CrowdFund Newbie: Is Your MBE, DBE, or FBE Ready for Regulation Crowdfunding?
By Ambrose Moses, III
There has been much talk about crowdfunding being a game-changer for small businesses and the economy. Rules have been proposed by the SEC concerning Regulation Crowdfunding (i.e. Equity-based Crowdfunding). Under Regulation Crowdfunding the general public will be allowed to invest limited amounts in small, unregistered securities.
If you have not yet begun exploring and positioning your MBE, DBE, or FBE business to participate in equity-based crowdfunding you are late. You could be missing an opportunity to raise the capital your business needs to startup, grow, or increase sales without taking out loans or incurring more credit card debt. But, all is not lost. You still have time to evaluate, develop, and execute your plan for equity-based crowdfunding.
The JOBS Act set forth the framework for Regulation Crowdfunding and gave the SEC the power to set the specific rules for companies, investors, and crowdfunding portals.
Some of the key points are that 1) the
maximum amount individuals can invest in Regulation Crowdfunding offerings will range between $2K and $100K annually, 2) the transaction will be done via regulated, online intermediaries” (platforms), 3) companies offering and issuing the investment securities can raise up to $1 million per year, 4) issuers must follow rules that include limiting any discussion of their offering to the intermediary platform and completing and maintaining filings such as résumés, recent tax returns if any, investment risks, the expected use of the investment proceeds, and full financial statements, and 5) for issues of over $100K, the financials must be formally reviewed or audited by a CPA.
MBE, DBE, and FBE businesses could do well to take advantage of the opportunity by exploring and positioning their businesses to participate in “Regulation Crowdfunding”.
Ambrose Moses, III, is an attorney and crowdfund consultant. Email: info@MosesLaw.pro. Telephone: (614) 418-7898.