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2016 | Buch

The JOBS Act

Crowdfunding Guide to Small Businesses and Startups

verfasst von: William Michael Cunningham

Verlag: Apress

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The second edition of this book shows how full implementation of the Jumpstart Our Business Startups (JOBS) Act by the SEC in 2016 enables entrepreneurs and SME executives to leverage crowdfunding platforms to raise significant amounts of capital for their startups and small-to-medium–sized businesses. The unprecedented fundraising opportunities contained in the hundreds of pages of new SEC rules have generated tremendous excitement in the startup, small business, angel investing, and venture capital worlds—tempered by uncertainty about the correct interpretation of the rules and the compliance risks implicit in them.In The JOBS Act: Crowdfunding Guide for Small Businesses and Startups, 2nd Edition, crowdfunding pioneer William Michael Cunningham trawls the hundreds of pages of new rules for the essential takeaways and practical tips on successfully tapping the new crowdfunding sources that the JOBS Act opens up to small businesses and startups, while complying with new SEC regulations in the least burdensome way. The 2nd edition of The JOBS Act delivers the following new material:Updates and augments the 1st edition with description, analysis, and discussion of post-2012 SEC rules and forms implementing the JOBS Act
Focuses on the final SEC rules that implement Title III (“Regulation Crowdfunding”) and Title IV (“Regulation A+”) to make the JOBS Act a practical fundraising vehicle for small business and startups
Presents case studies of successful JOBS Act-compliant crowdfunding campaigns
Tips readers to the opportunities, loopholes, and hazards in the hundreds of pages of new SEC rules that crowdfunders need know to maximize their fundraising success and avoid inadvertent non-compliance
Deploys new graphical analysis tools and financial models summarizing and comparing characteristics of various equity-based and donation-based crowdfunding campaigns
Reviews and describes significant Title III offerings and highlights relevant Title IV offerings
Lists all SEC/FINRA-approved equity crowdfunding platforms (“funding portals”)
Describes Title VII and provides crowdfunding-pertinent information on the new Offices of Women and Minority Inclusion at twenty-nine federal agencies
Who This Book Is For
Entrepreneurs and small business owners who wish to leverage the JOBS Act to crowdfund their enterprises. The secondary readerships are investors, angels, venture capitalists, securities lawyers, community development specialists, and visitors to crowdfunding platforms, which are required under the JOBS Act to demonstrate to the SEC and FINRA that they are proactively providing educational resources to potential crowdfunders.

Inhaltsverzeichnis

Frontmatter

Summary of the JOBS Act

Frontmatter
Chapter 1. The JOBS Act
Summary and Definitions
Abstract
Signed into law on April 5, 2012, the Jumpstart Our Business Startups (JOBS) Act remains a revolutionary development in the world of startup and small business financing. The revolutionary potential of the JOBS Act has been gradually activated by phased regulatory implementation of its various parts, called titles. Only since May 16, 2016, for example, have startups and small businesses been enabled to tap the promise of certain provisions in the JOBS Act to use the power of the Internet to raise equity capital from investors across the country and around the globe. These provisions allow small companies, including startups, to raise via crowdfunding (described in full later in this chapter) up to $1 million per year, subject to a five-year and $700 million market-value limit. For such companies, the JOBS Act has also created exemptions to accounting and auditing rules, as well as to rules that require public companies to report details concerning executive compensation and other financial data.
William Michael Cunningham
Chapter 2. Startup Financing Environment
Is the JOBS Act Still Needed?
Abstract
I hope this chapter provides some of the rationale for the optimism expressed at the end of Chapter 1. Financing a startup is difficult. The financial crisis made this task all the more challenging. But, with the addition of the financing options allowed under the JOBS Act, I believe the task of financing a startup or existing business may be, at the margin, easier, and this is all most true entrepreneurs need—a little daylight.
William Michael Cunningham
Chapter 3. Emerging Growth Companies
Facts, Figures, and Potential
Abstract
The JOBS Act defines eEmerging Growth Companies (EGCs) merging growth companies (EGCs) in the United States as firms with less than $1 billion in revenue. The act targets these firms, allowing them to raise up to $1 million by selling ownership stakes (equity capital), or taking on debt (loans) via crowdfunding. These firms can raise a maximum of $1 million on an annual basis.
William Michael Cunningham

Disclosure and Crowdfunding in the JOBS Act

Frontmatter
Chapter 4. Accounting, Reporting, and Other Standards in the JOBS Act
Form C
Abstract
The Securities Act of 1933 mandates that to sell or even offer to sell securities in the United States, those securities must be registered with the Securities and Exchange Commission, the SEC. The SEC, in turn, requires security sellers (broker/dealers) to disclose a great deal of information about the company doing the selling, the company investors are buying into (not the funding portal or broker). This set of information tries to provide, comprehensively, all relevant information about the firm’s past and future prospects. This 1933 act allows certain companies to skip the registration process under a limited number of conditions. These security registration exemptions allow a firm to sell its securities if it is selling them to “accredited investors,” generally high-income, high-net-worth people. The JOBS Act changes this.
William Michael Cunningham
Chapter 5. Crowdfunding
Abstract
On June 7, 2007, I proposed the creation of the Microcredit Stock Exchange to the Government of the District of Columbia.
William Michael Cunningham
Chapter 6. What Title III Crowdfunding Costs
Abstract
Under the final rules for crowdfunding, the SEC (the commission) has developed detailed cost estimates for Title III JOBS Act issuers. These estimates cover the cost of each requirement imposed on issuers. This chapter describes these estimates and offers my perspective. As an initial cost guide, I think these estimates will be of interest to those considering JOBS Act crowdfunding under Title III.
William Michael Cunningham
Chapter 7. Portals
Crowdfunding Industry Model Portal(s)
Abstract
In order to crowdfund, you need a portal. In this chapter, I expand on the JOBS Act rules governing these critical entities. I also review our estimates, based on SEC data, for total revenue and profit by platform type and for the industry as a whole.
William Michael Cunningham

The JOBS Act, by Title

Frontmatter
Chapter 8. Title I
Reopening American Capital Markets to Emerging Growth Companies
Abstract
This section of the JOBS Act sets the stage for all that comes later. It defines an emerging growth company as a security issuer with less than $1 billion in revenue in the most recently completed fiscal (as opposed to calendar) year. It also states that any company with less than a billion in revenue that issued common stock prior to December 8, 2011 is not eligible to be treated as an emerging growth company. Certain disclosure requirements are lifted. The “firewall,” or limitations between security issuance activities (underwriting) and research, is lifted for EGCs.
William Michael Cunningham
Chapter 9. Title II
Access to Capital for Job Creators
Abstract
To sell securities legally in the United States, the company offering them must register the securities with the US Securities and Exchange Commission. All information concerning the offering has to be presented to investors via a prospectus. A company can bypass this registration requirement via the use of a limited number of exemptions.
William Michael Cunningham
Chapter 10. Title III
Crowdfunding
Abstract
The crowdfunding provision of the JOBS Act gets most of the attention. Section 301 establishes that transactions under $1 million are exempt from certain registration requirements. Note that the act does not specify that only EGCs can use these provisions. The crowdfunding exemption is broadly available to even very large or very old firms.
William Michael Cunningham
Chapter 11. Title IV
Small Company Capital Formation
Abstract
Some have called Title IV the most important part of the JOBS Act, since it expands what are known as Regulation A exemptions. Regulation A allows the SEC to remove registration restrictions from any class of security if it determines that doing so is in the public interest. Securities issued under a Regulation A exemption had been previously limited to $5 million. The JOBS Act raises that limit to $50 million. This is a very large increase, a change we don’t normally see.
William Michael Cunningham
Chapter 12. Title V
Private Company Flexibility and Growth
Abstract
If a company has fewer than 750 shareholders and less than $1 million in assets, long-established rules exempt that firm from having to register its securities with the SEC.
William Michael Cunningham
Chapter 13. Title VI
Capital Expansion
Abstract
Title VI of the JOBS Act focuses on banks, and does for them what Title V did for other companies. It says banks don’t need to register with the SEC until they have $10 million in assets and a certain number of shareholders. It also expands the number of those shareholders for these institutions from 500 to 2,000 before triggering the registration requirement, with no qualification concerning accredited vs. nonaccredited persons.
William Michael Cunningham
Chapter 14. Title VII
Outreach on Changes to the LawOutreach on changes to law
Abstract
This title of the JOBS Act follows a pattern established by Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires the creation of an Office of Minority and Women Inclusion at 29 federal agencies to “monitor the diversity efforts of the agencies, the regulated entities, and agency contractors.”
William Michael Cunningham
Appendix A. Form C
Abstract
Under JOBS Act Title III, operationalized as Regulation Crowdfunding, to raise money using Title III Crowdfunding, you must first file Form C. The Swiss Army knife of disclosure documents, the form should be filed 21 days prior to soliciting funds. Form C is filed electronically via the SEC’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system.
William Michael Cunningham
Appendix B. Form 1-A
Abstract
If Form C is the Swiss Army knife of disclosure documents, Form 1-A is a machete. The stakes are higher. You can solicit up to $50 million from anyone, not just accredited investors. (Certain investors are limited to investing only a certain percentage of their income, however.) While you have more freedom to talk about your offering on social media and via advertising, the overall audience is going to be more knowledgeable.
William Michael Cunningham
Appendix C. Sample Pitch Deck
Abstract
As I noted in this book, it makes sense to have a cogent, easy-to-share summary of your crowdfunding approach, no matter what you are trying to do. This chapter facilitates that by presenting sample slides. These slides (available free online at www.creativeinvest/crowdfundingslides/) provide a framework you can use in your own crowdfunding efforts.
William Michael Cunningham
Backmatter
Metadaten
Titel
The JOBS Act
verfasst von
William Michael Cunningham
Copyright-Jahr
2016
Verlag
Apress
Electronic ISBN
978-1-4842-2409-0
Print ISBN
978-1-4842-2408-3
DOI
https://doi.org/10.1007/978-1-4842-2409-0