CROWDFUNDING

Outline Legal Issues How to of Crowdfunding

LEGAL ISSUES

Accredited Investors Meet certain minimum income or net worth value Trusts, corporations, or charitable organizations have certain minimum asset levels

JOBS Act Jumpstart Our Business Startups April 2012 Final rule approval October

JOBS Act Raise up to $1 million/year from anyone without having to do public offering Ordinary Investors can put up to $10,000 to SB that are not registered with SEC.

JOBS Act Remove prohibition on general advertising – Rule 506 Sales limited to accredited investors Document accredited investors

JOBS Act Rule 501 (Accredited Investor) Net worth >$1 million excluding value of primary residence Annual income >$200,000 in each of two most recent years; spouse $300,000

JOBS Act Review IRS forms past two years Written confirmation: –Register broker-dealer –SEC register investment adviser –Licensed attorney –CPA

Concerns Seem tailored to Wall Street versus startup community Strong penalties for unintended violations – Banned from fundraising for year

Concerns Keep filings confidential especially amounts raised for competitive reasons (Form D) Use third party to do SEC filings & act as data storage center for startups Startups always financing not set time frame.

Patents America Invents Act Major Change - First to Invent to First to File System –Date of application versus date of invention –Provisional Patent - Good Idea

HOW to of CROWDFUNDING

Are You Ready Its more than an Adventure; It’s a Job! Idea Shown the $$$ Will Flow-WRONG! Fees - YES Possible Penalties

Are You Ready Must be 18 years old Check to see requirements on U.S. Resident Major Credit Card or Debit Card May have to establish Amazon Payment Account

Are You Ready Research is the KEY Review past CF site projects CF Website will determine Yes or No to your project

Two Ways To Crowdfund Use existing CF sites Use your website & network

Product; Service; Event Casual observer find interesting Unique; different or value added Describe project in 20 seconds

Finances Research How Much You Need –Cost of Project –Cost of Rewards Promised –Don’t Forget Payment Fees Host Website Amazon

Finances Taxes Person changes mind to fund – Loss Revenue (10-20%) Other services Do Financial Projections!

Who Gives Friends & Families – NO Repeat Backers – NO <20% Average Pledge $30

Who Gives The Host Site is not where revenue grows from Create Network – “The Story” –Media –Unique Website for Campaign –Social Media

Duration 30-Day 45-Day 60-Day 90-Day

Duration Remember – Constant Communication –Reply to –Create Blog & Update –Respond to Facebook, Twitter, etc. –Getting media coverage –Update on Rewards –Update Video –168 Hours – Global

Campaign Start Mid Point End

Video Be Real Two – Five Minutes Get to Point in First 30 Seconds You or Friend Present It –Passion

Video Tech Shops Can Help –3-D Printing –Rapid Prototyping Show as much as you can: –Computer Model –Physical Prototype –Functional Prototype Can Use the 5 Senses

Video Avoid Using Copyright Materials Audio –SoundCloud –Vimeo Music Store –Free Music Archive Video –

Video Take Your Time Do It Right Don’t Forget To Say – How to Donate Goal:VIRAL New Videos Throughout Campaign

Video Facebook Twitter You Tube Linked In

Rewards Make sense & relate to project Awards at different payment tiers Value added or junk Did you figure into your costs

Rewards Did fans offer reward ideas Limited rewards Personal touch (i.e. Thank You)

Future Currently over 400 Websites Global

Future For Profits Non Profits Match Funding Will Lenders Adapt?

Reminder Market Research Finances Future Business Plan

Resources

Resources Non Profit

Resources Business – – –

Resources International – Create 2 nd Language – –

Examples Non Profit – Play For Profit – Manufacturer Product

KEEP IT SIMPLE!

Questions