Startup Exemption

Entries categorized as ‘crowdfunding’

4 Things You can do to Legalize Crowdfunding Today

March 11, 2012 · Leave a Comment

After returning from several days of lobbying for Crowdfund Investing in Washington, DC, we have this small window of opportunity to make Crowdfund Investing legal over the next several weeks.  Here’s what you need to know and what you need to do to help Legalize Crowdfunding today.

The House passed our Crowdfund Investing Bill (HR 2930) back in November.  The Senate has been sitting idly even though a few Senators have tried to push Crowdfunding forward.  However both Senate Majority Leader Reid (D-NV) and Banking Committee Chairman Johnson (D-SD) refused to act until now.

On March 8th, the House took 6 of the Capital Formation bills that passed with almost unanimous bipartisan support (including our Crowdfunding bill), packaged them together into one (called the JOBS Act) and passed it again with overwhelming bipartisan support.  The President came out and endorsed this Republican-led initiative and now they are calling the Senate’s bluff.  Either sit and do nothing and come election-time Americans will know that the Senate is the cause of the gridlock in DC or bring the bill (or their own version of the bill) to the floor to vote and act on our country’s behalf.

Here are 4 things you can do to help Legalize Crowdfunding today:

  1. Now more than ever we need people calling both Senate Majority leader Harry Reid (D-NV) at (202) 224-3542 and Senate Banking Committee Chairman Tim Johnson (D-SD) at (202) 224-5842 and let them know that America’s Entrepreneurs need Crowdfunding.
  2. Click the links, download, complete these form letters with your information and send them to both Reid and Johnson.
  3. Tweet, Facebook Status Update, Google+ & Linkedin Post about this page to your followers to spread the word.
  4. If you are an entrepreneur or if an Investor who would use or back some on a Crowdfund Investing website, then register on LegalizeCrowdfunding.org. (You can get there on your cell phone by texting “HR2930” TO 83432).
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Categories: Congressman Patrick McHenry · crowdfund investing · crowdfunding · Sherwood Neiss · Woodie Neiss
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Crowdfund Investing’s Window of Opportunity to Become Law

March 8, 2012 · Leave a Comment

This was a busy week for Crowdfunding in Washington, DC.  Sherwood Neiss, Chief Advocate for the Startup Exemption spent the last weekend working with and prepping Tim Rowe Founder and CEO of the Cambridge Innovation Center for Tuesday’s Senate Banking Committee Hearing on Capital Formation.  Mr. Rowe was the expert panelist speaking about the benefits of Crowdfund Investing (CFI) not only for the 450 startups in his innovation center (including Crowdfund Investing platform Wefunder) but for the thousands of entrepreneurs that don’t have access to Cambridge, Silicon Valley, or Wall St.

Unlike prior hearings that were hostile towards Crowdfund Investing, this hearing had a growing list of bipartisan supporters including once vocal opponent, Senator Charles Schumer.  In his remarks he stated, “Given the level of bi-partisan support… passage in the Senate appears not to be a matter of if, but of when. I expect a comprehensive Senate proposal to be announced in the coming days.”  With two Senate Bills on Crowdfunding, a compromise solution advanced, and Republicans and Democrats lining up, perhaps the guys at LegalizeCrowdfunding.org will see the light of day soon.

The Senate is under pressure to act or be portrayed as out of touch with Americans who want action in Washington.  The House crafted, marked up and voted on six capital formation bills all meant to spur innovation, entrepreneurship and employment.  All received overwhelming bi-partisan support, including the Crowdfunding bill H.R. 2930 (the basis of which comes from the Startup Exemption framework) that was approved 407-17.   All have been sent over to the Senate where Senator Reid who controls the calendar has refused to act until now.

In a direct affront to the gridlock that exists in Washington, DC, the House decided to show America where in fact the bottleneck in Washington resides – with the Senate.  Today the JOBS Act, a compilation of all the already passed, aforementioned Capital formation bills (including Crowdfund Investing) were grouped together in one bill and passed again by the House.  This tremendously bi-partisan bill addresses the challenges that are preventing our nation’s job creators from getting capital that they need to innovate and hire Americans.  By grouping them together, one bill will be sent to the Senate to take up rather than several.  It either keeps the Senate from debating and stalemating on each one or forces them to come up with their own JOBS Act (which is hard since they haven’t taken up and passed any of the bills from the House to date). To further point the finger, the President came out and publicly endorsed the Republican championed legislation.

Backed up against the wall, Senator Reid announced that the Senate will move forward on these capital formation bills.  How he will do it is up in the air.  The choices are in Committee or on the floor of the Senate.  If it is done in Committee then both sides can work out their issues and come to a compromise.  If Reid decides to take it directly to the floor then he opens it up to Amendments that historically prove to derail the process and reinforce the gridlock.

Now is the time for entrepreneurs who need access to capital to call both Senate Majority leader Harry Reid (D-NV) at (202) 224-3542 and Senate Banking Committee Chairman Tim Johnson (D-SD) at (202) 224-5842 and let them know that America’s Entrepreneurs need Crowdfunding.

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Categories: Congressman Patrick McHenry · crowdfund investing · crowdfunding · LegalizeCrowdfunding.org · Sherwood Neiss
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An Update from the Startup Exemption Team

March 1, 2012 · Leave a Comment

To view the original version of this post, click here:
An update on the Process to Legalize Crowdfunding from the guys who brought Crowdfund Investing to Washington, DC

Dear Crowdfunding Followers,

Here’s the latest from the guys leading the charge to legalize Crowdfund Investing (CFI) in Washington, DC.

LegalizeCrowdfunding.org goes live.
Already 138 entrepreneurs have registered to create 2,500+ jobs, which will have over $100M in stimulus! Let’s show Washington, DC the power of Crowdfund Investing! If you are an,

  1. Entrepreneur: Register to show how many people you need for your business (eg: jobs you will create) and the economic impact it will have.
  2. Investor: Register to show the impact your dollars will have stimulating our economy.
  3. Crowdfunding Supporter: Send an email to your Legislators, Tweet and Post about the site!

Endorse Crowdfund Investing!  SBE Council plans to send this group letter to U.S. Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY) in the coming week.  If you would like to sign onto the letter and add your name to the growing list of groups representing small business owners and entrepreneurs that are urging the U.S. Senate to take action, please send your name, affiliation and email contact information to SBE Council at info@sbecouncil.org.

Status of Legislation

  1.  The Good: As it stands we have 3 bills before Congress.  HR 2930 passed the House with an overwhelming 96% approval – Yes that’s true bipartisan support.   President Obama came out and endorsed the Bill with a Statement of Administrative policy and also included our framework in the Startup America Legislative Agenda.  Things have slowed down in the Senate but to help move things along we went back to Washington and presented them with some Commonsense Consensus ideas that pull the best of the 3 bills into one.
  1. The Bad: NASAA’s opposition to crowdfunding is also in opposition to the needs of our economy, entrepreneurship and jobs.  NASAA argues that they are best suited to regulate simple, transparent markets for businesses on Crowdfunding Intermediaries.  This would create 50 different markets for Crowdfunding, rendering Crowdfund Investing dead on arrival.  This is part of the reason it is so hard for small businesses to raise money today; different bureaucratic, costly rules for each states.  Since CFI is based on community financing, we believe the crowd can do a better, faster, cheaper and more efficient job of determining which ideas, if any, should be funded and with how many dollars.  It is that simple.  Leave the heavy-handed, traditional regulation and oversight for the larger businesses that can access traditional capital.  We advocate state regulation preemption, while preserving the enforcement power of the states to pursue fraud when it occurs.

Would you like us to speak to your organization/group about Crowdfunding?  We are finding there is much confusion about what Crowdfunding is, how Crowdfund Investing differs, how investors are protected and what CFI means for our economy.  Please contact us to discuss your event and how we can participate in sharing this information.   Here are a few of our upcoming events:

  1. Feb 29th – Crowdfunding & Startup Investing
  2. Mar 6th – The Future of Startup Financing: A North American TeleForum on Crowd funding
  3. March 13th – The Soho Loft Crowdfunding Conference, Los Angeles, CA
  4. March 20th – TiE Arizona @ Thunderbird, Glendale, AZ
  5. March 28th – 30th MIT Global Startup Workshop – Istanbul, Turkey
  6. April 19th The Crowdfunding Conference, 2012 – New York City

Loudsauce Campaign:  Our
friends at Laudsauce have launched a campaign to place a one-page ad on the back of Politico.    Politico is seen by 32,000 eyes in DC so let’s show all those folks working on Capitol Hill how Crowdfund Investing Equals JOBS.

Fund the fight:  None of this is happening for free.
If you haven’t yet, please donate $50 to help us get this legislation across the finish line!  Every $50 donation will get your name listed in the ‘I support Legalizing Crowdfunding’ section of the website.

Crowdfund Investing Blog Posts:  If you haven’t had a chance to see any of our recent posts, here they are:

Contact us:  Got a comment?  Need to speak to us?  Here’s how …
Sherwood Neiss, sherwood@startupexemption.com, 202-247-7182
Jason Best, jason@startupexemption.com
Zak Cassady-Dorion, zak@startupexemption.com

 

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Categories: crowdfund investing · crowdfunding · Jason Best · LegalizeCrowdfunding.org · Sherwood Neiss · Zak Cassady-Dorion
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Press Release: Small Business Groups Urge U.S. Senate for Crowdfunding

March 1, 2012 · Leave a Comment

News from the Small Business & Entrepreneurship Council

FOR IMMEDIATE RELEASE        CONTACT:  Karen Kerrigan

February 29, 2011                              (703)-242-5840, kkerrigan@sbecouncil.org

Small Business Groups Urge U.S. Senate Leaders to Quickly Move Forward on Crowdfunding Legislation

Washington, D.C. —  Today, a coalition of the nation’s most influential organizations representing small business owners and entrepreneurs is urging U.S. Senate leaders to work together to bring crowdfund investing legislation to the Senate floor for a vote. In a letter addressed to Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY), the groups note that crowdfund investing legislation passed the U.S. House 407-17, and President Barack Obama has expressed his support for the legislation through a Statement of Administration Policy as well as in his Startup Legislative agenda recently delivered to Capitol Hill.

Crowdfund investing platforms will allow entrepreneurs who lack access to funding networks the opportunity to bring their business ideas directly to investors through regulated, online platforms.  As the groups note in the letter, “Americans will have the opportunity to invest in small businesses in their local communities, or support entrepreneurs in rural areas where business formation is critical to sustaining those communities.”  The letter points out that capital access remains a serious challenge for startups and growth-oriented businesses, and without “adequate sources of capital, the economy will continue to underperform, and the recovery will remain less than robust.”  Funding streams “remain cautious, locked or tentative,” write the groups.

Two crowdfund investing bills have been introduced in the U.S. Senate.  Majority Leader Reid announced yesterday that the U.S. Senate will address the package of capital formation bills that overwhelmingly passed the U.S. House.  With respect to crowdfund investing legislation, state regulators have engaged in a campaign of “fear and fraud,” which has deprived Senators from learning the facts about how crowdfunding currently works through gift-based platforms, and how technology  — and a new regulatory framework – will play a central role in rooting out potentially bad actors on crowdfund investing platforms.

As the groups note in their letter:

“On these platforms, investors will dynamically engage with other investors to vet business ideas and fund those businesses that have significant promise.  Crowdfund investing platforms will be open and transparent, and operate under a new regulatory framework. The platforms will protect investors by utilizing proven technologies and tap into ‘the sunshine’ of social media.  This is what has made gift-based crowdfunding so successful, and why crowdfund investing has been a major success in other parts of the world.  Entrepreneurs looking to raise capital will be required to provide significant financial information to potential investors, as well as withstand the scrutiny of the crowd in regards to the feasibility of their business plans and models.

The small business groups are optimistic about the legislation’s fate. In the letter, they communicate a belief that “a consensus is achievable for advancing legislation that enables effective crowdfund investing platforms for small businesses while protecting investors.”  Majority Leader Reid said the Senate Banking Committee will hold an additional hearing on the package of capital access bills next week, which the groups hope will include expert witnesses on crowdfunding so that Senators can be properly informed about existing platforms, and how the new space will protect investors.

The groups underscore the importance of the need to work together to enact solutions that will help small business owners invest, grow and create jobs  “Capital is the lifeblood of our economy, and without it small business owners and entrepreneurs simply cannot generate the new jobs, breakthrough innovations and economic impact that are necessary for bringing our nation back to sustained growth,” the groups conclude in the letter.

The letter was signed by Harry Alford, President & CEO, National Black Chamber of Commerce; Kristie Arslan, President & CEO, National Association for the Self-Employed; Roger Campos, President & CEO, Minority Business Roundtable; Allen Gutierrez, National Executive Director, The Latino Coalition; Barbara Kasoff, President & CEO, Women Impacting Public Policy (WIPP); Karen Kerrigan, President & CEO, Small Business & Entrepreneurship Council; and Todd McCracken, President, National Small Business Association.

A copy of the letter can be accessed here.  For additional information, please contact or visit the Small Business & Entrepreneurship Council (SBE Council) at 703-242-5840, or www.sbecouncil.org.

# # #

 

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Categories: Congressman Patrick McHenry · crowdfund investing · crowdfunding
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The Startup Exemption Headlines Crowdfunding Conference on March 13, 2012 in Los Angeles

February 25, 2012 · 1 Comment

The SoHo Loft Capital Creation Event Series Announces the Agenda for the Capital Creation and Crowdfunding Conference

in Los Angeles

 

BriefingWire.com, 2/24/2012 Roswell, GA, Feb. 24, 2012 — Today the SoHo Loft announced the agenda for its upcoming Capital Creation and Crowdfunding Conference, the definitive forum for learning about the rapidly evolving marketplace for private company stock. The two-day event will be held in Los Angeles, CA on Tuesday, March 13th and Wednesday, March 14th.

In this remarkable moment in history, the U.S. regulatory environment, its capital markets and the innovation that drives those markets are simultaneously on the threshold of dramatic change. We are currently witnessing the embryonic period of a cutting-edge stock market just as we usher in a new era of mass media. At the same time, new legislation aimed at facilitating capital formation is being introduced to support this modern infrastructure. There has never been a more opportunistic time to capitalize on change.

TSL’s Capital Creation and Crowdfunding Conference provides attendees with key insight into the direction of the U.S. capital markets during this period of regulatory transformation and the rapid progression of the developing ecosystem. Attendees will get a fresh look at how capital formation is changing as well as learn where new growth opportunities exist, how social media is transforming Wall Street and most importantly, how to capitalize in this changing paradigm.

Attendees will also get to know the players who are shaping the Private Company Marketplace (PCM) including the private shares desks and exchange platforms, crowdfunding experts, secondary private share buyers and angels, private stock analysts, legislators and seasoned entrepreneurs. There will also be ample networking sessions to exchange ideas, discourse and opportunities.

THE AGENDA:

DAY ONE: CROWDFUNDING – TUESDAY, MARCH 13TH

· 1pm – Registration, pre-networking, Demos
· 130pm – Opening Remarks and Introduction

· Employing Crowdfunding to Enhance Capital Formation and Create Jobs
· Rep. Patrick McHenry to discuss his bill, HR 2930 also known as the “Crowdfunding bill”

· “How you can make a difference and be heard” by Jason Best, Co-Founder and partner of Startup Exemption
· 3 to 330pm – Coffee Break: Snacks and Networking Under the Buttonwood Tree

· The Capital Markets of Tomorrow – Meet The Pioneers of Crowdfunding

· 330 to 415pm Panel: “Legalize it” – The transforming regulatory landscape to introduce a new asset class

· Panelists include:
1. Jason Best, Co-Founder of Startup Exemption
2. Jouko Ahvenainen, Co-founder of Grow VC
3. Richard Salute, Capital Markets and SEC Practice Director with J.H. Cohn
4. Mitchell Littman, Esq., founding partner of Littman Krooks LLP
· 415pm to 445pm Panel: The relationship between Angels and Crowdfunding

· Panelists include:
1. Julia Dilts, Co-Founder and CEO of Maverick Angels
2. Charles Sidman, Managing Partner of ECS Capital Partners and Angels
3. Wil Schroter, Serial Entrepreneur & CEO of Virtucon Ventures
4. Candace Klein, Founder and CEO of Bad Girl Ventures and SoMoLend
5. Connie Koch, President of the Southern California Region of Keiretsu Forum
· 445pm to 515pm Panel: Establishing the Infrastructure to enhance Crowdfunding:

· Panelists include:
1. Gene Massey, CEO of MediaShares
2. William Davis, President of Gate Impact
3. Alon Hillel-Tuch, Co-Founder of RocketHub
4. Steven A. Cinelli, Founder, CEO, PRIMARQ Inc.
· 515 to 545pm – Coffee Break: Snacks and Networking Under the Buttonwood Tree
· 545pm to 7pm – Presentations:
· 545pm: Case Study: One start-up’s experience utilizing Crowdfunding
· 605pm: “Models and approach to building the new sustainable finance sector” by Jouko Ahvenainen, Co-founder of Grow VC
· 625pm: “Transforming an Idea into a Business” by Julia Dilts, Co-founder and CEO of Maverick Angels
· 645pm – Closing Remarks, Meet our Sponsors
· 7pm – Cocktail Party, Extensive Networking

To register for tickets, please visit http://tslccla.eventbrite.com/. Only ticket holders will be permitted into the event. Press Passes will be provided to qualified members of the media at no charge. To receive Press Passes, please contact dsa@thesoholoft.com. To view detailed bios of our distinguished speakers, please visit http://www.thesoholoft.com/our-network/speakers-2/

ABOUT THE SOHO LOFT CAPITAL CREATION EVENTS:

The Soho Loft Capital Creation (TSLCC) Event Series is the only global event platform where accredited investors; accomplished angels; microfinancing groups; CIOs of investors; select merchant and investment bankers; VCs; family offices; incubators; private equity firms; pre-IPO mutual funds; secondary stock buyers, sellers and equity analysts from across the world assemble in order to exchange ideas, discourse and opportunities that will help reshape the capital markets and stimulate economic growth. Our mission is to bring awareness and drive capital to the private company marketplace (PCM) as well as to help develop its infrastructure so that it can mature into a viable and functional institutional marketplace that facilitates capital formation, innovation, expansion and job creation. For additional information please visit us at http://thesoholoft.com and www.facebook.com/TheSohoLoftevents.

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Categories: crowdfund investing · crowdfunding · Jason Best · Sherwood Neiss
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On Feb 29th, 1pm EST Startup Exemption Co-Founders to Speak on Crowdfunding

February 23, 2012 · 1 Comment

National Council of Entrepreneurial Tech Transfer Presents

Crowdfunding Webinar Mini-Series

Upcoming Webinar:

“Crowdfunding and Startup Investing”
Wednesday, February 29, 2012, 1:00-2:30pm ET 
Presenters:
Jason Best, Co-Founder, Startup Exemption
Sherwood Neiss, Startup Exemption
 

Register for this free series here:

(or go to: https://www2.gotomeeting.com/register/415957282)

ABOUT THIS WEBINAR

A rare glimpse of Crowdfund Investing.  This free webinar will focus on different aspects on what Crowdfunding is, to what it looks like today, how it differs from Crowdfund Investing, what framework for Crowdfund Investing is to the legislative process in Washington DC, the hurdles to becoming law and dealing with everyone from leading Representatives and Senators all the way up to the White House.

AGENDA:

  • Overview of Crowdfunding
  • Introduction of the concept of CrowdFund Investing
  • Where it came from
  • How it works
  • Entrepreneurs
  • Social Networking
  • Local
  • Innovation
  • What is happening globally with Crowdfunding and why we must pass this now to effectively compete
  • What we ran into in DC when we began to explore CrowdFund Investing
  • Decided to try to make a change
  • Created Startup Exemption
  • Created a common sense regulatory framework
  • Began to push for it
  • Who is against CFI?
  • How has legislation moved through Washington DC?
  • Review chart of different bills
  • Current state of the process

 

SERIES DESCRIPTION:In November, the House of Representatives passed The Entrepreneur Access to Capital Act amending the Securities Act of 1933. The bill would allow a new registration exemption for companies raising crowdfunded financing. Companies may raise up to $1 million within a 12-month period without registering the securities with the Securities and Exchange Commission (SEC).

The Crowdfunding Webinar Mini-Series will feature a balanced array of presenters from government agencies, universities, VC and Angel groups to present the advantages and issues for individual investors, policymakers, Congress and the Administration better understand the implications of crowdfunding.

 

ABOUT THE PRESENTERS:

 

Jason Best

Jason Best is a Co-Founder of Startup Exemption and brings over 10 years of executive management experience at 2 SaaS healthcare businesses (one of which he co-founded) in the bay area.  His work there included starting a business from the ground-up during the dot com crash, building broad coalitions of US medical societies in support of Internet-based physician-patient communication and changing FDA regulations to enable physicians to receive electronic medication and device warnings instead of paper.  This change dramatically increases patient safety while reducing time and costs for physicians and the pharmaceutical industry.

He is a successful entrepreneur and consultant to technology companies on business development and strategy issues to enable companies to grow quickly and effectively.  In both 2010 and 2011, his work in strategy development, building scaleable processes, partnership development and branding/marketing, led to one of his clients, Kinnser Software, being named by Inc. Magazine as one of the 500 fastest growing private companies in the USA.

In Dec 2010, he also Co-Founded A Single Production Company, a documentary film company based in Bangkok Thailand.  He has served as the Executive Producer for its first feature “The Cheer Ambassadors”.  The film will premier at the Bangkok World Film Festival in January 2012.   He is also working on a program with local entrepreneurs and educators to create a more entrepreneurial Web development industry in Thailand.

Jason earned his MBA from the Thunderbird School of Global Management, the world’s top international MBA program as well as a BA from William Jewell College, ranked by Forbes and US News and World Report as one of America’s best national liberal arts colleges.  He has lived and worked in Europe, South America and Asia.  He grew up in Louisiana and is now based in San Francisco, California to be near snow skiing, the ocean and wine country.

Sherwood Neiss

Chances are this entrepreneur has already helped you, your child, someone very close or even your pet.  As a 3-time INC500 winner whose company won E&Y’s Entrepreneur of the Year, Sherwood understands the keys to entrepreneurial success from concept to company to sale.

Sherwood Neiss started his post-MBA career on Wall Street and moved to Silicon Valley where by his 29th birthday reached the personal and financial goals he set for his 30th year.  Wondering what to do next and also left struggling with a debilitating family dilemma, he used his entrepreneurial drive to help turn his family adversity into a multi-million dollar company that today is helping millions of sick children, animals and adults get better by being more compliant with their medicines.

Sherwood Neiss co-founded FLAVORx (www.flavorx.com) the company makes 42 yummy flavors that take the yuck out of medicine.  His structured approach helped not only build a business model that threw off millions of dollars in cash but also helped grow the business from one pharmacy to over 80% of the pharmacies in the United States.   He raised millions of dollars in capital and saw the culmination of his endeavors with the sale of the company in 2007.

Sherwood is an avid public speaker.  He speaks at universities and seminars around the world about what it takes to be an entrepreneur, how to fund your idea and build a winning company.  He testified at three Congressional hearings;  one on the impediments to capital formation under Sarbanes-Oxley and two regarding access to capital for entrepreneurs and Crowdfund Investing.  His SOX testimony was one of the reasons the Small Business Exemption to section 404(b) audit requirements was passed in July 2010.

Most recently Sherwood won the November 2010 & May 2011 Startup Weekend Challenges in Miami to use smartphones for instant polling & for an equity based crowdfunding platform.  Currently he advocating for the SEC to update the securities laws to make it legal for groups of people to pool small dollar amounts of money together to invest in startups aka “Crowdfund Investing.”

When not working, Sherwood is an avid traveler.  He lived in Japan for a year and post-sale of FLAVORx took his second backpacking trip around the world.  In addition to speaking at universities and businesses around the country he invests in real estate in the U.S. and Brazil, is part of a Private Equity group in Los Angeles, is working on a clean tech project in Puerto Rico and is involved with several other start-up ventures.

 

 

WEBINAR DURATION: Each session is a 90-minute webinar with 60 minutes of presentation and 30 minutes of Q&A.

COST: Free, but registration required by clicking on register the Register button above.

HOW TO PARTICIPATE?: This webinar is online. You need a computer with web access for the visual/audio. You may also dial-in using the audio-only telephone number. The call in details and instructions on how to join the webinar will be sent to you via email after you register. Once registered to the webinar you will receive a reminder email 24 hours before the start of the webinar with instructions on how to join.

QUESTIONS TO SPEAKERS: Q&A is conducted by a chat box to the speakers.

WHO SHOULD PARTICIPATE IN THE WEBINAR?: National and international media, federal and state government officials, venture capitalists, angel investors, Global 1000 companies, industry representatives, university officials, entrepreneurs and individual investors.

SLIDES AND VIDEO: The slide presentations and video recording will be available on this page. If you are unable to join the live webinar, you may view the recorded video that will be posted within 24 hours after the scheduled webinar ends.

If you have questions about this webinar, please email NCET2’s Research Commercialization and SBIR Center at support@ncet2.org

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Categories: crowdfund investing · crowdfunding · Jason Best · Sherwood Neiss
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Crowdfunding Takes a Hit as Profounder Shuts Its Doors

February 21, 2012 · Leave a Comment

Our own real-world Stephen Colbert skit is playing out before our eyes.  Security Regulators are up in arms about the prospect that the average American can decide if he or she is smart enough to invest $10, $100, $1,000 or $10,000 into an entrepreneur they know, via would be SEC-registered websites, that would allow entrepreneurs (who had cleared background and security checks) to raise money from their friends and family.  Hence they are spending millions of dollars on lobbyists and staffing Senate hearings with opponents to derail Republican–led legislation that the House of Representatives passed with 96% approval. (Yes this is the same House that rarely passes things with such bi-partisan approval). This was also endorsed by a Statement of Administrative Policy by our Democrat President  –all of which is meant to help keep America competitive, spur innovation, encourage entrepreneurship and create millions of jobs.

There are two bills before the Senate.  Senator Reid must act to bring a Crowdfunding Bill much like the House version to the floor to vote on.  Entrepreneurs, The US House and The President get it.  Jobs won’t come if we don’t provide the capital.  Let’s not look to past to get us out of this problem.  Let’s look to the future and the success of Crowdfunding globally.  If 96% of the House thought it was worthwhile, shouldn’t we expect the same from the Senate?  Are we really going to let Special Interests that care more about their own power than our future economic prosperity kill crowdfunding legislation in the Senate?

Even before the equity-based crowdfunding site Profounder had a chance to show to the U.S. (ps -this is already legal and flourishing in the UK) the power of harnessing a few dollars from the crowd to spur innovation, encourage entrepreneurship and create jobs, they have shut their doors.  In a statement to their followers they said, “the current regulatory environment prevents us from pursuing the innovations we feel would be most valuable to our customers, and we’ve made the decision to shut down the company.”

An inside-Beltway battle is being fought between the people trying to propel our country forward, America’s job creators, and those holding us back, Regulatory agencies including groups like the North American Securities Administrators Association ( www.nasaa.org )..  They are more concerned with clinging to outdated laws written 78 years ago than the economic needs of our country.  Current regulations, were written before most homes had radios, much less the Internet.  This was during a time when your “social network” was a stack of business cards that you could write letters to send via the US Post Office.   Now, this deeply entrenched bureaucracy prevents entrepreneurs from using the Internet and social media to go to their friends and family for investments.

The U.K. has just updated their security laws to allow their citizens to finance their nation’s job creators much in line with what ProFounder was trying to do.  What the UK realizes, is with the advances in technology and the Internet, there is power to a group of interconnected people vetting an entrepreneur in an open and transparent platform where they can decide if she or he is worthy of funding.  As of last week, it was going so well that the UK Government began to offer tax credits to their citizens to encourage investment.

The financial markets in the US for entrepreneurs and small businesses are STILL FROZEN.  With all the talk about it, the reality for most small businesses is they have no access to working capital.    Access to capital is the number on concern according to a recent study by the Small Business & Entrepreneurship Council.  Allowing Main Street to step in and fill the void left by Wall Street, the banks and Venture Capital can only help propel our country forward.  We need to stand together.  We need to legalize Crowdfunding.  If you are an entrepreneur register at LegalizeCrowdfunding.org now!

Sherwood Neiss and Jason Best are Co-Founders  for the Startup Exemption, which brought the idea for “Crowdfund Investing” to Washington a year ago.  They have recently launched LegalizeCrowdfunding.org to quantify the impact the legalizing crowdfunding can have on our nation. 

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Startup Exemption Founder to Speak at North American TeleForum on Crowdfunding

February 14, 2012 · Leave a Comment

The Future of Startup Financing: A North American TeleForum on $$$ Crowd funding

Register today (Tuesday, March 6th, beginning at 11 am EST)

Register On-Line to Reserve your spot on the Call

Join a group of your colleagues in Canada and the U.S. on Tuesday, March 6th beginning at 11:00 am EST for an important Teleforum Conference Call on the future of seed and growth financing for start-ups and entrepreneurs.

The briefing team will be lead by the founder of the Crowd funding movement, Sherwood Neiss, Chief Advocate for The Startup Exemption. Mr. Neiss will describe the advances in technology, the Internet and Social Media to allow an entrepreneur to raise a limited amount of capital from his friends, family & community under a framework that provides for investor protection.

Also attending the call to provide background and guidance will be members of the CATA Crowd funding Action Committee (see below), including, Tom Houston, Partner, FMC Law, Andrea Johnson, Partner, FMC Law, Peter Andrews, Regional Director, Corum Group, Steven Hurwitz, Partner, Choate, Hall & Stewart LLP, John Reid, CATA, CEO, Gary Stairs, CEO, Chair and CEO of Stellar RHL., Michael Turner, VP, Wesley Clover, Jordan Smith, B.Sc., Senior Manager, Deloitte and Paul Dombowsky, CEO, Ideavibes.

Crowd funding is local vesting and community vetting where only the winning ideas receive not only funding but shared knowledge, experience and marketing power. Crowd funding makes it easier for business to obtain investment by selling stock to small investors. A new Bill is currently in the U.S. Senate to exempt crowd funding from State regulation of securities offerings.

CATA has launched an advocacy Campaign to encourage Canadian legislators to adopt approaches similar to the U.S. approach.

“We don’t want to have this launched in the U.S. and then have to play catch up,” said CATA president John Reid.

Gary Stairs, President of Fredericton-based Stellar-RHL and Chair of i-ATLANTIC, noted, “New Brunswick and its sister provinces have developed models of collaboration between experienced investors, young entrepreneurs, universities, and government. Today’s new capital formation pathways that allow businesses to be crowd funded can really catch fire in this ecosystem. Regrettably we are blocked by regulations.”

Andrea Johnson, Partner, FMC law and securities expert said, “I believe the Canadian government is very behind in this and should be pushed harder because access to capital is a big issue. Making it easier for start-ups to get that money is important.”

CATA is lobbying provincial securities regulators to make similar changes here. While the new American legislation would be overseen by a single national watchdog, the U.S. Securities and Exchange Commission, Canada still has no national regulator, after a Supreme Court decision recently declared such a body unconstitutional.

The U.S. Perspective:

Mr. Neiss, who has raised more than $100-million in funding capital, notes that “I’ve testified in front of Congress twice now and our framework is the framework for all the Bills before Congress. We are on the ground lobbying in Washington, DC. We also have the support of President Obama.”

“I believe the Canadian government is very behind in this and should be pushed harder because access to capital is a big issue. Making it easier for start-ups to get that money is important,” said Johnson.

The TeleForum will be MC’d by Bill Hutchison, Chair of i-CANADA, and Barry Gander, Co-Founder of i-CANADA, a movement to create an Intelligent Nation through the adoption at the community level of ultra-high-speed networking. “This new avenue for capital, plus our growth ecosystem, could make investments in start-up ventures gain speed,” said Mr. Hutchison. “Thousands of new jobs will be created in the process.”

CATA North American Teleforum l on the Future of Start-up Financing
Featuring: Sherwood Neiss, Chief Advocate for The Start-Up Exemption & Industry Experts
Tuesday, March 6th
11 am – 12:15 pm EST
Conference Call format with Q & A

Who Should Participate

– Entrepreneurs seeking start-up and growth funding
– Financial advisors dealing with SMEs
– Government officials responsible for financing
– International trade officers and those concerned with export policy

++ Action Items: How do I sign up?

Sign up online at:
http://www.cata.ca/Media_and_Events/teleforum-Feb6.html

Please note that spots on this call are limited.

Your local call in number and access code will be sent to you via email. Callers have local dial in numbers in all major Canadian and U.S. cities and free access worldwide using Skype.

Note that the Call-in Registration fee is $45 for for Non Members; CATA members (no charge) have preference as we limit caller numbers to encourage active discussion. Fees are reinvested in our Competitive Innovation Nation research programs. Questions: eboucher@cata.ca

 

A Special Background Note on Sherwood Neiss

Sherwood Neiss started his post-MBA career on Wall Street and moved to Silicon Valley where by his 29th birthday reached the personal and financial goals he set for his 30th year. He used his entrepreneurial drive to help turn a family adversity into a multi-million dollar company that today is helping millions of sick children, animals and adults get better by being more compliant with their medicines. Sherwood co-founded FLAVORx (www.flavorx.com ) the company makes medicine flavourful. His structured approach helped not only build a business model that threw off millions of dollars in cash but also helped grow the business from one pharmacy to over 80% of the pharmacies in the United States. He raised millions of dollars in capital and saw the culmination of his endeavors with the sale of the company in 2007. He speaks at universities and seminars around the world about what it takes to be an entrepreneur, how to fund your idea and build a winning company. He testified at three Congressional hearings; one on the impediments to capital formation under Sarbanes-Oxley and two regarding access to capital for entrepreneurs and Crowd fund Investing. His SOX testimony was one of the reasons the Small Business Exemption to section 404(b) audit requirements was passed in July 2010. Most recently Sherwood won the November 2010 & May 2011 Startup Weekend Challenges in Miami to use smart phones for instant polling & for equity based crowd funding platform. Currently he advocating for the SEC to update the securities laws to make it legal for groups of people to pool small dollar amounts of money together to invest in startups aka “Crowd fund Investing.”

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Categories: crowdfund investing · crowdfunding · Sherwood Neiss
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The Commonsense Crowdfund Investing Compromise

February 13, 2012 · Leave a Comment

Great progress has been made to legalize Crowdfunding in the US with 3 bills before Congress.  We have seen Crowdfunding gain traction in the US with 2 donation-based projects raising over $1.5M each on Kickstarter.  In addition, the UK is accelerating it’s push to encourage Crowdfunded Investments by offering a new tax credit.  Now is the time to push Crowdfund Investing legislation over the finish line here.

As we move the Crowdfund Investing legislation forward it is important to keep the following in mind.  1) It has to be written so a market can successfully be formed, within the confines of the regulations.  (i.e., Trying to crowdfund $250,000 in increments under $1,000 is going to be nearly impossible if entrepreneurs are forced to raise 100% of their funding request in order to be funded).  2) It has to be easy to understand from an entrepreneur’s, an investor’s and intermediaries point of view.  3) It needs to be fair, without needless bureaucracy and costs where the advances in the Internet and technology can offer enhanced security and streamlined process and 4) It needs to be done in a way that our Nation’s Job Creators can start capitalizing on its effectiveness NOW… without getting bogged down by lengthy SEC rule making.

In order to help advance this legislation, the Startup Exemption,which represents over 5,000 active crowdfunding followers (including entrepreneurs, investors, intermediaries, security lawyers, authors, and security experts) sought a consensus on the 3 bills.  The goal was to take the best of them and consolidate it into one that would provide access to capital without undue bureaucracy.  It is important to keep in mind that the technology built into today’s Internet can allow both the transfer of information between entrepreneurs and potential investors as well as intermediaries and regulatory agencies without lengthy and costly bureaucracy — all in a transparent and accountable fashion.

 We hope the compromise ideas (click here for the full PDF) we put forth in these pages are helpful as you  push this legislation across the finish line.
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Categories: crowdfund investing · crowdfunding · Jason Best · Sherwood Neiss · Zak Cassady-Dorion
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As VC’s Pull Back from Funding Startups, Crowdfunding is Poised to Jump in

February 10, 2012 · Leave a Comment

The Kauffman Foundation for Entrepreneurship hit the nail on the head. “Startups aren’t everything when it comes to job growth.  They’re the only thing.” Other than a good idea, the most critical thing to launching job-producing businesses is capital. Historically, capital to fund the nation’s job creators came from Angels, Private Equity and Venture Capital.  But a new downward financing trend is emerging and the results are potentially devastating.

According to the Silicon Valley Watcher, “the latest report on trends in US Venture investments shows a massive decline of 40% in seed investments in US startups in the final quarter of 2011, and a much larger drop of 48% for the entire year.”

While there was an overall decline in funding across software, Internet and IT services, by far the largest drop was in seed funding for startups, which almost halved in 2011.

As traditional VC firms have moved into later stage funding, Angels and Private Equity have moved into the space they once occupied.  The result is a larger void at the Seed Capital stage.  Without capital to fund startups, the outlook for the nation’s entrepreneurs is grim.

“Capital is necessary to fund innovation, which leads to businesses that create jobs.  Without capital there will be no jobs,” says Sherwood Neiss,  entrepreneur and Chief Advocate for the Startup Exemption, (the group that brought equity-based crowdfunding (aka Crowdfund Investing) to Washington).  So just like any good entrepreneur that identifies a problem, they come with a solution “If we allow the average American to step in and crowdfund the ideas they deem worthy, then we can get capital flowing.”

The idea has merit.  Donation-based crowdfunding has shown that winning ideas can secure adequate seed financing.  Two examples stick out.  On Kickstarter 13,512 people donated almost $1M to two entrepreneurs to develop the Nano Watch.  They now employee 10 people and believe that TikTok has led to an additional 45 support related jobs for the company.  In the UK, The Rushmore Group, raised  £1M from 143 Investors on a Crowdfund Investing platform.  The expansion capital will create over 30 full time jobs, many more part-time jobs and additional support jobs.  “These two examples,” Neiss says, “show the power that crowdfunding can have in creating jobs.  Crowdfunding is much akin to community financing where an entrepreneur will pitch his idea to his or her social network.  Provided that the idea has merit, the entrepreneur is seen as trustworthy, the business model makes sense and the investment opportunity is worthwhile, people will invest.”

Back to the Kauffman study.  A major finding is that start-up firms (those younger than one year old) create an average of 3 million jobs annually, while existing firms lose 1 million jobs each year.  This is predicated upon capital available.  If Congress legalizes Crowdfund Investing, with the departure of VCs from the startup space, the future of seed and expansion capital stands to look like the chart to the right.  With countries like UK leading the pack, it is just a matter of time before the US follows suit.  That or we risk seeing our economy decline as entrepreneurship and innovate fall victim to the Valley of Death.

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Categories: crowdfund investing · crowdfunding · Sherwood Neiss
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