The curious case of crowdfunding rewards as dividends
The buyout of Oculus VR has renewed interest in the possibilities of securities crowdfunding. The tricky part of recreating the crowdfunding success of Oculus VR is to generate the same excitement as a rewards campaign within the bounds of a serious securities offering. In our previous post, CrowdCheck noted some of the issues that can arise when undertaking a […]
What if Oculus offered securities as well as rewards?
The Facebook acquisition of Oculus VR has brought a lot of attention to crowdfunding campaigns by early stage companies. Some of that attention has not been positive; even resulting in death threats to the Oculus VR founders and their families. Much of the more constructive criticism is based around the question of whether the 9,522 Kickstarter backers, who contributed $2,437,429 to […]
Oculus: Crowdfunding scam or crowdfunding success?
I don’t understand the reaction to Facebook buying Oculus by opinion writers. Much of it seems to misrepresent either what was expected to happen or the cause of what happened. For example, Joel Johnson, an early backer of Oculus on Kickstarter and writer for ValleyWag is disappointed his contribution enabled Oculus to obtain venture funding, leading ultimately to […]
CrowdCheck’s summary of intrastate crowdfunding offering exemptions
With the amount of attention that intrastate crowdfunding has been getting lately, we thought it would be important to highlight the key requirements, limitations, and conditions of those various state statutes and rules. You can find our summary chart here.
Intrastate crowdfunding offerings may not exceed 500 investors — unless you want to be an SEC reporting company
In recent months, individual states have been jumping on board the crowdfunding bandwagon by revising their securities laws to make it simpler for companies in their states to raise capital from individual investors over the internet. These are laudable efforts and will help small companies legally raise funds from outside investors. As other commentators and analysts have described, […]
Getting ready for seeking investment – Part 4: Keeping track of your company’s ownership
In our previous installments of our “Getting ready for seeking investment” series, we have talked about having the right corporate form, proper incorporation and remaining in good standing, and holding and documenting board meetings. The next step in order to be ready for investors is knowing how you are going to keep track of your ownership. Keeping track […]
No securities law violation is too small for the SEC
SEC Chair Mary Jo White is bringing the New York cop-on-the-beat attitude to the SEC’s enforcement of securities law violation. In a speech before the Securities Enforcement Forum on October 9, 2013, Chair White indicated that on her watch, the SEC will pursue enforcement in a manner not unlike that of New York City in the 1990s. […]
Bad actors! Bad actors everywhere!
Well, maybe. The SEC doesn’t like bad actors in securities offerings. Since finalizing its Disqualification of Felon and Other “Bad Actors” from Rule 506 Offerings, the SEC has copied and pasted (with a few differences) the same disqualification terms into its proposed rules for securities crowdfunding and proposed amendments to Regulation A. As a reminder, the disqualification works like […]
Do it right the first time: Defective securities offerings and crowdfunding
For those who are not interested in reading a long, complicated, legal-centric analysis of the impact of defective securities offerings and crowdfunding, here is the summary: Securities offerings that aren’t done properly have to be undone; fixing them is a process that is expensive, time consuming, difficult to do correctly under state law, and exposes […]
Getting ready for seeking investment – Part 3: Holding and documenting board of director meetings
Every major action your company takes—amending the articles of incorporation, hiring company officers, authorizing the issuance of securities, entering significant contracts, etc.—requires approval by your board of directors. Every state requires a corporation to have a board of directors: some may require multiple directors; some require that there be at least one director. The rules […]