Crowdfunding Now!

The Washington Post reported that Ben Miller, the co-founder of Fundrise.com, said that his firm has received $31 million in financing from tech and real estate investors led by Chinese social media giant Renren and executives from New York developer Silverstein Properties. Other investors include Scott Plank, formerly of Under Armour, and Rich Boyle, former chairman and chief executive of Loopnet. http://www.washingtonpost.com/news/digger/wp/2014/05/28/fundrise-lands-31-million-in-financing-led-by-chinese-social-media-firm/

The picture below shows states where real estate crowdfunding transactions have occurred. We agree "crowdfunding" is one of the latest buzz words, but the fact that Merriam-Webster's Collegiate Dictionary recently added Crowdfunding  speaks to the fact that crowdfunding is here to stay.  While the full impact on the U.S. real estate market has yet to be determined, if the past year is any indication, real estate may be one of the biggest segments of the crowdfunding marketplace. In twenty-three (23) states (plus the District of Columbia), project sponsors have successfully funded multiple real estate and property transactions.  These states, shown above in blue , and listed in alphabetical order, are: Alabama, Arizona, California, District of Columbia, Florida, Georgia, Illinois, Indiana, Kansas, Louisiana, Michigan, Mississippi, Missouri,  New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, Texas, Utah,  Washington, and Wisconsin. We

The picture below shows states that have enacted equity crowdfunding (green). The states that have legalized equity crowdfunding as of today (7/22/14) are listed below: Alabama Colorado Georgia Idaho Indiana Kansas Maine Maryland Michigan Tennessee Washington Wisconsin Others are in the process of enactment...and moving fast! The first thing to note is the way states with equity crowdfunding exemptions are clustered. Alabama/Georgia, Colorado/Kansas, Washington/Idaho. This is no accident. If a state nearby has equity crowdfunding and you do not, it is marginally more likely that startups and other companies looking for capital will move to the state with crowdfunding. Therefore, it makes sense for your state to adopt a crowdfunding exemption. States understand the potential equity crowdfunding has and refuse to wait for SEC JOBS Act Title III regulations to be finalized. Probably the most notable state on its way to allowing equity crowdfunding is California. Why

According to an analysis if the proposed law, "this bill is closely modeled after the recent enacted equity crowdfunding exemption established in Maine..and will allow small businesses to raise up to $1 million in capital by selling small amounts of equity to individual investors. Small businesses will need to register with the California Department of Business Oversight , as well as, set a fundraising goal and deadline. This bill will allow individual investors to purchase up to $5,000 in equity from a single business." Bill AB-2096   Highlights  (click on the link at left to go to the bill) "A) The aggregate amount of securities sold to all investors by the issuer within any 12-month period is not more than one million dollars ($1,000,000). (B) The aggregate amount of securities sold to any investor by the issuer, including any amount sold during the 12-month period preceding the date of the transaction, (is) five thousand dollars ($5,000)... (ii) For..offeri

We have worked on a number of crowdfunding projects and can offer the following guidelines.  It is helpful to think of a crowdfunding project as a long-duration project, even if it is only three months long. Given this, "it is critical there be a continual flow of accurate information from team members, managers, partners, and the crowd concerning your project. Yet, our experience is that,  almost invariably, bad news concerning how a crowdfunding project is tracking doesn't get to noticed until it is too late to do anything about it . Most projects are run by one or two people, so this might be seen as surprising. Why is this? If we're talking about a project with a one or two-month duration, the temptation to ignore bad news is great. "Surely, the self-justification goes, we can work really hard, send a few emails, and things will come back on track. Surely, we can send some better tweets and make it up. Surely we can grab some attention somehow."  So h

According to Financial Services Committee Staff, Congressman Patrick McHenry has offered to "strike Title III of  the JOBS Act, which was added by the Senate, and replace it with legislation that closely  mirrors the House-passed crowdfunding title and makes additional improvements." The proposed legislation, "entitled  the ' Startup Capital Modernization Act of 2014 ' ,  (H. R. 4565)  is primarily directed towards fixing some of the potentially fatal defects and ambiguities embedded in the original JOBS Act bill...here are some of the highlights: Raises crowdfunding limits from $1 million to up to $5 million. Allows self –certified financials for raises under $500,000 – and independently reviewed financials statements for raises between $500,000 and $3 million – leaving the more onerous audited financials for raises above $3 million. Eliminates the requirement that the SEC promulgate rules requiring detailed, registration statement-like non-financial dis

We note with interest recent comments published in Time Magazine and written by Princeton University freshman Tal Fortgang. Mr. Fortgang apparently feels compelled to not apologize for something I don't recall anyone asking him to apologize for, being born white and male at a time when it pays to be both in the richest country on earth. (For an interesting take on Mr. Fortgang, take a look at Slate Magazine's  response .) This follows similar statements made by  Donald Sterling and Clive (not Al) Bundy , Mr. Bundy seen here with a Clarence Thomas look alike. Mr. Fortgang believe that his 2 or 3 years of success are due to the investments his parents made in his education. On this, he is partially right. The problem is that investments do not matter , since returns from investments for certain people have been  purposefully   limited . The fact that he does not recognize this makes him arrogant, selfish and stupid. Mr. Fortgang's attitude is only possible with a surp

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