The total number of Financial Industry Regulatory Authority (FINRA) member retail brokerages has been on the decline for the last five years, but one sliver of the universe is showing new signs of life: A new crop of broker/dealers and online funding portals are joining FINRA to capitalize on new opportunities made possible by the JOBS Act of 2012. The legislation prompted the SEC to make it easier to market and solicit investments, and opened the door for small businesses to engage in so-called “equity crowdfunding.”

About 15 to 20 of these new firms have signed on since 2013, according to Fishbowl Strategies, with another three to six launching soon, in anticipation of a wave of issuers and investors entering the market. Whether there is a crowd for equity crowdfunding remains to be seen.

But Paul Boyd, managing partner at ClearPath Capital Partners, a wealth management firm for tech entrepreneurs, says there
is plenty of pent-up demand and a backlog of Reg D deals that are moving forward.

Boyd also expects the next phase of the JOBS Act, Title III, will bring a lot more attention to capital raises online. Set to go into effect in May, those rules let any investor, accredited or not, invest in unregistered securities online (with limits on the amounts that can both be invested, and raised, in a year). The tech-fueled vision of bypassing stuffy financial intermediaries in favor of a new-class of SEC-registered and FINRA member “crowdfunding portals” has inspired a flotilla of startups to enter the space.

Many of the new entrants have affiliated agreements with brokerdealers. Some have launched their own b/ds.

WealthForge launched its own b/d to provide all the services needed to complete a private securities transaction, including investor accreditation, regulatory filings and escrow. Co-founder and CEO Mat Dellorso says the new rules—and bringing the process online—have spurred their growth.

“When you bring the internet and you’re allowed to advertise a private security through 506(c), more investors do take part,” he says. WealthForge has completed 150 private financing transactions, bringing in 2,500 investors. “A traditional investment bank might complete three or five a year,” he says. “It’s a lot more volume because it’s more transparent and online now.

“Normally these transactions take weeks and months, but an investor can literally invest in a private placement on our platform in a matter of minutes,” he says.

Dellorso doubts they will do much work with firms looking to raise capital through the exemptions for non-accredted investors.

CircleUp is another new broker-dealer with a focus on consumer products and retail companies. Bhakti Chai, which makes Fair Trade Certified tea, raised nearly $865,000 on the platform.

Folio Institutional, a self-clearing broker/dealer, saw the interest around equity crowdfunding and decided to launch an online equity and debt-funding platform in September. Since the firm can custody the securities, it can enage in secondary-market transactions and, potentially, public offerings.

For the entire article from WealthManagement.com please click here

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In a recent Forbes.com profile, CEO Crosland talks about his broker dealer, which is already operating and doing crowdfunding type equity raises under the SEC’s Regulation D 506(c) rules for general solicitations, says, “ I believe the SEC passing Title III will be a watershed event for both startups and investors. Startups and the general investing public will be forever changed.”

BrokerDealer.com is the global directory of broker-dealers; the firm’s database covers brokerdealers operating in more than 30 countries across the free world.

Seed Equity Ventures is a registered broker dealer with the U.S. Securities and Exchange Commission and is a member of both FINRA and SIPC. Seed Equity Ventures provides investment banking services to startups and growth companies from around the world.

The Forbes piece by Devin Thorpe was excerpted by the curators at crowdfund industry search portal, RaiseMoney.com; here’s the link

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The moment many advisers hear the term “crowdfunding,” they tune out. Crowdfunding is for the unwashed masses, for Kickstarter fans, for small-time investing neophytes. It’s not a place for real investing.

Well, advisers can continue to believe that, but that doesn’t mean their clients will. Especially given changes on tap for 2016 that will shower more investors with opportunities to “get in on the ground floor of the next big thing.”

The odds of your clients being drawn to new ventures rose markedly on Oct. 30, when the Securities and Exchange Commission passed Title III, part of the 2012 JOBS Act, which allows non-accredited investors to get into private equity through crowdfunding platforms.

Jeff Benjamin’s column quoted a securities lawyer, Doug Ellenoff, calling this move “the publicification of the private investment market.” And Mr. Benjamin cautioned InvestmentNews readers about the coming “aggressive push into the retail space” early next year, when these sites can begin taking non-accredited money.

BUY-IN LIMITED

Luckily for advisers, who hold tight to client assets and manage portfolios holistically, the buy-in for these offers will be limited. The deals themselves will not be able to raise more than $1 million in a 12-month period, and individuals will be able to contribute only between 5% and 10% of their yearly income.

But any chunk broken out of a financial plan to wager on these offers deserves attention. That’s not to say none of these ventures will be worth considering. And likely, if a client wants to support a community project, for example, there may be factors to weigh in addition to possible returns.

But in this new environment, advisers need to tell clients: “Bring anything that comes your way to us first.” Deals will sound too good to be true because that’s how marketing works. That’s fine when it comes to toothpaste or hamburgers, but decisions to spend even a few grand in retirement savings on crowdfunding offers would benefit from professional scrutiny.

And advisers will need to stay current during the evolution of this new retail-level private equity market and its investment structure…

For the full article, please click here

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The US Securities & Exchange Commission (SEC) has given a social media greenlight to startups seeking to raise money and this week updated rules allowing for use of Twitter and other social media tools to solicit investors.

The Division of Corporate Finance announced that tweets of 140 characters or less are a proper way for a startup to gauge potential investor interest in a stock or debt offering. The posting must include a link to a disclaimer that says the firm isn’t yet selling securities.

If you are interesting in equity opportunities with start-ups, click here. Brokerdealer.com is the leading database for broker-dealers that want to help you.

Bloomberg noted that the SEC has been warming up to social media since April 2013, when it approved the use of posts on Facebook and Twitter to communicate corporate announcements such as earnings. Its latest endorsement of social media applies only to companies looking to raise up to $50 million a year.

Firms that use Twitter to solicit investor interest must include a link to a required disclaimer that says the firm isn’t yet selling securities, the SEC said in this week’s announcement.

It’s not clear how many companies will take advantage of the higher fundraising cap. Fewer than 30 offerings were made from 2012 to 2014, when the limit was $5 million, according to the SEC.

This post is from raisemoney.com.

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Three years after the JOBS Act was passed, it seems that Washington is back for more–a curtain call if you will–making it easier for small ventures to raise capital.

The House Financial Services Committee in early June floated a draft bill that would allow the creation of “venture exchanges” tailored to the needs of small companies looking to raise money. In many ways, the success of the JOBS Act hinges upon the creation of such markets. A healthy secondary market created liquidity that is critical to building investor confidence and creating a robust alternative to the global markets that today are dominated by enormous corporations.

If you are looking for a broker-dealer to get you started, click here. Brokerdealer.com is the leading database for dealers around the world.

The new proposed venture exchange laws are aimed at increasing access to liquidity for early stage investors in private startups and small businesses (some of which could be JOBS Act enabled investors), as a lack of liquidity was a concern voiced by some surrounding the new laws for equity crowdfunding with non-accredited investors. 

Investors in technology startups, for example, are likely to have to hold their position in any one investment for an average of 7 years. Creating opportunities for selling private stock in a startup investment sooner through venture exchanges has the potential to reduce some of the early stage investment risks.

These new venture exchanges could create markets that allow early investors who invested via equity crowdfunding to trade shares far before any kind of liquidity event like a public offering (IPO) might take place, spelling an opportunity for liquidity for those early investors. 

The number of IPOs has gone from an average of 311 from 1980-2000 down to an average of 99 IPOs each year from 2001-2011 so opening up other alternatives for liquidity will de-risk the growing number of startup investments happening online.

This is yet another step towards reforming our capital markets. The first step was to enable access, and was addressed by Titles II, III & IV of the JOBS Act. So regardless of your opinion on this matter, the summer is shaping up to be an interesting time for equity crowdfunding investors, accredited and non-accredited alike.

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Broker-dealer North Capital Private Securities has agreed to add the crowdfunding site OneVest to its platform that syndicates private offerings for investors. The platform, called 99Funding, has a minimum investment of $1,000 to $5,000, depending on the offering, but no fees for advisers or investors.

North Capital Private Securities vets each investment opportunity by reviewing documents, analyzing investment propositions against the market, doing background checks on principals and performing other due diligence.

More advisers are getting involved in crowdfunding, according to Jim Dowd, managing director of North Capital Private Securities.

“Just now it’s sort of getting into the more established financial services phase where financial advisers and independent broker-dealers are starting to look at these opportunities on behalf of their clients,” he said. “It’s driven by clients more than anything. Clients are insisting on these opportunities instead of brokers or advisers bringing the opportunities to them.”

REGULATORS TAKE ACTION

Crowdfunding grabbed regulators’ attention a couple years ago when Ohio officials sought to shut down a crowdfunding site for allegedly misleading investors about the earnings potential of investment opportunities.

Since then, state regulators, like in Massachusetts, have wanted investors to know that “some crowdfunding platforms might exaggerate potential returns and not present fair and balanced risk and opportunity,” according to Mr. Dowd.

“That’s why we embrace the idea of regulation from the beginning,” he said.

Marianne Hudson, executive director at Angel Capital Association, a network of accredited angel investors, said that if done right, crowdfunding can be a way to diversify a portfolio.

“It’s just a matter of finding out if it fits in your interest and understanding and own investment preferences,” she said. “A lot of them offer opportunities to make smaller investments . . . which then totally adds for diversity.”

Having the ability to make small investments may make the process more attractive to advisers and their clients who can then allocate a portion of their portfolio to this type of investment.

Ms. Hudson’s advice to financial advisers is to do their own due diligence.

“They need to get each individual platform to make sure they’re comfortable,” she said.

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Uber is an app-based transportation network and taxi company based out of San Francisco, California. It began in 2009 and has slowly been making its way across the United States and the world. Customers use the app to request rides and track their reserved vehicle’s location. Uber vehicles range from black luxury SUVs and town cars, to taxis, drivers’ personal vehicles. Although Uber hasn’t gone public yet, they have recently expanded their venture round to a total capacity of $2.8 billion due to high demand. Now, it is only a matter of time before the company decides to go public and the brokerdealers can’t wait. 

Uber, the ride-hailing service, likes to trumpet its popularity with consumers. Their fervor is surpassed, perhaps, only by investors’.

Facing overwhelming demand from institutional investors, Uber has expanded its Series E round of venture financing by $1 billion, according to documents filed Wednesday with the Delaware secretary of state, bringing the total capacity for the round up to $2.8 billion.

The move, which was confirmed by Uber, occurred just weeks after the company closed a $1.2 billion round of financing. At the time, Uber said it had left capacity for about $600 million in additional strategic investments, according to a Delaware filing. The company is incorporated in Delaware and based in San Francisco.

But the appetite for a piece of Uber has proved to be greater than the company had imagined. The $600 million was quickly oversubscribed, and Uber decided to raise the amount. Baidu, the Chinese Internet giant, accounts for part of the additional investment beyond the $1.2 billion round.

The most recent expansion is on top of some $4 billion Uber raised, including a recent $1.6 billion round of convertible debt financing from the clients of the private wealth arm of Goldman Sachs, the investment bank previously confirmed.

Uber’s $40 billion valuation, extraordinary by any private technology company’s standards, remains unchanged since the company announced the first part of the round in December. Uber is one of the most richly valued private technology start-ups, second only to Xiaomi, the Chinese smartphone manufacturer.

“The participation we have seen in Uber’s Series E underscores the confidence investors have in Uber’s growth,” Nairi Hourdajian, the head of global communications at Uber, said in a statement.

Even in Silicon Valley’s recent venture capital environment, where hundreds of millions of dollars and high valuations seem much easier to come by, Uber remains an anomaly. The company has raised close to $5 billion in private financing since it was founded in 2009, and it appears in no hurry to introduce itself to the public markets.

Uber is likely to need full pockets to continue its rapid growth.

The company is working to expand UberPool, its ride-sharing initiative that links multiple passengers heading toward the same destination and lets them split the cost.

Uber has also said it intends to bolster its European operations and push into the Asia-Pacific region.

It can expect to meet opposition. Uber faces stiff resistance from taxi and limousine interests in countries like Spain, Germany and Belgium, among others, and will probably need to spend heavily to market itself to win favor with locals.

To do well in China, the world’s most populous country, Uber will probably have to spend heavily to take on services like Kuaidi Dache and Didi Dache, China’s two largest taxi-hailing services, which recently announced plans to merge. That deal, if completed, would give the two services more than 90 percent of the market.

Meanwhile, Uber’s largest United States competitor is also raising money. Lyft, identified by its signature pink mustache logo, is trying to raise at least $250 million in private capital, with participation from at least one previous investor, the Alibaba Group of China.

For the original article, click here.

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For most start-up businesses, money to finance the business is a key issue, in recent years, start-up businesses have been turning to crowdfunding.

Crowdfunding is raising money contributions from a large number of people, typically through the use of the Internet. Some of the  more popular crowdfunding sites include GoFundMe and Kickstarter.

These kind of small businesses are the ones President Obama wanted to help in 2012 when he signed the Jumpstart Our Business Startups Act, better known as the JOBS Act. Part of the law, Title III, was intended to allow small businesses seeking capital to crowdfund, or raise money from virtually anyone, by selling stock and other securities over the Internet. “Start-ups and small business will now have access to a big, new pool of potential investors,” Mr. Obama said at the time. “For the first time, ordinary Americans will be able to go online and invest in entrepreneurs that they believe in.”

Congress directed the Securities and Exchange Commission to finalize the rules by December 2012, but the agency has yet to do so. As it reviews Title III of the JOBS Act, a debate has raged. Supporters say crowdfunding is an innovative way to finance new ideas. Others say the high risk associated with backing early-stage businesses is inappropriate for ordinary investors.

Only accredited investors — those with annual income of more than $200,000 or $1 million in net worth not including their primary residence — are permitted to participate in crowdfunding deals. Under the proposed rules, which the S.E.C. introduced in October 2013, businesses could raise up to $1 million in a 12-month period without registering the offering with the agency.

“The goal is to democratize and improve finance,” said Representative Patrick T. McHenry, Republican of North Carolina, who worked on the House crowdfunding bill that was incorporated into the JOBS Act.

In writing its rules, the S.E.C. adopted strict requirements intended to minimize fraud and protect investors. Individuals who are not accredited investors, for instance, would face limits on how much they could invest. Businesses would be required to go through a registered broker or a new type of registered platform called a funding portal for their offerings. Businesses also would be required to submit audited financial statements. The rules are still under review and may change.

While the rules are still under review having a brokerdealer in your corner to help find smart investments to make whether it is in a small company or large corporation.

For the full story from the New York Times click here

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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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The Securities and Exchange Commission is considering changes to its 30-year-old definition of “accredited investor” that could have serious implications for the crowdfunding industry.

Accredited investors are permitted to participate in private securities placements, and since the passage of the JOBS Act in 2012 opened the door to general solicitation for investors, many have been finding those opportunities through crowdfunding platforms.

The current definition of an accredited investor, written in 1982, says it is a person with earned income in excess of $200,000 (or $300,000 with a spouse) in each of the prior two years or one with a net worth over $1 million (alone or with a spouse), excluding the value of his/her primary residence.

Those pushing for change say the income thresholds have not been updated for inflation—that in today’s dollars, $200,000 and $300,000 would be $500,000 and $700,000.

But critics, like Brendan Ross, president of Direct Lending Investments, say such a change would halve the number of accredited households in the U.S., which today make up, by the SEC’s own calculations, 7.4% of all households.

Ross, who manages a short-term, high-yield small business loan fund, told FINalternatives that as regulators “become more educated on the implications of such a change, they will be less likely to move forward.”

“This would negatively impact the investment management industry as the number of accredited investors would sharply decrease. It’s unlikely that the SEC would want to impinge upon the private placement industry, which is the source of most financial innovation. Value investing, small companies, emerging markets, commodity funds, and REITs all started with accredited investors putting money into private placement vehicles, which then evolved into mutual funds.”

For the full story, please visit www.finalternatives.com

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