The top Corporation Finance Division post will be crucial because of the unit’s role in writing rules that govern public and private capital-raising.

In an interview, Mr. Hinman said “spurring more public offerings is a worthy goal of regulators, because investors benefit from the detailed public disclosures.” Hinman has also voiced his view towards further expanding the 2012 Jumpstart Our Business Startups Act. The law, also known as the JOBS Act, passed with bipartisan support and was hailed as the first sign that Washington understood how the internet could be used to help smaller companies raise money without turning to Wall Street.

“To the extent the SEC can make it more attractive and efficient to raise capital here, we are going to want to do that,” he said. “That is our primary focus and challenge going forward.”

Companies raised $2.1 trillion in private placements of stocks and bonds in 2014, compared with about $1.35 trillion for public sales of equity and debt, according to SEC figures. The decline in U.S. public listings has happened as fast-growing startups such as Uber Technologies Inc. and other “unicorns” have been able to get the cash they need from venture capitalists.

However much deal makers have lauded the SEC’s new-found resolve to promote public offerings, some market participants say they don’t see the problem that Mr. Clayton has said he wants to solve. “The real question is do small-growth companies have access to capital, and they do,” according to Robin Graham, managing director and head of technology, media and communications at Oppenheimer & Co. Inc. “It’s just in the private markets.”

According to Samuel Goldberg, a senior partner at Prospectus.com, a firm that specializes in business plan writing, feasibility studies and the preparation of investor offering documents and guiding private companies throughout the course of both private placements and public capital raising initiatives, “Public markets are ultimately the holy grail for start-up companies; easing the complexities of public listing can prove helpful for those who have private investors seeking exit strategies and enabling share Issuers to attract a new and much broader universe of investors.”

US SEC Brings in Top Gun Lawyer to Promote IPOs, Expand JOBS Act

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As brokerdealers, investment bankers, institutional investors and entrepreneurs “close the books” on 2014, all will agree this has been a remarkable year in which “billion dollar valuations” have seemingly been the norm. Most notably, technological start-ups have enjoyed increasing valuations with each subsequent round of financing from private equity and venture capital firms, albeit many financial industry professionals are wondering whether those valuations can carry over when these private companies embark on initial public offerings (IPOs).

While “Wall Street” protagonist Gordon Gekko coined the phrase “Greed is Good!,” the Broker-Dealers mantra for 2014 was “Funding is Fun!”

Below please find highlights of the WSJ article.

Chinese smartphone maker Xiaomi Corp. is now officially the world’s most valuable tech startup, worth $46 billion—the exclamation point on a year of extraordinary valuations.

Valuations placed on tech startups world-wide stretched to record heights in 2014 and accelerated at an exceptional pace, even when compared with the late 1990s dot-com boom.

Xiaomi is just the latest example. On Monday it raised more than $1 billion from investors, giving it the $46 billion overall valuation. Only Facebook Inc. raised capital at a higher value from private investors, at $50 billion in 2011.

This year, venture capitalists, mutual funds and big banks bestowed valuations of $1 billion or more on about 40 startups world-wide, doubling the number of such companies at the start of the year, according to research firm Dow Jones VentureSource.

Adjusted for inflation, the current roster of 70 “billion dollar” startups globally is nearly twice as large as the number during the boom years 1999 and 2000.

A “startup,” in this case, is loosely defined as a young, private company backed by venture capital, with overall valuations derived from the price that pre-IPO investors pay for a fraction of the equity.

Surveying the unprecedented valuations in the private market, “I have trouble drawing a parallel,” said Ted Schlein, a general partner at venture-capital firm Kleiner Perkins Caufield & Byers, adding that his firm is trying to exercise “aggressive restraint” as it looks for new investments.

Perhaps more astonishing than the dollar figures was how fast they were achieved. In November, investors paid $1.2 billion for a stake in Uber Technologies Inc. that valued the five-year-old car-hailing service at $41.2 billion, almost 12 times the price set by venture capitalists last year. The valuation of Pure Storage Inc., a vendor of data-storage equipment, tripled to $3 billion in April after less than a year. Slack Technologies Inc. was valued at $1.1 billion in October only a year after releasing its popular work-collaboration product.

In short, 2014 was the year the tech sector went into hyper-drive.

Before this year, only Facebook and Chinese online retailer JD.com Inc. commanded a valuation higher than $10 billion among private companies backed by venture capitalists, according to VentureSource. This year, six startups raised capital at that level or higher.

The prevailing theory behind the investment rush: Technology is overtaking nearly every major industry, from city transportation and hospitality to education and health care. And real businesses are being built, bullish backers say, not the revenue-less startups from those heady dot-com days in the late 1990s, when excitement over the Internet led to a tech-stock bubble that burst in early 2000.

Many of the companies in today’s billion-dollar club, such as Uber, Xiaomi, home-rental site Airbnb Inc., Web storage company Dropbox Inc. and data-mining startup Palantir Inc. are said to be generating tens if not hundreds of millions of dollars annually.

Airbnb, which is seeking to upend the hotel industry, was tagged with a $10 billion valuation in April, about 40 times its revenue of roughly $250 million in 2013. That revenue had doubled from the previous year, people familiar with the matter previously told The Wall Street Journal. Dropbox, also with a $10 billion valuation, had expected sales of more than $200 million in 2013, up from $116 million the year earlier.

Other companies, like messaging service Snapchat Inc. and online scrapbooking site Pinterest Inc., have barely started making money. Investors are betting those companies can capture audiences that will eventually translate into big money, à la Facebook.

Billionaire venture capitalist Peter Thiel , an early investor in Facebook, says on balance the field of startups doesn’t feel overvalued. The sum of billion-dollar-plus valuations in the U.S.—at roughly $160 billion—would still be less than half of Google Inc. ’s $365 billion market cap, he says.

Others are less sanguine.

“Without question in some sectors there is a pricing balloon bubble in late stage,” said Peter Fenton, a partner at Benchmark, an early investor in Uber, Dropbox and Snapchat. “At some point, these companies will be held accountable for their financials.”

The pricing party is being partly driven by the endowments, foundations and pension funds that back venture firms like Benchmark. Low interest rates and the prospect of juicy returns—inspired by success stories like Facebook, Google and Apple Inc. —are encouraging these firms to pour money into venture capital.

Venture firms have raised more than $32 billion this year, up 60% from last year’s total, though still well below the $121 billion (inflation adjusted) raised in 2000, according to VentureSource.

The latest figure, however, doesn’t include the dry powder from mutual funds such as BlackRock, T. Rowe Price and Wellington Management, or from hedge funds and big banks, all of which are bidding up prices.

Andrea Auerbach, a managing director at Cambridge Associates who meets with about 700 venture firms a year and advises foundations and other big institutional investors, says venture capitalists increasingly call her to pitch “pre-IPO funds.” The buzz-phrase conjures memories of the dot-com boom, when investors rushed into tech startups ahead of their initial public offerings. It is a sign, according to Ms. Auerbach, that investors are plowing money into startups based on momentum instead of fundamentals.

“There are managers trying to pursue this tactic—and it’s a tactic, not a strategy—of investing in pre-IPO companies,” said Ms. Auerbach. “There’s a clock on this and they’re running out of time.”

At least 30 companies have gone public in the U.S. with lower prices than they were worth in private stock sales or option grants in the prior 90 days, according to Valuation Advisors, which conducts valuations for private companies. Mr. Fenton of Benchmark sits on the board of business software company Hortonworks Inc., whose bankers cut its $1.1 billion valuation in half in December ahead of its IPO to entice investors. The maneuver worked to a degree—its stock rose 65% in the IPO. But the company, which lost $86.7 million on revenue of $33.4 million for the first nine months of the year, is trading slightly below a $1.1 billion market value.

Some warn that the winds will eventually shift in Silicon Valley and the easy money will end, possibly leading to a trail of destruction akin to the dot-com crash, including company failures and investor losses.

Mr. Fenton, whose firm Benchmark has been closely tracking companies’ spending rates this year, sees reckless behavior as the real devil underneath the big valuation numbers.

“Are we creating a generation of companies whose behavior has been poisoned by easy capital?” Mr. Fenton said.

For the entire story from WSJ, please click here.

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BrokerDealer.com blog update is courtesy of below extracts from 23 Dec NYT DealBook story by William Alden.

Editors note: For those not aware, the notion of “commission-free trading” is often a fallacy and a term that financial industry regulators somehow allow service providers to use, despite Finra’s self-acclaiming focus for cracking down on deceptive advertising. Few brokerdealers offer anything for ‘free’. Those who offer ‘commission-free’ trading for customers typically receive rebate payments aka payment for order flow checks in consideration for routing customer orders to the various electronic exchanges who dangle kickbacks in consideration for brokers delivering orders to their venue.

Andrei Cherny, Aspiration CEO

From Dealbook: “..A number of new financial start-ups are trying to reach younger and middle-class Americans by upending the customary fee structure of traditional brokerage firms and money managers. They are backed by deep-pocketed venture capital investors — and even celebrities like the rapper Snoop Dogg — who are wagering that these upstarts can challenge the Wall Street establishment…

Aspiration, a start-up wealth manager on Sunset Boulevard here, which had its official debut last month, is asking customers to pay whatever they think is “fair.” That can be as much as 2 percent of their assets, or as low as zero. Reflecting its high-minded goals, the company has also pledged to donate 10 percent of its revenue to charity.

Robinhood, a new brokerage firm based in Palo Alto, Calif., whose founders were inspired by the Occupy Wall Street movement, introduced an app this month that lets customers trade stocks without paying commissions. (The firm plans to make money by offering margin loans and by collecting a portion of the interest earned on customer money invested in money market funds.)

Big banks and brokerage firms haven’t been sitting still. Charles Schwab, for example, recently said it would introduce an automated investment service that doesn’t charge advisory fees. But many are constrained by new regulations or their own inertia. The public’s persistent skepticism of these institutions in the wake of the financial crisis hasn’t helped, either.

Some industry experts have voiced skepticism about the viability of the new business models, including those of Aspiration and Robinhood. But venture capitalists have been happy to bet that technology-focused start-ups can offer more appealing products for buying stocks or managing savings.

Aspiration has raised $4.5 million from investors including Jeff Skoll, the first president of eBay, and Joseph N. Sanberg, a former managing director at the hedge fund Tiger Global Management. Snoop Dogg and the actor Jared Leto recently invested in Robinhood, joining venture capital firms like Andreessen Horowitz that have helped the company raise a total of $16 million.

“There’s room for an investment firm with a conscience, at a time when Wall Street is facing this enormous level of distrust,” said Andrei Cherny, 39, Aspiration’s chief executive, who has a background in politics, having worked as a state prosecutor in Arizona and earlier as a speechwriter in the Clinton White House. “It should be incumbent on us to prove to our customers we’re doing a good job for them. If we can’t prove that, they shouldn’t pay us.”

Two recent initial public offerings of finance-related companies have helped amplify interest in the sector. Lending Club, which connects individuals to potential lenders, and OnDeck Capital, which makes loans to small businesses, had successful stock market debuts this month, creating windfalls for their backers.

For the entire DealBook story, please click here.

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Arthur Levitt, the longest-serving chairman of the Securities and Exchange Commission, is joining the advisory boards of two bitcoin-focused companies.

Frmer SEC Head Arthur Levitt, photo by Reuters

As an adviser to Atlanta-based BitPay, a bitcoin payment processor, and Vaurum, a Palo Alto-based bitcoin exchange for institutional investors, Mr. Levitt says he hopes to “help them understand the imperative of a robust approach to regulation” if bitcoin is to fulfill its promise to further shake up the world of finance. The appointments will be formally announced Tuesday.

Bitcoin is an independent digital currency in which transactions are verified by a network of computer owners and a universal payments ledger. The model strips out banks, credit card companies and other intermediary institutions from electronic payments and so aims to reduce costs in the system.

Mr. Levitt, who ran the SEC between 1993 and 2001 and who these days works in a variety of consulting roles, is one of the highest-profile members of the U.S. financial establishment to work in the digital-currency industry. In an interview, he said he was drawn to the sector by the innovative energy of the young people behind it, a group that he described as always “thinking beyond the box.”

“The intellectual firepower behind [bitcoin] enterprises is astonishing,” Mr. Levitt said. “But I think in terms of compliance and regulations, they are relatively immature.”

He said bitcoin needs regulation to build the trust of the broader population and boost adoption. Bitcoin firms “must have as their top priority a greater public understanding of what bitcoin is, how it works” and of the improvement it brings by “imposing competitiveness on establishment practices and procedures,” he added.

The BitPay and Vaurum appointments come at a crucial time for bitcoin. After it rallied 9100% against the dollar in the 12 months to December 2013, its price has since fallen by 70% from that peak, in part because of regulatory uncertainty.

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But another breed of company is angling to benefit from the Jumpstart Our Business Startups Act: freely traded firms, a few of which have been operating for a long time.

Salon Media Group Inc., SLNM -21.05% a 19-year old financially fighting Internet media business, and Giggles N Hugs Inc., GIGL 21.28% a seven-year old food-and-play-space chain, are among dozens of publicly traded companies that have signaled they intend to solicit investors using the new independence in the JOBS Act. Both trade on the over-the-counter market, and auditors have raised worries about their capability to continue operations.

The businesses are seeking new investors using some of the JOBS Act that lets small-scale private businesses advertise to affluent people, known as “accredited investors,” changing an 80-year old “general solicitation” marketing prohibition designed to safeguard investors.

The companies’ use of advertising independence meant for young start-ups exemplifies how a surprisingly extensive array of players expect to obtain an advantage under the brand new law. “You can place it in the class of unintended effects,” says New York securities attorney Douglas Ellenoff, referring to using the JOBS Act by publicly traded firms. “The entire purpose” of the law “was to allow it to be simpler for private companies to raise money,” he adds.

However, the usage of the brand new rules by publicly traded firms “is totally permissible,” says John C. Coffee Jr., a professor of securities law at Columbia University. He also says he does not see “any damage” in the use of the new rules by publicly traded companies.

Up to now, more than 1,600 businesses–including three dozen publicly traded ones–have signaled their intent to take advantage of the new advertising liberties, according to filings made with the Securities and Exchange Commission between Sept. 23, 2013, and June 30.

Other businesses, including San Francisco-based social media business Twitter Inc., TWTR -1.89% used other provisions in the JOBS Act to their advantage in the past. For instance, in 2013, Twitter used a group of rules in the law that permit growth businesses with up to $1 billion in yearly sales to file private filings in connection with an initial public offering. Twitter kept under wraps details about its profitability as well as the type of threats it confronted until about three weeks before it pitched its stock to investors in the process.

Salon, which now has a market valuation of less than $30 million, has another plan in utilizing the advertising liberties supplied by the brand new law. In-depth fiscal information together with the SEC has filed because it went public 15 years past. Lately, it lined up a third party fundraising platform, Deal Labs Inc., to send e-mails to 80,000 prospective investors describing Salon as an “award winning on-line news Website” with more than 17 million users. “Please see the specific risks,” reads one line in small type in the base of the e-mail that directs investors to the info about those threats.

Among those dangers: Salon’s present auditors have, since 2011, warned that they have considerable uncertainties about the organization ‘s capability to carry on its operations, citing problems such as the history of losses of the company’s. Salon went public in 1999 at $10.50 a share and is now selling stock at 25 cents a share.

Salon’s SEC filings reveal that 29% rose compared with a year before to $900,000 in the quarter ended June 30, while sales was flat. Salon CEO Cindy Jeffers attributes General Motors Co. GM -1.99% ‘s go to cut back on a planned ad campaign.

“It makes sense” for an organization that runs a Web site covering politics, entertainment and other subjects “to use all the advanced technologies,” she says of the choice to raise cash online. In the last two years, Salon has experienced “unprecedented increase” in the amount of “unique visitors” to the Salon.com website, she includes, as well as a successful stock offering will fuel an expansion that “will lead us to profitability.”

One review of the Salon offering states that it’s up to now raised $1 million of the $3 million it seeks, but it does not note that the amount represents a dedication from Salon Chairman John Warnock, a cofounder of Adobe Systems Inc. Mr. Warnock has funneled nearly $14 million into the business over the last five years, Salon says. The omission is “to be respectful of John,” says Deal Labs Chief Executive Aaron Travis. Salon’s “traffic is growing rather unexpectedly since Cindy Jeffers took over as CEO,” says Mr. Warnock. “All the signs for me are favorable.”

Salon and Deal Labs are “in dialogues” with about 20 prospective investors, including a handful that have made verbal commitments to put money into the offering, Mr. Travis includes. A fee collects in the quantity raised.

Giggles N Hugs, the Los Angeles-based family-restaurant chain, this month e-mailed about 20,000 customers with “Chance to invest” in the subject line. “We trust that you, our faithful customers, will participate in our growth goals and become stockholders,” Joey Parsi, the business’s creator, wrote in the pitch.

In the year 2012, he says, he united Giggles N Hugs because he believed being people with a publicly traded firm that had no businesses would make fundraising easier. Instead, he says, the small-scale firm found itself in a fundraising “no man’s land.” Giggles N Hugs lost $984,000 on sales of $1.6 million in the six months ending June 29, 2014, according to SEC filings.

Mr. Parsi says small businesses like his “want additional capital to triumph.” It’s three California places and he expects to add five places during the following year and enlarge into the licensing and merchandising as well as franchising of branded products. Up to now, he says, the business has procured nearly $1.2 million of the $2.6 million it seeks.

Lattice Inc., LTTC 6.52% which supplies risk-free communication services to penitentiaries, spent less than $15,000 on its recent JOBS Act stock offering. That is much less than the more than $100,000 it’d have cost the Pennsauken, N.J.-based telecommunications company to raise the same amount in a conventional private placement, Lattice CEO Paul Burgess says.

Lattice had a $779,000 loss on sales of $4.6 million in the six months ended June 30, according to its SEC filings. In all, it raised approximately $1.1 million from investors who understood the business or individuals linked with it to finance the firm’s ongoing growth.

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How to differentiate your disruptive and innovative company from the rest? Have your chief cheerleader (presumably your CEO) make an epic statement in which your entire company and your constituents can continuously hang their hats on..  The following is a classic example:

“We think we are going to fundamentally change humanity’s understanding of the economic landscape on a daily basis.” Skybox co-founder Dan Berkenstock

The above words from an entrepreneur whose offering is seemingly perceived to be something simple: satellite technology.

If you are an aspiring tech czar in the capital raising mode, a brand enhancement specialist, a brokerdealer or venture capitalist doing due diligence, or a mere investment banker who is working with an advanced-stage company whose execs are also looking to you to help ‘craft the value proposition” to investors, your target audience will always be more inspired when you perspire passion to the point where its dripping from your pores.

The context of the above quote is in connection with a very compelling piece written by WSJ reporter Christopher Mims in his aptly-titled column “KEYWORDS”

Hyperlink above will bring you to the June 16 WSJ article: The story itself is not merely about enterprise valuation techniques and not only about the next great technology innovation, the story transcends borders for those who can read in between the lines..

The post Amid the Crazy Enterprise Valuations, Google Finds a Steal of a Deal: Entrepreneurs and Bankers Take Heed; A BrokerDealer.com Blog appeared first on BrokerDealer Blog.

Bankers, Broker-Dealers, venture and private equity investors, and the universe of fast-growth start-ups who keep an eye on the pulse of pre-IPO funding rounds were salivating on Friday after Uber, the car ride service, announced it raised $1.2bil from “institutional investors, mutual funds, private equity and venture capital,” with a second round of investors coming soon. The new round of financing values the company at a total $18.2 billion. The company’s pre-money valuation, not counting the latest round of funding, was $17 billion.

Investors hope the company, which allows users to summon a ride on their smartphones, can expand globally and diversify into logistics.
The investors in the round valued Uber “pre-money” at $17 billion, the blog post said. The $1.2 billion infusion took the startup’s valuation to $18.2 billion.

Fidelity Investments put in about $425 million, Wellington Management added $209 million and BlackRock Inc contributed $175 million, according to a person familiar with the matter.

Venture firms Summit Partners, Kleiner Perkins Caufield & Byers, Google Ventures and Menlo Ventures also participated in the round, a person familiar with the matter said. Kleiner’s investment came from its Digital Growth Fund, run by former stock analyst Mary Meeker, known for her bullish recommendations during the first dot-com boom. Her fund has had recent hits, including traffic app Waze, acquired last year for $1.1 billion by Google.

“Uber is one of the most rapidly growing companies ever, and we believe there are opportunities for continued tremendous growth,” Joan Miller, a spokeswoman for Summit Partners, an investor in the funding round, said by telephone.Uber, which did not give details about its latest investors, operates in 128 cities across 37 countries.

Kalanick said he expected to close a second round of funding from strategic investors of about $200 million

The post Uber Snags $1.2Bil in Funding at $17Bil Valuation: Deal Investors Drive Record Raise for Car-Ride Service appeared first on BrokerDealer Blog.

BrokerDealer.com Launches Broker-Dealer Business Intelligence Portal for Global Bankers,

Qualified Investors and Entrepreneurs Raising Capital

New York, NY—May 28–Broker Dealer LLC, a provider of financial industry corporate intelligence and qualified investor databases, announced today the launch of a new, broker dealer web-based portal that incorporates 100,000 broker dealer, investment banker and securities dealer profiles as well as upwards of 20,000 qualified investors extending across 35 major countries, including capital formation brokers and deal investors based in North America, EU, Eastern Europe, China, Pacific Rim, the Middle East and Africa.

Apart from detailed lead generation and decision-maker metadata, the company’s platform incorporates a range of social media applications, including a “deal room” forum that enable capital-seeking business enterprises to share their business plans with professional deal-sourcing bankers and private funding sources that include qualified angel investors, hedge fund managers, private equity and venture capital firms and family offices seeking investment opportunities. The firm’s investor database is available for free and is accessible via http://BrokerDealer.com.

“Brokerdealer.com could be the right domain for this new player in the business intelligence space when considering the evolution of the JOBS Act in the U.S., the global embracement of crowd-funding in advance of traditional investment bank capital-raising techniques and the depth of global contact information available within the brokerdealer.com database. The social networking function within its subscriber-based platform is compelling, and it’s advertising-free.”

Brokerdealer.com was designed to help connect companies seeking broker dealers, funding, underwriting, or lead manager assistance for debt and equity offerings. The platform was created out of the need to give entrepreneurs, investors and data providers the ability to connect with one another. The broker dealer databases found on brokerdealer.com includes information such as broker dealer’s name, address, phone, URL/emails, and most important, a description of what the broker-dealer actually performs. If a company is seeking to raise capital for a real estate project the user will be able to filter the broker dealer databases – on a global scale – and reach out.

Brokerdealer.com anticipates adding 45 additional securities dealer and broker directories, giving network members of brokerdealer.com upwards of 75 of the world’s most popular broker dealer lists.

For Additional Info:

Email: brokerdealer@brokerdealer.com

Twitter: @broker_dealer

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