Newsletter: Bring Foreign Capital to the US via Crowd Funding – SEC suggestion

Newsletter: Bring Foreign Capital to the US via Crowd Funding – SEC suggestion

Updates, Thanks and an Invitation

Rumors are circulating that Chairman Mary Schapiro of SEC will resign after the elections.  I would think she has received a little too much heat this year.  While we are fervently working to make sure crowd funding for equity is not delayed as a new law, it does not seem it will be legal until mid 2013.

Meanwhile, we had a great event at NYU and Columbia University for their Executive MBA Class last week.  We are now continuing our work at NJIT, TechLaunch, State University of NY at Lake Placid, FIT and PACE in NY.  Reach out if you have not presented with us and will be available in NYC.

 A great thanks to Freeman White of Launcht, Douglas Ellenoff of Ellenoff, Grossman & Schole, Richard Salute of JH Cohn, Enzo Villani of Villani Advisers, Christine Landon of Crowd Fund Advisers, Mark Perlmutter of MicroAngels and Vince Molinari of Gate Technologies for speaking at these events.

New Partner Announcement

EFactor Corp. Partners with The Soho Loft to Offer Expert Funding and Financing Expertise for Global Entrepreneurs

The Soho Loft has partnered with EFactor – one of the leading entrepreneur organizations globally with 1,000,000 plus members.  We have 80+ events scheduled just with them for 2013 and are about to launch 20 more partnered events in the next few months – so check out our global event calendar.

About EFactor Corp.

EFactor Corp., the world’s largest entrepreneurial community, provides its members with the people, tools, marketing and expertise to succeed and make real, trustworthy and lasting connections. At the core of EFactor is a strong algorithm that allows members to not only connect with a lot of people, but with the right people. In addition, EFactor provides knowledge, funding access and resources to reduce business costs, delivered through a unique mix of online social networking and offline domestic and international events. EFactor has over one million members in 185 countries across 90 industries. It is incorporated and headquartered in San Francisco.

EFactor Corp. is also the parent company to a number of subsidiary service organizations including: MCC International, a UK communications and public relations agency; EQmentor, a company that delivers matching software for mentors to find the best mentees. In addition, it develops partnerships with companies such The Soho Loft, a global event platform where attendees assemble in order to exchange ideas and opportunities that will help reshape capital markets and stimulate economic growth.

 

This is going to be a busy fall.  See you out there and meanwhile enjoy this article we had Mr. Drake write.

SEC suggests: Bring foreign capital to the US via crowd funding

 

Crowd funding had $1.5 billion in transactions in 2011.  Because of the attention being given to the crowd funding bill, we are looking at a $3.2 billion market in 2012.  Almost all of that projected market is currently happening outside crowd funding for equity transactions.  In this nascent industry, half of that projection is also from the production of US companies.  Now our holding firm, The Soho Loft, is proposing that we should export our expertise abroad.  The US Commerce department agrees.

 

At our first meeting with the SEC, we quickly learned there would only be one self-regulatory organization involved, FINRA. Shortly thereafter, we revamped CFIRA so part of it became a trade association (CFPA) while the acronym CFIRA was modified to mean the Crowd Fund Intermediary Regulatory Advocates.  This positioned our organization to actively lobby for a regulatory environment that would facilitate effective crowd funding for equity.

 

One of the topics we haven’t asked the SEC about during my last three visits is how do we get foreigners without social security numbers to place investments in the US? This is extremely difficult  when tracking investors is legally required. It seems logical to use an SSN for this, but there might be a more effective option. Our next conversation with the SEC will include this question, and I will highlight the recommendation that foreign investors should not be excluded.  We will ask the SEC to consider allowing foreign investors to invest with an Individual Taxpayer Identification Number (ITIN). The IRS passed an ITIN regulation on Dec. 17, 2003. It reads, in part:

 

“Foreign buyers and sellers of U.S. real property interests need Taxpayer Identification Numbers (TINs) to request reduced tax withholding when disposing of the property interest, and to pay any required withholding. Individuals who do not qualify for Social Security Numbers (SSN) may obtain Individual Taxpayer Identification Numbers (ITINs) to meet the requirement to supply a TIN.

 

The Internal Revenue Service implemented new procedures, effective December 17, 2003, to strengthen controls on ITINs and ensure the numbers are issued for tax administration purposes only.”

 

ITINs would help import capital to the US and brand US innovation and early-stage investment without having to do expensive road shows and face-to-face meetings.

 

Other recent articles and news on our website:

Real Wall Street’s Heart Booms from Southern California
The Soho Loft Capital Creation Events, a holding company of LDJ Capital, and the West Coast Wall Street Conference have announced a joint venture for a Nov. 19th event in Newport Beach: American Prosperity and Jobs Symposium 2012.

The Soho Loft University Series: Creative Impact Entrepreneurship

And true to The Soho Loft DNA and its’ decade worth of history, it continues this same spirit through its University Series on Creative Impact Entrepreneurship.

The Soho Loft at SUNY: A Leading-Edge Seminar on ‘Crowdfunding’ at Lake Placid

One of the seminar headliners, David Drake, stated that “Our expertise is in helping Small and Medium-sized Enterprises (SME) and start ups find capital formation solutions.”   Dr. Nancy J. Church, Chair of the Department of Marketing and Entrepreneurship in the School of Business and Economics, SUNY Plattsburgh, stated “We are excited to have such high-powered, distinguished guest speakers visit the campus, and we hope that members of the business community will take the opportunity to join us!  As the only SUNY school that offers a B.S. in Entrepreneurship degree, we want to offer leading edge and relevant programs that will help our students and local entrepreneurs discover ways to raise capital and follow their dreams.

Please visit www.thesoholoft.com//crowdfundingupcoming-events/ for future events.

Note:  Featured image courtesy of www.freedigitalphotos.net

2 Comments

  1. I’m not sure that clears enough hurdles – put in reverse, if a US investor went to a CF site located overseas and invested, the SEC would deem that the securities needed to be registered in the US.

    As everyone tends to follow the US, what this means is that the securities offered on the US CF site would likely have to be registered in the EU or UK or wherever those investors were coming from. The alternate would be to set up an offshore blocker company and limit the offering to accredited investors.

    Basically, the tax and banking regimes make it very difficult for investment capital to flow freely internationally, certainly at the level expected for equity CF flows.

    More likely that multinational CF sites will co-host campaigns in different jurisdictions. Obviously less friendly to entrepreneurs who’d like to see a CF site have global distribution capabilities, but the liabilities and legal quagmires, and different evolutionary stages of various countries make this 3-5 years away from inception.

    Reply
    • You are actually outlining the challenges on an international basis. Currently all crowd funding for equity platforms in Stockholm, Rotterdam, London and Paris are run domestically and offered initially only to domestic investors. However, there are SPVs strategies set up to expand on this but this requires, as you outline, financial registration compliant with EU laws and domestic laws. We are well aware about the developments abroad and how they are executing as we have a investor watch list in crowd funding. (David Drake)

      Reply

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