crowdfunding . outline legal issues how to of crowdfunding
TRANSCRIPT
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Outline• Legal Issues
• How to of Crowdfunding
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LEGAL ISSUES
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Accredited Investors• Meet certain minimum income or net
worth value
• Trusts, corporations, or charitable organizations have certain minimum asset levels
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JOBS Act• Jumpstart Our Business Startups
• April 2012
• Final rule approval October 2013
• www.sec.gov
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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.
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JOBS Act• Remove prohibition on general
advertising – Rule 506
• Sales limited to accredited investors
• Document accredited investors
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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
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JOBS Act• Review IRS forms past two years
• Written confirmation:– Register broker-dealer– SEC register investment adviser– Licensed attorney– CPA
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Concerns• Seem tailored to Wall Street versus
startup community
• Strong penalties for unintended violations – Banned from fundraising for year
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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.
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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
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HOW to of CROWDFUNDING
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Are You Ready• Its more than an Adventure; It’s a Job!
• Idea Shown the $$$ Will Flow-WRONG!
• Fees - YES
• Possible Penalties
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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
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Are You Ready• Research is the KEY
• Review past CF site projects
• CF Website will determine Yes or No to your project
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Two Ways To Crowdfund• Use existing CF sites
• Use your website & network
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Product; Service; Event• Casual observer find interesting
• Unique; different or value added
• Describe project in 20 seconds
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Finances• Research How Much You Need
– Cost of Project– Cost of Rewards Promised– Don’t Forget Payment Fees
• Host Website• Amazon
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Finances• Taxes• Person changes mind to fund – Loss
Revenue (10-20%)• Other services
• Do Financial Projections!
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Who Gives• Friends & Families – NO
• Repeat Backers – NO <20%
• Average Pledge $30
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Who Gives• The Host Site is not where revenue
grows from
• Create Network – “The Story”– Media– Unique Website for Campaign– Social Media
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Duration• 30-Day
• 45-Day
• 60-Day
• 90-Day
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Duration• Remember – Constant Communication
– Reply to email– Create Blog & Update– Respond to Facebook, Twitter, etc.– Getting media coverage– Update on Rewards– Update Video– 168 Hours – Global
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Campaign
• Start
Mid Point
End
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Video• Be Real • Two – Five Minutes• Get to Point in First 30 Seconds• You or Friend Present It
– Passion
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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
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Video• Avoid Using Copyright Materials• Audio
– SoundCloud– Vimeo Music Store– Free Music Archive
• Video– www.Archive.org
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Video• Take Your Time • Do It Right• Don’t Forget To Say – How to Donate
• Goal: VIRAL
• New Videos Throughout Campaign
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Video• Facebook
• You Tube
• Linked In
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Rewards• Make sense & relate to project• Awards at different payment tiers• Value added or junk• Did you figure into your costs
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Rewards• Did fans offer reward ideas• Limited rewards• Personal touch (i.e. Thank You)
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Future• Currently over 400 Websites
• Global
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Future• For Profits
• Non Profits
• Match Funding
• Will Lenders Adapt?
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Reminder• Market Research
• Finances
• Future Business Plan
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Resources• www.crowdsourcing.org• www.kickstarter.com• www.crowdtilt.com• www.feedthemuse.net• www.indiegogo.com• www.rockethub.com
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ResourcesNon Profit• www.crowdrise.com• www.fundly.com• www.startsomegood.com
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Resources• Business
– www.angel.co– www.appsfunder.com– www.quirky.com
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Resources• International – Create 2nd Language
– www.ulule.com– www.newjelly.com
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Examples• Non Profit – Play
• For Profit – Manufacturer Product
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KEEP IT SIMPLE!
