect equity-based crowd funding also to take off.
Equity-based crowd funding took form with the 2012 passage of the JOBS Act, which expanded the ability of non accredited individuals to make direct investments in private companies at the earliest stage of their development through registered web-based portals. Up until this point, the only way to invest in these businesses was through a private equity group, an “angel” investor, or at the initial public offering (IPO) stage. However, before investors can access these web-based portals, the Securities and Exchange Commission still needs to approve final rules governing the operation of this newest capital market. Those rules are expected sometime in 2014.
A level of investor protection

As the proposed SEC rules stand now, entrepreneurs would be allowed to raise up to $1 million in a 12-month period either using a licensed broker-dealer or via a funding portal registered with the SEC. Investors with an annual net income or net worth of less than $100,000 would be allowed to invest up to 5 percent of that or $2,000, whichever is more, every 12 months. Investors with an annual income or net worth greater than $100,000 would be able to invest up to 10 percent of that every 12 months. Securities bought through crowd funding portals would have to be held at least a year before being sold.
Companies would be required to provide detailed information to investors so that they understand what they’re getting into; however, only those raising more than $500,000 would have to file more detailed information with the SEC. Even so, equity crowd funding isn’t without significant risks, including the chance that you could lose all or part of your investment.
Risks and barriers to success

“Equity-based crowd funding can offer investors the chance to own a piece of a fledgling company, but they’re often risky bets and can be more volatile than more established stocks because of how unproven these start ups tend to be,” said Mroz. “If the business succeeds, then its value goes up—and so does the value of that share of the business. But the converse also can be true. That’s why due diligence is key for investors.”
For many entrepreneurs, it can be easier to raise money for a project than it may be to make that project a success. Investors who are sold on a good idea but have no experience working with start ups could easily overlook a weak financial statement or a questionable business model.
“There are lots of examples of individuals who donated money to start ups that never managed to make the leap from concept to actual product,” concluded Mroz. “But even if the company had early success, investors may be surprised to find their original equity stake was diluted as more funding was required to take the business to the next level. What’s important to remember is that just a small number of these startups will be winners, leaving most investors holding stakes in companies that may end up having little or no value.”
For these and other reasons, Mroz suggests speaking with a professional advisor about equity crowd funding and its possible role as a speculative add-on to a sound financial plan. Specifically, he or she can explain prudent ways to invest in the broad opportunities this new and still untested investment opportunity may provide.
The Northwestern Mutual Voice Team is a group of professionals who share insights and opinions from experts and industry leaders across the enterprise. Our vision is to inspire others to take action and plan for their financial future through topics ranging from financial planning, retirement planning and distribution strategies, wealth accumulation and preservation, to leadership, philanthropy and innovation. 
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