Group items tagged

evolve into best practices and common leadership – this will accelerate the crowdfunding phenomena towards the $1 trillion market we predict it to be by 2020.  The investor democratization and customer communication involvement crowdfunding allows will trigger widespread corporate implementation by Q4, 2013.

mainly angels at this point – are in for the long haul

and not necessarily for a return on capital.

Under Title III, companies wishing to sell stock to the public will have to provide information to investors and the S.E.C., including financial disclosures that grow more extensive as the size of the offerings increases. They will be allowed to sell stock only through an intermediary: either a broker-dealer or a specialized crowdfunding Web site, or portal. The intermediaries will have to take steps to ensure that small investors are protected, even from themselves. The law limits how much a person can invest in crowdfunding in a year, depending on income and net worth.

protection measures could, if fully adopted, make crowdfunding prohibitively expensive.

That big issue caused Mr. Caldbeck to leave his job to start CircleUp, a company that aims to connect up-and-coming consumer products companies with investors.

crowdfunding is a way for capital-starved entrepreneurs to receive financing that neither big investors nor lenders are willing or able to provide. To others, it represents a potential minefield that could help bad businesses get off the ground before they eventually fail, and in some cases could even ensnare unsophisticated investors in outright fraud.

SoMoLend, which lends money to small, Main Street-type businesses that typically wouldn’t interest private investors.

How do I register with the SEC as a funding portal? Answer: The SEC must adopt rules governing funding portals before permitting anyone to register with the SEC as a funding portal. These rules will address the form and process needed to register with the SEC as a funding portal.

The JOBS Act requires these intermediaries to, among other things: provide disclosures that the SEC determines appropriate by rule, including regarding the risks of the transaction and investor education materials  ensure that each investor: (1) reviews investor education materials; (2) positively affirms that the investor understands that the investor is risking the loss of the entire investment, and that the investor could bear such a loss; and (3) answers questions that demonstrate that the investor understands the level of risk generally applicable to investments in startups, emerging businesses, and small issuers and the risk of illiquidity;  take steps to protect the privacy of information collected from investors;  take such measures to reduce the risk of fraud with respect to such transactions, as established by the SEC, by rule, including obtaining a background and securities enforcement regulatory history check on each officer, director, and person holding more than 20 percent of the outstanding equity of every issuer whose securities are offered by such person;  make available to investors and the SEC, at least 21 days before any sale, any disclosures provided by the issuer;  ensure that all offering proceeds are only provided to the issuer when the aggregate capital raised from all investors is equal to or greater than a target offering amount, and allow all investors to cancel their commitments to invest;   make efforts to ensure that no investor in a 12-month period has purchased crowdfunded securities that, in the aggregate, from all issuers, exceed the investment limits set forth in section Title III of the JOBS Act; and any other requirements that the SEC determines are appropriate.

“Crowdsourcing is the process by which the power of the many can be leveraged to accomplish feats that were once the province of a specialized few.” And a lot more will change, very quickly.

In Europe, equity-based crowdfunding allows people buy an ownership stake in your business. That practice is illegal in the U.S., but will likely gain steam in a global marketplace where individuals can use platforms like Symbid to help propel an interesting new business into the marketplace. Social lending sites like LendingClub or Prosper permit you to legally crowdfund your for-profit startup in the U.S., but you’ll have to start paying it back immediately, and you could be left liable for the loan if the business fails.

Crowdsourcing will only grow, and it’s up to you to weigh the risks and benefits of using it to extend your enterprise. It may serve a single, specific purpose, or support a key component of your operating blueprint across your organization, or it may not be the right choice--at least not yet.

small donors help lay the foundation for

major municipal innovations, galvanizing communities.

This could be a better practice since it creates a separation of powers. Instead of blindly donating, you can see someone in your community or across the world is in need and set up a page in their name to collect funds for them. This allows those who are too busy to volunteer to feel more active in the donation process. They are able to see the effect of their funds and can even reach out to the person in need after they have donated.