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CROWDFUNDING The New Way to Raise Capital. HOW TO FUND NEW BUSINESS VENTURES? 1.Bootstrap Capital (Your Own Money) 2.Investors (Other People’s Money)

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Presentation on theme: "CROWDFUNDING The New Way to Raise Capital. HOW TO FUND NEW BUSINESS VENTURES? 1.Bootstrap Capital (Your Own Money) 2.Investors (Other People’s Money)"— Presentation transcript:

1 CROWDFUNDING The New Way to Raise Capital

2 HOW TO FUND NEW BUSINESS VENTURES? 1.Bootstrap Capital (Your Own Money) 2.Investors (Other People’s Money) Debt Instruments Equity Instruments

3 USING OTHER PEOPLE’S MONEY REQUIRES “SECURITIES” (A Highly Regulated Industry) 1.Registered Securities 2.Securities Exempt From Registration Regulation D Securities Rule 504, 505, 506 Exemptions Limitation on # of Investors NO PUBLIC SOLICITATION

4 MEANWHILE, ON THE INTERNET People start raising capital for projects Social Media makes it possible to Raise money from Many People Each making small contributions CROWDFUNDING WAS BORN 2008 “Create-a-Fund” launched 2009 Musicians, filmmakers, inventors popularize Crowdfunding

5 BUSINESS NOTICES BuyaBeerCompany.com2010 The goal -- $300,000, Pabst Brewing Company Pledgers could follow the fundraising on the BuyaBeerCompany website. If $300 million in pledges were received the “pledgers” would receive a “crowdsourced certificate of ownership,” and beer of a value equal to the amount pledged. SIX MONTHS 5 MILLION INVESTORS $200 MILLION

6 GOVERNMENT NOTICES JOBS Act of 2012 (“Jumpstart Our Business Startups” Act) Title 3 “Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure Act” CROWDFUNDING

7 CROWDFUNDING ACT Allows exemption from registration if: 1.Limitation on total investment of $1M/12 months 2.If investor has annual income or net worth less than $100,000 – limit of $2k or 5% of income or net worth (increased to 10% if more than $100,000) 3.Through a registered broker-dealer or a funding portal that complies with requirements.

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