Startup Exemption

Entries tagged as ‘American Jobs Act’

Crowdfunding Industry Establishes Standards to Help Protect Entrepreneurs and Investors and Spur JOBS Act

March 21, 2012 · Leave a Comment

Crowdsourcing.org and Crowdfunding Industry Experts Launch Crowdfunding Accreditation for Platform Standards (CAPS) Program

LOS ANGELES, CA, Mar 21, 2012 (MARKETWIRE via COMTEX) — Today, the JOBS Act took one step closer to becoming law. On the heels of the JOBS Act passing the Senate cloture vote by a wide margin (with two amendments pending) — which will allow companies to offer securities to non-accredited investors via crowdfunding platforms — the launch of the Crowdfunding Accreditation for Platform Standards (CAPS) program is the first significant milestone adopted by the industry. The CAPS program establishes standards for crowdfunding operations and aims to protect investors from fraud. As the industry begins the process of creating a self-regulatory framework, CAPS — which will govern the accreditation of crowdfunding platforms — will be a key pillar within this framework.

More than 400 crowdfunding platforms were operating in January 2012. As industry leaders recognized that investors would need help and more information when funding ventures through these platforms, the CAPS program was created to ensure a secure and reliable experience. Now CAPS-accredited platforms will display the CAPS badge on their sites to demonstrate they have been accredited based on qualification criteria in four areas:

 

  • Operational transparency
  • Security of information and payments
  • Platform functionality
  • Operational procedures

 

“Now that crowdfunding legislation is gaining momentum in Washington, the future of the industry will be determined by its ability to create a consistent and safe environment,” said founder of Crowdsourcing.org Carl Esposti. “As the intermediary between investors and entrepreneurs, crowdfunding platforms owe fundraisers and investors a high degree of transparency and the ability to facilitate secure transactions to reduce the risk of fraud. If the industry can deliver in these areas, the potential is unlimited, and crowdfunding can effectively become the backbone of both SME financing and philanthropic donations.”

The CAPS Council, the governing body of CAPS with currently 11 crowdfunding experts, has taken the initiative to establish these accreditation criteria to ensure crowdfunding platforms adequately protect fundraisers and investors. Members of the CAPS Council include:

  • Carl Esposti, founder of The Industry Website Crowdsourcing.org
  • Sherwood Ness & Jason Best, founding members of the Start-up Exemption, and leading lobbyist and advocate for crowdfunding
  • Kevin Lawton, author of Crowdfunding Revolution

Following an initial private invitation-only launch, eight organizations — Crowdcube, Grow VC, Crowdfunder, GreenUnite, HelpersUnite, Symbid, Give A Little and Fundrazr — have been accredited by the CAPS program and another 20 organizations are currently undergoing the process. More than 200 crowdfunding platforms are expected to apply for accreditation in 2012.

“Crowdfunding is the future of seed and growth financing for startups and entrepreneurs,” said Sherwood Ness, founding member of the Startup Exemption. “It uses the web, social media and advances in technology to allow an entrepreneur to raise a limited amount of capital from his friends, family & community under a framework that provides for investor protection. Establishing high platform standards is the clear next step to not only protecting investors but also to ensure continued success and growth of the industry.”

Journalists interested in speaking to a CAPS Council member or learning more about the program can contact Jennifer Moebius at jennifer@moebiusink.com.

About  STARTUP EXEMPTION:

Startup Exemption is the name Sherwood Neiss, Jason Best and Zak Cassady-Dorion created to describe their CrowdFund Investing (CFI) framework.  The framework is an exemption under Regulation D Securities Offerings that would allow startups and small businesses to raise a limited amount of seed and growth capital from their social networks using SEC-registered websites.  Their framework was the basis for the three Crowdfunding bills considered by Congress and was endorsed by the President.  It passed the US House in November, 2011, 407-17 and the US Senate on March 22, 2012 as part of the JOBS Act 73-26. The path from idea to law in 579 days can be found at: www.startupexemption.com.

Contact Information:

Sherwood Neiss                                          Jason Best

(202) 247-7182                                          (415) 999-2271

Available  7am to 7pm M-F (ET)                 Available  7am to 7pm M-F (PT)

sherwood@startupexemption.com             Jason@startupexemption.com

Other Links:

About Crowdsourcing.org

Founded in 2010, the industry website Crowdsourcing.org is a neutral organization dedicated solely to crowdsourcing and crowdfunding. As one of the most influential and credible authorities in the crowdsourcing space, Crowdsourcing.org is recognized worldwide for its intellectual capital, crowdsourcing and crowdfunding practice expertise and unbiased thought leadership. Crowdsourcing.org is an initiative by massolution, a unique research and advisory firm specializing in crowdsourcing and crowdfunding solutions for private, public, and social enterprises. More information at www.crowdsourcing.org .

Media Contact
Jennifer Moebius
Email Contact
Phone: +1-617-922-8004

www.twitter.com/Crowdsourcing_

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Crowdfunding isn’t Sex, Drugs and Rock n Roll

March 19, 2012 · 1 Comment

Leave it to the Crowdfunding opposition to turn ‘entrepreneurship, innovation and jobs’ into ‘fear, fraud and apocalypse.’  Now that the JOBS Act is on the verge of passing, the media is running wild with stories that re-regulating the markets (yes Crowdfund Investing (aka equity-based crowdfunding) is re-regulating not deregulating) will lead to mass fraud, hysteria, a loss in investor confidence and a collapse of the general markets.  Most importantly there’s a general misperception among the opponents to Crowdfund Investing that access to capital will NOT lead to innovation and jobs.  How wrong they are.

Over a year ago, 3 successful entrepreneurs sat down with a goal to craft a framework to allow a limited amount of seed and growth capital to flow into the hands of entrepreneurs using the tenants of crowdfunding.  These entrepreneurs had the experience of taking ideas, raising money, growing businesses and hiring over 150 employees.  That’s walking the walk.  These MBA grads understand what it means to be an entrepreneur, what information investors need to make informed decisions, what the laws regarding raising capital formation are and the benefits of a symbiotic relationship to a functioning, transparent marketplace.

The missing component post the 2008 financial meltdown was the disappearance of capital. Along with the collapse of the financial markets went home equity lines used to launch ideas, credit cards with large credit lines and low interest rates used to finance growth, and private money used to expand businesses.  Business 101 – Cash is KING.  Without access to capital, you cannot grow or hire!

So rather than come up with “a mechanism to undermine market transparency, roll back important investor protections, and, drive up the cost of capital for small companies” as Barbara Roper Director of Investor Protection, Consumer Federation of America said, these Entrepreneurs crafted a framework that if implemented along its original extent would have addressed all the concerns, misperceptions and drama floating around today.

The framework was carefully crafted.  It carved out a rule under which fraud-free entrepreneurs and small businesses with revenues of less than $5M that weren’t foreign corps, public or investment companies could raise up to $1M either selling Common Stock or revenue based financing on SEC-registered websites.  Where, investors would have to agree using current standard verification technology that they understand there is no guarantee of return, that they could lose their entire investment and that their liquidity/return is limited to any dividends, sale, public offering or a merger of the company.  And once they agreed to that, would be limited as to how much they could risk to the lower of $10,000 or 10% of their AGI. Where standardized forms (generic term sheets & subscription agreements) based on industry best practices would be used to maintain transparency and reduce time and expense for all parties.   Post funding standardized and automated reporting for use of proceeds would be required on a quarterly basis by entrepreneurs.  Platforms would provide the SEC monthly offering reports that include information on: deals funded, entrepreneurs’ names, social security numbers, addresses, date of births, amount of capital raised, list of investors and individual dollar amount contributed.  And most importantly social media would control the process.  Entrepreneurs would only be allowed to solicit people in their social network using Facebook, Twitter, Linkedin, etc.  Platforms would use social media tools to create a deal room for each idea where interested investors can publicly pick apart the entrepreneur, the idea, the business model and the investment opportunity.  And most importantly, NO MONEY would be exchanged until the ENTIRE crowd decided to fund the entrepreneur and the entrepreneur’s funding target was 100% met.  Not so easy, right?

If implemented as designed it would allay all concerns including entrepreneurs who need capital, investors who need proper disclosures to make informed decisions, regulators who want to know what is happening in the capital markets and intermediaries who will provide the social media tools to allow for solicitation and vetting before the crowd collectively and in an open dialog, decides which of their community entrepreneurs they wish to fund and with how much money as well as the conduit for the transaction to happen.

Crowdfund Investing will be a great financing tool for our nation’s entrepreneurs.  The opponents, well they are academic and regulators.  We are entrepreneurs , investors and most importantly JOB CREATORS. We created 150 jobs before when capital was available.  But you know what?  We can’t do it today, without Capital!  The time is now to Legalize Crowdfunding!!

Sherwood Neiss, Jason Best & Zak Cassasdy-Dorion are the developers of the framework for Crowdfund Investing which is the basis for all the CF Bills before Congress.  For more information about us go to www.startupexemption.com/about-us

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Senate Votes on Crowdfunding Tomorrow! Call your Senators TODAY and say “Vote for JOBS!”

March 19, 2012 · Leave a Comment

 

 

An update on the Process to Legalize Crowdfunding from the guys who brought Crowdfund Investing to Washington, DC
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Dear Crowdfund Investing Follower,

On Tuesday, March 20th the Senate will take up the House-approved JOBS Act.  It includes the majority of the Crowdfunding framework that we originally brought to DC, was used by Representative McHenry (R-NC) as the basis for HR2930, and was endorsed by the President.  Several components of the framework were also included in the Senate version and many of our ideas are the ones used in the bipartisan Merkley/Bennet/Brown/Landrieu compromise that was offered as an amendment to the Crowdfunding portion of the House-approved Bill.

Everyone is in agreement.  Solving the funding problem faced by our nation’s job creators is a smart thing.  Crowdfund Investing (CFI) is a great idea but it has to take place in a marketplace that is transparent and accountable.  However, without a Senate passed bill, Crowdfund Investing won’t exist.

When the Senate takes up the bill on Tuesday, it is important that if you support Crowdfunding in any shape or formyou do the following:

  1. Call your Senators and tell them “I support the JOBS Act and Senator _______ should vote in favor of it.”
  2. Rally your supporter, followers, friends and family to do the same thing.  Tweet, Facebook post, Linkedin update, etc about this!  The opponents to Crowdfunding are outnumbering proponents in calls to the Senate.  If Crowdfunding fails here, it dies and history proves that its chances of being resurrected again are near zero.  Here’s a tweet you can use: 2 Directions #Crowdfunding can go in Tuesday’s Senate Vote & What You Need to Do http://wp.me/p1JYwD-48 PLEASE RETWEET! #JOBSAct.

Kevin Lawton, author of The Crowdfunding Revolution said it best in the Huffington Post, “We are on the precipice of a historical moment for entrepreneurs, and for America to set the precedent for innovation again. Crowdfunding is not only a win for the 99%. Allowing it is a veritable 1st Amendment for American business owners. We need your support, now!”

It is CRITICAL THAT THE SENATE VOTE IN FAVOR OF THE PRESIDENT, JOBS AND CROWDFUNDING!   If the Senate votes against the JOBS Act, Crowdfunding will probably never see the light of day!  It is important that if you support Crowdfunding you have your voice heard Tuesday!

We are back in Washington, DC and working tirelessly to see this through!

All our best,
Woodie, Jason & Zak

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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Obama Pressures Congress for Crowdfund Investing!

January 25, 2012 · Leave a Comment

In tonight’s State of the Union Address the President said the following to a loud round of applause: “It means we should support everyone who wants to work and every risk taker and entrepreneur who espires to become the next Steve Jobs.  After all innovation is what America has always been about.  Most new jobs are created in startups and small businesses.  So let’s pass an agenda that helps them succeed.  Tear down regulations that prevent aspiring entrepreneurs from getting the financing to grow.  Expand tax relief to small businesses that are raising wages and creating good jobs.  Both parties agree on these ideas.  So put them in a bill and get it on my desk this year!”

Crowdfund Investing is the zero-cost government initiative he is discussing that can create millions of jobs!  The President gets it.  The House of Representatives gets it!  Now we have 2 bills in the Senate.  Let’s get this on the desk of the President NOW so that we can get back to innovating and creating jobs!

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What Crowdfunding Opponents Don’t Want You to Know

November 15, 2011 · Leave a Comment

With all the time and attention that fraud has received, we wanted to talk about a much more important issue, failure.  Failure of early businesses happens 50% of the time – that’s just a fact of nature.  If we were to hold that fraud would happen 1% of the time, then failure is 50 times more important in risk mitigation for investors.  And nearly all Americans who invest in the public markets already mitigate against the risk of “losing it all” by way of holding a portfolio.  Diversification has been practiced for centuries, and it’s no different in any asset class, be it public equities, commodities or crowdfund investing.

We believe that prudent risk and fraud mitigation currently in HR2930, along with law enforcement provisions in the bill preserve the power of state and federal officials to aggressively pursue those who commit fraud.  Now, let’s create a plan to help more honest businesses succeed.

KNOWLEDGE & EXPERIENCE

When entrepreneurs talk about failure they talk about the lessons they learned and the experience they gained which is less sexy to the media than fraud.  In crowdfund investing, the entrepreneur has access to his investors to gain knowledge and experience from them in order to attempt to reduce the rate of failure.  The transparency and ease of many to many communication benefits all.

When investors talk about a stock’s failure, they always focus on the critical importance of diversification.  WHY?  Because everyone knows, a diversified portfolio is the best security against loss.  Why focus on educating people about portfolio diversification when it is easier to claim crowdfund investing will open the floodgates to fraud?

So why do we bring this up?  Because the opponents want you to focus on something that will grab the media’s attention (fraud).  This also distracts the debate while trying to prevent regular Americans from supporting entrepreneurs with their own dollars.

There are entrenched interests that don’t want you to focus on how getting capital to entrepreneurs will stimulate innovation.  They clearly don’t talk about alternative solutions.  AND most importantly they don’t want to lose jurisdiction over the business and revenue they are currently generating.  These are areas we hope the media starts to look into more fully.

Much of our new information economy is based on new ways of connecting people.  Preventing entrepreneurs from soliciting financing from their fans and potential customer base, equates to a massive form of economic suppression.  And it’s a suppression of the most powerful human right ever given, the 1st Amendment.

If the opponents took the time to think it through, they’d see that fraud is no more of an issue than in other forms of investing.  With prudent safeguards in place, let’s focus the majority of our energy on the real issues – continued education about diversification.

Think we are wrong?  Please tell us why.  How does one “lose it all” when holding a portfolio of businesses?  How does suppressing platforms which will drive Yelp-like crowdsourced checking & reviews of entrepreneurs help prevent fraud?

 

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Our IndieGoGo Campaign – Hey U.S. Senate, We’re Coming to Talk to YOU!

November 4, 2011 · Leave a Comment

BREAKING NEWS …. Our Bill, HR 2930 passes with almost unanimous, rare bipartisan support!  This is a HUGE achievement for every struggling entrepreneur and innovator out there that is looking for capital!

BUT we aren’t done yet!  “If and when” the Senate picks this up IS YET TO BE DECIDED?!?!

WE CAN’T WAIT!  

So help is fund and hold our RALLY IN WASHINGTON,DC on November 17th to keep the positive momentum going!  This coincides perfectly with Global Entrepreneurship Week and a one-day meeting the SEC is having that day on Small Business Capital Formation.  OUR FACES NEED TO BE SEEN AND OUR VOICES HEARD!

We’ve launched a campaign on Indiegogo to help fund the rally and WE NEED YOUR support!  So please contribute!  And if you are in or near Washington on November 17th, Please COME TO THE RALLY!

Click the image below or here to go to the Indiegogo campaign:

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US House Votes in Favor of Crowdfund Investing!

November 4, 2011 · 1 Comment

One word …. AMAZING!  The debate was amazing and the vote was AWESOME – 407 to 17!  I can’t believe in only 9 short months we went from “hey we’ve got a framework and a solution” to a bill that just passed the US House of Representatives!

We owe a HUGE debt of gratitude to the AMAZING group of people who made this a reality thus far:

1) Karen Kerrigan at the Small Business & Entrepreneurship Council, for listening to me and putting up with my nonsense!

2) Whoopi Goldberg and Tom Leonardis who first publicly spoke out in favor of our idea and got slammed for it. … Guess 96% of Congress agrees with you/us! 😉

3) Angus Loten at the Wall Street Journal for deciding the subject was newsworthy enough in our early days to write about it in the WSJ?!?!

4) Kevin Lawton who wrote The Crowdfunding Revolution and provided major contributions to my testimonies and the Startup Exemption framework.

5) Paul  Spinrad, Jenny Kassan & Danae Ringelmann (of IndieGoGo) who wrote the first petition to the SEC to make equity-based crowdfunding legal.  Paul also provided incredible input in the testimonies and framework.

6) Chairman Darrell Issa who so graciously took 20 minutes after the May hearing to talk one-on-one with me about crowdfunding as a solution.   Peter Haller & Hudson Hollister for pushing the idea forward.

7) Doug Rand from the White House who reached out to us and included our proposal as part of the President’s Jobs Act.  That’s bipartisan support!

8) And the AMAZING Chairman Patrick McHenry for calling the Crowdfunding hearing, writing the legislation, entering it into record, deliberating over TWO committee hearings, bringing together ideas from both sides, passionately debating it on the floor today and pulling off a 96% bipartisan win in the US House of Representatives!!!  Also a shout out to Dana Mauriello for her awesome testimony at the September Crowdfunding hearing!

And most importantly to my cohorts JASON BEST and ZAK CASSADY-DORION without whom NONE OF THIS WOULD HAVE happened!  As Jason said, “we were naive enough to think we could challenge the status quo and make a difference.  Look at what happened?”

WE AREN’T DONE! … Off to the SENATE … Stay tuned because we have our own big news on this front coming out in the next 24 hours!!

THANK YOU EVERYONE!

Sherwood

 

 

 

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House approves bipartisan SEC bills; GOP, Dems still bicker – The Hill’s Floor Action

November 3, 2011 · Leave a Comment

House approves bipartisan SEC bills; GOP, Dems still bicker – The Hill’s Floor Action.

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President Obama Endorses Our Framework and HR 2930!

November 2, 2011 · 1 Comment

When we crafted our framework for Crowdfund Investing in February, 2011 we thought we had a .1% chance of updating the security laws to make equity-based crowdfunding legal.  Now we have HR 2930, the Entrepreneurial Access to Capital Act whose roots come from 2 hearing we’ve had on Capitol Hill and our entire framework!

And this just in from the White House … aaaaaaaah … day by day we get closer to helping entrepreneurs get access to capital to innovate and create jobs!

A TON of thanks for Rep. Patrick McHenry for taking on our cause!!

The Startup Exemption Team!

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Another Step Closer to Crowdfund Investing (CFI) Reality

October 27, 2011 · Leave a Comment

Yesterday, October 27, 20011, our bill HR 2930 was amended in the Full Financial Services Committee. It now pretty much matches everything we have been advocating for in Washington! From here it goes to the floor of the US House of Representatives.

Sherwood Neiss, chief advocate of the Startup Exemption said, “What an amazing milestone. Several democrats also signed on showing further bipartisan support for entrepreneurship, innovation and JOBS!”

The Startup Exemption formulated only 10 months ago with a goal to update the security laws to use the tenants of crowdfunding to get capital flowing to entrepreneurs. In that short period of time, they acquired thousands of follows on their petition, blog and twitter feed. They were part of 2 congressional hearing in Washington, DC. They were consulted and included in President Obama’s American Jobs Act and were the backbone for HR 2930, what they like to call the Crowdfund Investing Act.

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