Add North Carolina to the growing list of states working on intrastate investment crowdfunding legislation, especially as the equity crowdfunding proposal of the Jumpstart Our Business Startup Act (JOBS Act) won’t be brought up by the SEC for a three-month public commenting until the end of August at the earliest. This is according to Arizona Representative David Schweikert’s estimates during his speech at the Angel Capital Association on April 19, 2013.

Skyline Of Uptown Charlotte, North Carolina
Image from FreeDigialPhotos.net

A team of local entrepreneurs and investors in North Carolina looked closely at crowdfunding legislation that has already been passed in Kansas and Georgia. Working together with State Representative Tom Murry they created the North Carolina JOBS Act by selecting the best features of each exemption, while avoiding the problems associated with the stalled and complex federal JOBS Act.

“The reason we did it is that startup companies and small businesses play a critical role in creating new jobs and growing the economy,” said Representative Murry. North Carolina angel investor Mark Easley added, “Crowdfunding gives smaller enterprises in North Carolina access to the capital they need to initiate new business ventures, to expand operations, and to hire additional staff.”

Details about the North Carolina Jumpstart Our Business Startups Act (NC JOBS Act) can be found on the North Carolina JOBS Act of 2013 Blog. The bill is sponsored by Representatives Tom Murry, Tim D. Moffit, Phil Shepard, and Kelley E. Hastings.

The North Carolina approach to investment crowdfunding has been called brilliant and clever.

The North Carolina JOBS Act has a number of provisions that allow the state’s small businesses to raise money through crowdfunding:

• The issuer must be a North Carolina business.

• The investor must be a North Carolina resident.

• Fundraising Cap: Within a 12-month period issuers may raise up to $1 million without audited financials, or $2 million with audited financials.

• Investor Cap: Investors may invest no more than $2,000 each, unless they are accredited.

• Intermediaries: Issuers may use a professional crowdfunding platform, but it is not required.

• Reporting: Quarterly reports discussing management compensation, operating results, and financial condition must be provided to all investors.

• Solicitation: Issuers and sellers are permitted to promote the offering publicly, after filing notice with the state securities regulatory agency.

• Communicating Risk: Investors are required to certify in writing by the time of sale that they understand the risks of unregistered securities and may lose their entire investment.

• Liability: Officers and directors are protected from liability except in the case of fraud or breach of fiduciary duty.

• The exemption is set to become effective immediately when passed. The state regulators may pass rules as real-world usage merits, but there is no waiting period.

It is good to see states taking the initiative while the federal equity crowdfunding law is delayed in a legal securities quagmire.

About The Soho Loft (www.thesoholoft.com)

The Soho Loft Capital Creation Events (”TSL”) is a corporate strategy and advisory services company specializing in financial innovation and economic sustainability. Through its global events and media platform it advances diligent mainstream and alternative investing for start-up entrepreneurs and small and medium-sized enterprises. TSL provides visionary leadership and relevant education in the areas of capital formation, crowdfunding, angel networking, non-conventional funding, eb5 green card programs, micro-finance, venture capital, private equity and hedge funds.

TSL is a subsidiary of LDJ Capital based in New York USA. Its founder and Chairman, David Drake, is a founding member of Crowdfund Intermediary Regulatory Advocates (CFIRA) and of Crowdfunding Professional Association (CFPA). He played a key role in the passing of the JOBS Act (Jumpstart Our Business Startups Act) in the United States. His advocacy for financial innovation has taken him to the global stage when he joined the U.S Commerce Department’s delegation to Brussels and Rome at the Transatlantic Economic Forum for SME Policy last July 2012 where he met with European ministers and national legislators. He is an international speaker and prolific writer on these topics.

Overall, TSL’s mission is to bring global awareness and develop infrastructure to facilitate innovative capital formation and access and spur job creation. As such, The Soho Loft operates as the leading global corporate strategy adviser on financial and economic policy.

About David Drake

David Drake is the founder and Chairman of LDJ Capital in New York City and of The Soho Loft Capital Creation Event Series (“TSL”) covering the Private Company Marketplace and Capital Formation. Mr. Drake is an expert and a thought leader on the USA JOBS Act (Jumpstart Our Business Start-Ups Act) including Reg A+, Reg D 506, Crowdfunding Capital and Onramp IPO. He is a founder and former executive board member of the Crowdfund Intermediary Regulatory Advocates (CFIRA) and of the leading global trade association Crowdfunding Professional Association (CfPA). He was part of the U.S. Commerce department delegation as the JOBS Act expert at the US and European Transatlantic Economic Council (TEC) forum last July 2012 in Rome and Brussels where he met with European Ministers and national legislators. He writes extensively on these topics and his articles and editorials are published by leading industry websites such as forbes.com, pehub.com, equities.com, cfira.org, crowdsourcing.org, sme-world.com and loftfi.com to name a few.

Crowdfunders generally fall into different categories like equity, donation, reward and debt. The last one is also known as microfinancing or what is commonly referred to in Europe as “peer-to-peer lending.” Funding is generally in the form of a simple loan, but over time, other instruments may possibly evolve from this. Here are the top 15 up-and-coming peer-to-peer lenders that are making the financial waves in Europe. This is an update to a previous top 10 list published on Forbes last March 26th.

1. Zopa – This London-based P2P lender offers loans of up to £10,000 where individual borrowers deal directly with lenders. Zopa categorizes borrowers based on their credit grades and lenders can offer terms and amount of money based on the category of the borrower.

2. Funding Circle – A marketplace where lenders can spread their investments across various small businesses to lower the risk and increase their ROI. The U.K. government is now lending through Funding Circle and will be lending £20 million to SMEs through the platform. Small businesses can seek loans ranging from £5,000 to £1 million from multiple crowdfunders.

3. Ratesetter – Also London-based, Ratesetter is the first to have introduced the concept of a “provision fund” into P2P lending. This fund is generated from borrowers’ payment of a “credit rate” fee and is used to diversify risk in the form of a reimbursement to lenders in the event of a late payment or payment default.

The lenders mentioned above are the biggest P2P lenders by total volume in Europe. These three are also the founding members the P2P Finance Association, the first trade association for the P2P finance industry.

4. Auxmoney – Based in Dusseldorf, Germany, this peer-to-peer loan marketplace raised $12 million in funding just this March. It allows private consumers to get personal loans from private investors between €1,000 and €20,000. Over 11,000 projects, collectively valued at over €50 million, have been financed through this platform.

5. ThinCats – As of April 2013, this P2P lender which operates throughout the U.K. had £23.14 million total capital deposited from 1,581 lending members, and had provided 120 loans since January 2011 totalling £20.38 million. Average interest earned by lenders is 10.84% net.

6. Pret d’Union – Based in Moulineaux in northern France, this top P2P lender allows private individuals and institutional investors to lend money to borrowers directly through a secured bond marketplace. It has received $5.22 million in Series B funding in 2011, and then $4.18 million in series C funding in 2012. Both lender and borrower gets a better deal from bypassing the traditional financial institutions.

7. Folk2Folk – This is another U.K.-based P2P lender that offers interest-only loans that are secured by first mortgages on non-residential or for-commercial-use properties located in the South West (Cornwall and West Devon). U.K. interest rate is normally at 7.5% for both borrowers and lenders and the minimum lending amount is £25,000.

8. Smartika – Based in Milan and formerly known as Zopa Italy, Smartika has been providing credit to the people since 2007. Lenders and borrowers get better rates that can be up to 25% less than what they would get if borrowing through traditional banking. This means that the lenders enjoy 6.5% p.a. interest rate after charges.

9. isePankur – This is the first lender to allow cross-border lending (open to investors from all EU countries) and are pursuing a pan-European (Central and Eastern Europe) coverage in future. In March this year, the lender launched a Secondary Market facility where P2P loans are now tradable. This is the first social lending platform in Estonia and is also the oldest peer-to-peer lending platform in Scandinavia.

10. Assetz Capital – Launched towards the end of 2012, this platform has lent £2,234,995 at an average rate of 13.3%. Their largest loan is £1.5m and they claim this is the largest peer-to- peer loan in the UK to date. So far they have 809 registrations.

11. Boober – Originated in the Netherlands, Boober is a direct P2P lending marketplace where the interaction between borrower and lenders is more personal and social. To date it has funded €791,650 in loans with interest rates ranging from 5.50% to 16.00%.

12. FriendsClear – Based in Paris, France, FriendsClear offers two services: FriendsClear Family for securing loans between well-known friends and relatives; and FriendsClear Pro for entrepreneurs to seek funding from private investors whom they don’t know personally. It received $637,000 funding in 2010.

13. FundingKnight – This U.K.-based peer-to-peer crowdfunding platform allows borrowers and lenders to transact directly and eliminates the need for a banking system and other financial agencies. FundingKnight has a membership minimum of £500 and can lend up to £100,000 to small businesses planning to expand. FundingKnight is a member of the fraud prevention agency CIFAS.

14. Prestiamoci – The first home-grown crowdfunder in Italy, it was founded in 2007 and launched its site on 2009. What makes Prestiamoci unique, setting it apart from its competitors, is that they have built their own in-house P2P technology platform.

15. Squirrl – A social saving community based in the U.K. that provides person-to-person as well as person-to-business lending. Squirrl provides a platform for funding assets that are provided by well established suppliers to their customers and the services are paid for over a period of time. This is allowed in many situations such as in the motor industry, industrial machinery, office equipment, mobile-phones, and vending machines.

“P2P Lending is booming in the UK and growing in several national markets in Europe,” says Claus Lehmann, a peer-to-peer lending expert and Editor at P2P-Banking.com. Going forward, “a next step in development could be a pan-european P2P lending service – to achieve that companies have to deal with regulation and financial practises that differ widely from market to market,” adds Mr. Lehmann.

Industry-wise, a recent crowdfunding report estimates that crowdfunding sites globally is estimated to reach close to $5.1 billion in transactions for 2013, twice the $2.7 billion total for 2012. And while the U.S. currently leads the world in volume of crowdfunding transactions at 72%, still a sizable chunk will come from Europe at 26%, and then 2% from the rest of the world.

About The Soho Loft (www.thesoholoft.com)

The Soho Loft Capital Creation Events (”TSL”) is a corporate strategy and advisory services company specializing in financial innovation and economic sustainability. Through its global events and media platform it advances diligent mainstream and alternative investing for start-up entrepreneurs and small and medium-sized enterprises. TSL provides visionary leadership and relevant education in the areas of capital formation, crowdfunding, angel networking, non-conventional funding, eb5 green card programs, micro-finance, venture capital, private equity and hedge funds.

TSL is a subsidiary of LDJ Capital based in New York USA. Its founder and Chairman, David Drake, is a founding member of Crowdfund Intermediary Regulatory Advocates (CFIRA) and of Crowdfunding Professional Association (CFPA). He played a key role in the passing of the JOBS Act (Jumpstart Our Business Startups Act) in the United States. His advocacy for financial innovation has taken him to the global stage when he joined the U.S Commerce Department’s delegation to Brussels and Rome at the Transatlantic Economic Forum for SME Policy last July 2012 where he met with European ministers and national legislators. He is an international speaker and prolific writer on these topics.

Overall, TSL’s mission is to bring global awareness and develop infrastructure to facilitate innovative capital formation and access and spur job creation. As such, The Soho Loft operates as the leading global corporate strategy adviser on financial and economic policy.

About David Drake

David Drake is the founder and Chairman of LDJ Capital in New York City and of The Soho Loft Capital Creation Event Series (“TSL”) covering the Private Company Marketplace and Capital Formation. Mr. Drake is an expert and a thought leader on the USA JOBS Act (Jumpstart Our Business Start-Ups Act) including Reg A+, Reg D 506, Crowdfunding Capital and Onramp IPO. He is a founder and former executive board member of the Crowdfund Intermediary Regulatory Advocates (CFIRA) and of the leading global trade association Crowdfunding Professional Association (CfPA). He was part of the U.S. Commerce department delegation as the JOBS Act expert at the US and European Transatlantic Economic Council (TEC) forum last July 2012 in Rome and Brussels where he met with European Ministers and national legislators. He writes extensively on these topics and his articles and editorials are published by leading industry websites such as forbes.com, pehub.com, equities.com, cfira.org, crowdsourcing.org, sme-world.com and loftfi.com to name a few.

David Drake of LDJ Capital continues today with his fifth article on his series regarding crowdfunding for equity solutions.

Image from BanklessTimes.com

Crowdfunding is exempt from ‘held of record‘ calculation in regards to registration requirements under 12g of SEC 1934 Act. But among the issues that could effectively kill the crowd funding provisions in the JOBS Act, is the practical matter of “held of record.”
For the first investment year, when investors cannot transfer shares except to directors of the issuing firm, direct relatives or accredited investors, there is little problem. Crowdfunding is exempt from the calculation in respect to registration requirements.
However, after one year, the registration requirements of Section 12g apply.

This represents a huge added burden when thousands (or tens of thousands) of investors transfer shares. Unless this requirement can be made more efficient through automation – or the exemption extended to 2 to 3 years – it will simply cost issuers too much.
If an issuer is burdened with this requirement, at a $2 overhead cost per investor, ownership changes could easily surpass the amount originally raised.

Maybe the drag along clause where an issuer puts in the operating agreement that if he sells the company or part of the company or gets investors coming in, the rest of the crowd funders are part of a “drag along” and have to sell — as long as they realize a minimum of some target amount in returns and profits.

A drag along clause is not standard in the world of Angels and VCs.

The question is whether such a clause should be required by the SEC, only recommended, or something that would fall under issuer/platform self-regulation.

Furthermore, what is a reasonable minimum return for the investor getting caught selling under a drag along?
We have some serious questions that if left unresolved, would make this bill sterile in practice.

It simply isn’t going to happen if it cannot be made both practical and profitable.

About The Soho Loft (www.thesoholoft.com)

The Soho Loft Capital Creation Events (”TSL”) is a corporate strategy and advisory services company specializing in financial innovation and economic sustainability. Through its global events and media platform it advances diligent mainstream and alternative investing for start-up entrepreneurs and small and medium-sized enterprises. TSL provides visionary leadership and relevant education in the areas of capital formation, crowdfunding, angel networking, non-conventional funding, eb5 green card programs, micro-finance, venture capital, private equity and hedge funds.

TSL is a subsidiary of LDJ Capital based in New York USA. Its founder and Chairman, David Drake, is a founding member of Crowdfund Intermediary Regulatory Advocates (CFIRA) and of Crowdfunding Professional Association (CFPA). He played a key role in the passing of the JOBS Act (Jumpstart Our Business Startups Act) in the United States. His advocacy for financial innovation has taken him to the global stage when he joined the U.S Commerce Department’s delegation to Brussels and Rome at the Transatlantic Economic Forum for SME Policy last July 2012 where he met with European ministers and national legislators. He is an international speaker and prolific writer on these topics.

Overall, TSL’s mission is to bring global awareness and develop infrastructure to facilitate innovative capital formation and access and spur job creation. As such, The Soho Loft operates as the leading global corporate strategy adviser on financial and economic policy.

About David Drake

David Drake is the founder and Chairman of LDJ Capital in New York City and of The Soho Loft Capital Creation Event Series (“TSL”) covering the Private Company Marketplace and Capital Formation. Mr. Drake is an expert and a thought leader on the USA JOBS Act (Jumpstart Our Business Start-Ups Act) including Reg A+, Reg D 506, Crowdfunding Capital and Onramp IPO. He is a founder and former executive board member of the Crowdfund Intermediary Regulatory Advocates (CFIRA) and of the leading global trade association Crowdfunding Professional Association (CfPA). He was part of the U.S. Commerce department delegation as the JOBS Act expert at the US and European Transatlantic Economic Council (TEC) forum last July 2012 in Rome and Brussels where he met with European Ministers and national legislators. He writes extensively on these topics and his articles and editorials are published by leading industry websites such as forbes.com, pehub.com, equities.com, cfira.org, crowdsourcing.org, sme-world.com and loftfi.com to name a few.

David Drake of LDJ Capital continues today with his fourth article of his series regarding crowdfunding for equity solutions.

Image from: BanklessTimes.com

The SoHo Loft Roundtable

Intermediaries, as set out in the Act, will be required to obtain background and history checks on officers, directors and certain affiliates of the issuer.

Our concern is that these provisions do not constitute an undue burden across the marketplace.

If background checks are set in parallel with the size of the offering, this would give a scaling feature that might be necessary to keep smaller offerings feasible.

And smaller offerings are expected to be, overall, a significant part of the crowdfunding landscape. A 20% shareholder in one issue shouldn’t automatically be required to meet the same level of background checks as one in a much smaller offering.

We would also like to see a safe harbor provision that limits liability for intermediaries who perform to regulated standards.

These standards would be the least burdensome with automated checks, such as credit and criminal history using existing technology solutions.

The balance to be struck is between a high level of fraud detection and investor protection, coupled with the lowest overhead, especially for smaller dollar amount fundraising.

The parallel with broker-dealers is not a strong one. Funding portals should have a lower standard to meet because they have a role limited by statute.

The goal is to find a commercially realistic solution and a safe harbor checklist that all portals can adopt.

About The Soho Loft (www.thesoholoft.com)

The Soho Loft Capital Creation Events (”TSL”) is a corporate strategy and advisory services company specializing in financial innovation and economic sustainability. Through its global events and media platform it advances diligent mainstream and alternative investing for start-up entrepreneurs and small and medium-sized enterprises. TSL provides visionary leadership and relevant education in the areas of capital formation, crowdfunding, angel networking, non-conventional funding, eb5 green card programs, micro-finance, venture capital, private equity and hedge funds.

TSL is a subsidiary of LDJ Capital based in New York USA. Its founder and Chairman, David Drake, is a founding member of Crowdfund Intermediary Regulatory Advocates (CFIRA) and of Crowdfunding Professional Association (CFPA). He played a key role in the passing of the JOBS Act (Jumpstart Our Business Startups Act) in the United States. His advocacy for financial innovation has taken him to the global stage when he joined the U.S Commerce Department’s delegation to Brussels and Rome at the Transatlantic Economic Forum for SME Policy last July 2012 where he met with European ministers and national legislators. He is an international speaker and prolific writer on these topics.

Overall, TSL’s mission is to bring global awareness and develop infrastructure to facilitate innovative capital formation and access and spur job creation. As such, The Soho Loft operates as the leading global corporate strategy adviser on financial and economic policy.

About David Drake

David Drake is the founder and Chairman of LDJ Capital in New York City and of The Soho Loft Capital Creation Event Series (“TSL”) covering the Private Company Marketplace and Capital Formation. Mr. Drake is an expert and a thought leader on the USA JOBS Act (Jumpstart Our Business Start-Ups Act) including Reg A+, Reg D 506, Crowdfunding Capital and Onramp IPO. He is a founder and former executive board member of the Crowdfund Intermediary Regulatory Advocates (CFIRA) and of the leading global trade association Crowdfunding Professional Association (CfPA). He was part of the U.S. Commerce department delegation as the JOBS Act expert at the US and European Transatlantic Economic Council (TEC) forum last July 2012 in Rome and Brussels where he met with European Ministers and national legislators. He writes extensively on these topics and his articles and editorials are published by leading industry websites such as forbes.com, pehub.com, equities.com, cfira.org, crowdsourcing.org, sme-world.com and loftfi.com to name a few.

David Drake of LDJ Capital continues today with his third article of his series regarding crowdfunding for equity solutions.

Graphics from Rockethub

Documentation

Investor protection is a key part of any legislation that seeks to open up opportunities to the general public.

Along these lines, we’ve previously covered requirements and suggestions for education, fraud protection, transparency and a whistleblower program.

Section 302 also establishes investment limits to guard investors against catastrophic harm, and we offer our thoughts on this issue here.

The intent of the Act is to match invested amounts with net worth, so that investments are on par with the ability to suffer losses in the often risky new ventures and small company arena.

In principle, this is an important and worthwhile concern. However, we feel a distinction needs to be made between individual and institutional investors and not simply a general rule for the marketplace as a whole.

This can be accomplished by removing institutions from the definition of “person” for purposes of regulation.

An associated difficulty comes with data gathering and checking to ensure an individual is not exceeding the proposed limits. The method used currently in other investments requires the completion of a questionnaire and the awarding of the status of “accredited investor.”

This may be the only workable solution, as other due diligence requirements could cripple the marketplace with unworkable and expensive credit or background checks.

Even checking for exposure among different crowdfunding offers (across intermediaries) has practical difficulties, unless a registry is created to gather such data.

Clarification is also needed on limits in aggregate versus per-issuer limits.

About The Soho Loft (www.thesoholoft.com)

The Soho Loft Capital Creation Events (”TSL”) is a corporate strategy and advisory services company specializing in financial innovation and economic sustainability. Through its global events and media platform it advances diligent mainstream and alternative investing for start-up entrepreneurs and small and medium-sized enterprises. TSL provides visionary leadership and relevant education in the areas of capital formation, crowdfunding, angel networking, non-conventional funding, eb5 green card programs, micro-finance, venture capital, private equity and hedge funds.

TSL is a subsidiary of LDJ Capital based in New York USA. Its founder and Chairman, David Drake, is a founding member of Crowdfund Intermediary Regulatory Advocates (CFIRA) and of Crowdfunding Professional Association (CFPA). He played a key role in the passing of the JOBS Act (Jumpstart Our Business Startups Act) in the United States. His advocacy for financial innovation has taken him to the global stage when he joined the U.S Commerce Department’s delegation to Brussels and Rome at the Transatlantic Economic Forum for SME Policy last July 2012 where he met with European ministers and national legislators. He is an international speaker and prolific writer on these topics.

Overall, TSL’s mission is to bring global awareness and develop infrastructure to facilitate innovative capital formation and access and spur job creation. As such, The Soho Loft operates as the leading global corporate strategy adviser on financial and economic policy.

About David Drake

David Drake is the founder and Chairman of LDJ Capital in New York City and of The Soho Loft Capital Creation Event Series (“TSL”) covering the Private Company Marketplace and Capital Formation. Mr. Drake is an expert and a thought leader on the USA JOBS Act (Jumpstart Our Business Start-Ups Act) including Reg A+, Reg D 506, Crowdfunding Capital and Onramp IPO. He is a founder and former executive board member of the Crowdfund Intermediary Regulatory Advocates (CFIRA) and of the leading global trade association Crowdfunding Professional Association (CfPA). He was part of the U.S. Commerce department delegation as the JOBS Act expert at the US and European Transatlantic Economic Council (TEC) forum last July 2012 in Rome and Brussels where he met with European Ministers and national legislators. He writes extensively on these topics and his articles and editorials are published by leading industry websites such as forbes.com, pehub.com, equities.com, cfira.org, crowdsourcing.org, sme-world.com and loftfi.com to name a few.

May 9, 2013 - NEW YORK – The only constant is change. That’s the essence of business. The shifting climate calls for more innovation in the business world – to create more jobs and more opportunities. Even in these challenging economic times, the world is still filled with opportunities – especially for those business-savvy folks with the vision and high flexibility quotient. Don’t get left behind.

Join entrepreneurs at the Innovation Economy Expo on Thursday, May 9, 2013 from 7:30 AM to 6:30 PM at the Ontario Convention Center in Southern California. The program helps entrepreneurs, students and educators stay in tune with the ever-changing business environment. It will also pave a way for them to connect with other businesses.

As the world moves at a frenetic pace, this is the best time for business leaders, educators and policymakers to convene under the same cause: the success of business must benefit everyone. Innovation Economy Expo happens every year, where participants from sole proprietors to large offshore organizations collaborate and focus on advancing business creation and growth.

The Soho Loft sponsors two tracks at this event together with its partner FundingPost: How to raise capital for growth via Crowdfunding and through Investor Forum.

The panel for the Crowdfunding session from 1.15-2.45pm will be moderated by David Drake, Founder and Chairman of The Soho Loft. The panel will be composed of Michael Fultz, Founder and CEO of Fund All Be All; Jeffrey Henderson, Vice-president of Sales & Marketing at Invested.In; Joseph Barisonzi, CEO at CommunityLeader; Jilliene Helman, Founder and CEO of Realty Mogul; Aggie Kobrin, Director at CEC Global Events, and David Khorram, CKO at Crowdfunding Planning.

“A sustainable economy can only be created if we foster teamwork and partnership among all stakeholders,” says Mr. Drake.

The second track from 3 to 4.30pm is an investor forum and a one-on-one pitching session to be led by Joe Rubin, Co-founder and Director of FundingPost. The panel will be joined by Paul Cummings, Head of the Honda Research Institute Fundamental Technology Partnering Group; and, Andrew Tweed of Thomvest Ventures (the family office of Thomson Reuters).

“Crowdfunding is highlighting the fact that the old ways of raising capital are just not enough today. We need to be part of a collaborative platform such as this to be able to bring more power-packed financial innovative ideas into action,” says Mr. Rubin.

There will be more chances of learning, sharing, networking, team building, and of course, creating opportunities for business development and growth during the event. The Innovation Expo Program promises to be a full day of workshops, investor forums and collaboration programs and it concludes with a networking reception back in the pavilion.

There is a need to create a crowd-driven global platform to advance innovation and companies in today’s new innovation economy and to promote a culture of collaboration by connecting innovators and business people with the global resources needed for growth. The only businesses that will succeed are those who have access and can take advantage of global resources.

Be part of their success, join them. Check out event details at :

http://innovation-thesoholoft-crowdfunding-los-angeles.ev…

About The Soho Loft (www.thesoholoft.com)

The Soho Loft Capital Creation Events (”TSL”) is a corporate strategy and advisory services company specializing in financial innovation and economic sustainability. Through its global events and media platform it advances diligent mainstream and alternative investing for start-up entrepreneurs and small and medium-sized enterprises. TSL provides visionary leadership and relevant education in the areas of capital formation, crowdfunding, angel networking, non-conventional funding, eb5 green card programs, micro-finance, venture capital, private equity and hedge funds.

TSL is a subsidiary of LDJ Capital based in New York USA. Its founder and Chairman, David Drake, is a founding member of Crowdfund Intermediary Regulatory Advocates (CFIRA) and of Crowdfunding Professional Association (CFPA). He played a key role in the passing of the JOBS Act (Jumpstart Our Business Startups Act) in the United States. His advocacy for financial innovation has taken him to the global stage when he joined the U.S Commerce Department’s delegation to Brussels and Rome at the Transatlantic Economic Forum for SME Policy last July 2012 where he met with European ministers and national legislators. He is an international speaker and prolific writer on these topics.

Overall, TSL’s mission is to bring global awareness and develop infrastructure to facilitate innovative capital formation and access and spur job creation. As such, The Soho Loft operates as the leading global corporate strategy adviser on financial and economic policy.

About David Drake

David Drake is the founder and Chairman of LDJ Capital in New York City and of The Soho Loft Capital Creation Event Series (“TSL”) covering the Private Company Marketplace and Capital Formation. Mr. Drake is an expert and a thought leader on the USA JOBS Act (Jumpstart Our Business Start-Ups Act) including Reg A+, Reg D 506, Crowdfunding Capital and Onramp IPO. He is a founder and former executive board member of the Crowdfund Intermediary Regulatory Advocates (CFIRA) and of the leading global trade association Crowdfunding Professional Association (CfPA). He was part of the U.S. Commerce department delegation as the JOBS Act expert at the US and European Transatlantic Economic Council (TEC) forum last July 2012 in Rome and Brussels where he met with European Ministers and national legislators. He writes extensively on these topics and his articles and editorials are published by leading industry websites such as forbes.com, pehub.com, equities.com, cfira.org, crowdsourcing.org, sme-world.com and loftfi.com to name a few.

David Drake of LDJ Capital continues today with his second article of his series regarding crowdfunding for equity solutions.

Advertising

The Act already addresses, and prohibits compensation for several categories of activities, including the purchase of potential investor information. It also forbids directly soliciting investors or directing them to specific investment vehicles. What is permitted is general advertising in the sense of branding a site or making the public aware of a sites purpose and function. The difficulty comes in with a grey area that might not be apparent at first glance.

Specifically, we recommend that investment providers generally be able to advertise that a certain company, cause, or named investment – without advertising specifics of the investment itself. This would fall under “notification” rather than an inducement to buy. Using this would allow directories, press releases and mention on other sites where potential investors may be interested in learning more. We feel this wouldn’t constitute “advertising” as much as “notification” and should have a backlink to the originating site as a stipulation.

Advice

Investment advice is a tricky subject. The problems arise when differentiating between unbiased information and actual investment advice or recommendations. This is further compounded by the ability to shape each user’s experience on the Internet to shape visitor experiences and gain influence over their decision making.

When will information, such as about historical performance, be construed as advice or a recommendation? What about the selection process in the decision to back one offer and host that, over another, competing offer?  SEC needs to allow exceptions and guidance for platforms, and we are asking them, to reject and remove issuers that may be offensive such as tobacco, alcohol related or sexually related issuers.  How will that not be considered investment advise?

To a large extent we believe that free market forces will constrain this latter problem, with good investments attractive to intermediaries and poorer products less so. Transparency would be key and this implies an easy way for potential investors to access solid, relevant information.

One suggestion that would increase transparency, provide information and avoid unpermitted advice, would be a template requirement with stats visible across the board and presented in the same way. This would also be a clear target for regulation and an easily enforceable metric.

The JOBS Act needs interpretation of what the intentions of Congress was when drafting it.

We are working with SEC to translate and guide this crowd funding process towards an economical automated implementation.

About The Soho Loft (www.thesoholoft.com)

The Soho Loft Capital Creation Events (”TSL”) is a corporate strategy and advisory services company specializing in financial innovation and economic sustainability. Through its global events and media platform it advances diligent mainstream and alternative investing for start-up entrepreneurs and small and medium-sized enterprises. TSL provides visionary leadership and relevant education in the areas of capital formation, crowdfunding, angel networking, non-conventional funding, eb5 green card programs, micro-finance, venture capital, private equity and hedge funds.

TSL is a subsidiary of LDJ Capital based in New York USA. Its founder and Chairman, David Drake, is a founding member of Crowdfund Intermediary Regulatory Advocates (CFIRA) and of Crowdfunding Professional Association (CFPA). He played a key role in the passing of the JOBS Act (Jumpstart Our Business Startups Act) in the United States. His advocacy for financial innovation has taken him to the global stage when he joined the U.S Commerce Department’s delegation to Brussels and Rome at the Transatlantic Economic Forum for SME Policy last July 2012 where he met with European ministers and national legislators. He is an international speaker and prolific writer on these topics.

Overall, TSL’s mission is to bring global awareness and develop infrastructure to facilitate innovative capital formation and access and spur job creation. As such, The Soho Loft operates as the leading global corporate strategy adviser on financial and economic policy.

About David Drake

David Drake is the founder and Chairman of LDJ Capital in New York City and of The Soho Loft Capital Creation Event Series (“TSL”) covering the Private Company Marketplace and Capital Formation. Mr. Drake is an expert and a thought leader on the USA JOBS Act (Jumpstart Our Business Start-Ups Act) including Reg A+, Reg D 506, Crowdfunding Capital and Onramp IPO. He is a founder and former executive board member of the Crowdfund Intermediary Regulatory Advocates (CFIRA) and of the leading global trade association Crowdfunding Professional Association (CfPA). He was part of the U.S. Commerce department delegation as the JOBS Act expert at the US and European Transatlantic Economic Council (TEC) forum last July 2012 in Rome and Brussels where he met with European Ministers and national legislators. He writes extensively on these topics and his articles and editorials are published by leading industry websites such as forbes.com, pehub.com, equities.com, cfira.org, crowdsourcing.org, sme-world.com and loftfi.com to name a few.

This is Part 1 of a 10-part series.

CFIRA representatives have already met with the members of the Corporate Finance, Trading and Markets and Office of the Compliance Inspection Divisions of the SEC.

Our interest was to hash out new rules and regulations governing crowdfunding. The process is ongoing, and this meeting was just the start. In this series, we’ll lay out some of the important points covered, our concerns and suggestions.

Any workable crowdfunding regulation will require an investor protection mechanism. We advocate relying on transparency and fraud prevention mechanisms already in place for charities and reward-based markets as a starting point. This basic structure should then be augmented with additional protections such as: portal registry, background and securities enforcement history check, required investor education and due diligence requirements.

Some of the elements suggested to protect investors are:

1. Funding portal register, similar to Broker-Check. This should allow easy checking for registration status;

2. Whistleblower program similar to existing programs at the SEC, but scaled to the smaller amounts expected;

3. Third party escrow;

4. Due diligence requirements with these key components:

• a. Background and history check for registrant, scaled to funding amounts;
• b. Education of potential investors on crowdfunding generally;
• c.  Survey investors individually to verify their understanding of the risk they are taking in general and on this particular deal;

As with all investment vehicles, the trick will be to balance regulation against the cost of compliance.

For this reason, many of our suggested practices need to be scaled to the expected market. Since one of the advantages of crowdfunding is a diverse investor base with small, but cumulative, investments at risk, the regulatory costs can quickly balloon and kill returns.

To avoid fatal regulatory hurdles for the industry, we recommend the burdens be placed generally on those issuing the investment opportunity and minimized for investors. There already exists a method to do this: the internet itself, where disclosures and information can be a simple click away and investment tracking (on both sides) can be automated.

About The Soho Loft (www.thesoholoft.com)

The Soho Loft Capital Creation Events (”TSL”) is a corporate strategy and advisory services company specializing in financial innovation and economic sustainability. Through its global events and media platform it advances diligent mainstream and alternative investing for start-up entrepreneurs and small and medium-sized enterprises. TSL provides visionary leadership and relevant education in the areas of capital formation, crowdfunding, angel networking, non-conventional funding, eb5 green card programs, micro-finance, venture capital, private equity and hedge funds.

TSL is a subsidiary of LDJ Capital based in New York USA. Its founder and Chairman, David Drake, is a founding member of Crowdfund Intermediary Regulatory Advocates (CFIRA) and of Crowdfunding Professional Association (CFPA). He played a key role in the passing of the JOBS Act (Jumpstart Our Business Startups Act) in the United States. His advocacy for financial innovation has taken him to the global stage when he joined the U.S Commerce Department’s delegation to Brussels and Rome at the Transatlantic Economic Forum for SME Policy last July 2012 where he met with European ministers and national legislators. He is an international speaker and prolific writer on these topics.

Overall, TSL’s mission is to bring global awareness and develop infrastructure to facilitate innovative capital formation and access and spur job creation. As such, The Soho Loft operates as the leading global corporate strategy adviser on financial and economic policy.

About David Drake

David Drake is the founder and Chairman of LDJ Capital in New York City and of The Soho Loft Capital Creation Event Series (“TSL”) covering the Private Company Marketplace and Capital Formation. Mr. Drake is an expert and a thought leader on the USA JOBS Act (Jumpstart Our Business Start-Ups Act) including Reg A+, Reg D 506, Crowdfunding Capital and Onramp IPO. He is a founder and former executive board member of the Crowdfund Intermediary Regulatory Advocates (CFIRA) and of the leading global trade association Crowdfunding Professional Association (CfPA). He was part of the U.S. Commerce department delegation as the JOBS Act expert at the US and European Transatlantic Economic Council (TEC) forum last July 2012 in Rome and Brussels where he met with European Ministers and national legislators. He writes extensively on these topics and his articles and editorials are published by leading industry websites such as forbes.com, pehub.com, equities.com, cfira.org, crowdsourcing.org, sme-world.com and loftfi.com to name a few.

May 7, 2013 – NEW YORK — The Soho Loft takes the university students, researchers and academia of Baruch College, City University of New York, to an insider look into capital markets and the benefits of the JOBS (Jumpstart Our Business Startups) Act. The Soho Loft organized a special panel discussion that will engage in issues related to the JOBS Act, its impact on the crowdfunding scene and how crowdfunding can best offer the kind of funding that other financing methods may not be able to provide. These and other issues will be tackled during the Creative Impact Entrepreneurship Program on Tuesday, May 7, 2013 at the Baruch College Campus.

“Crowdfunding is an alternative funding solution that will best match the challenges and opportunities that startups and small businesses face during capital formation and growth expansion strategies,” says David Drake, Chairman of The Soho Loft.

Photo courtesy of Baruch College

Mr. Drake will moderate the panel discussion that will highlight the unique developments of the JOBS Act, a law which has propelled the vibrant growth of the crowdfunding industry in the USA. The discussion will not just highlight the latest developments in this piece of legislation but will also focus on how the entrepreneurs can take advantage of the opportunities it offers to help grow their businesses.

The participants can also glean important insights from Alejandro Cremades, Founder and CEO of Rock The Post. Mr. Cremades completed his Master’s Degree in International Business & Trade Law at Fordham Law School. Rock The Post is a grassroots crowdfunding platform for entrepreneurs and small businesses.

Others on the panel are: Vamsi Sistla, Technical Strategist at Crowd Valley; Jeremy Andrews, Founder and CEO of Smart Money Entrepreneurs; and, Sang Lee, Founder and CEO of Return on Change.

The discussion is expected to further fuel the students’ desire to create and innovate and get to the core of the industry and community where they want to actively take part in.

Not many people know that Baruch College was put up almost a hundred years ago on the foundation of a free academy, which resulted from the New York Literary Fund. In 1958, the business college was later named after Bernard Baruch, an alumnus of the college, statesman, financier, philanthropist, and political adviser to many US presidents.

Today, Baruch College is home to one of the best-kept secrets in New York, which is the Lawrence N. Field Center for Entrepreneurship. For over two decades now, the Small Business Development Center or “Small Business Lab” has been serving the entrepreneurs of New York by providing resources like advices, mentoring and other related services. As an outcome, the field center was instrumental in more than $110 million invested into the New York economy.

It comes as no surprise that the JOBS Act and crowdfunding will find its most passionate students and followers among the halls of this university.

Check out event details at : http://crowdfunding-university-baruch-newyork-57.eventbri…

About The Soho Loft (www.thesoholoft.com)

The Soho Loft Capital Creation Events (”TSL”) is a corporate strategy and advisory services company specializing in financial innovation and economic sustainability. Through its global events and media platform it advances diligent mainstream and alternative investing for start-up entrepreneurs and small and medium-sized enterprises. TSL provides visionary leadership and relevant education in the areas of capital formation, crowdfunding, angel networking, non-conventional funding, eb5 green card programs, micro-finance, venture capital, private equity and hedge funds.

TSL is a subsidiary of LDJ Capital based in New York USA. Its founder and Chairman, David Drake, is a founding member of Crowdfund Intermediary Regulatory Advocates (CFIRA) and of Crowdfunding Professional Association (CFPA). He played a key role in the passing of the JOBS Act (Jumpstart Our Business Startups Act) in the United States. His advocacy for financial innovation has taken him to the global stage when he joined the U.S Commerce Department’s delegation to Brussels and Rome at the Transatlantic Economic Forum for SME Policy last July 2012 where he met with European ministers and national legislators. He is an international speaker and prolific writer on these topics.

Overall, TSL’s mission is to bring global awareness and develop infrastructure to facilitate innovative capital formation and access and spur job creation. As such, The Soho Loft operates as the leading global corporate strategy adviser on financial and economic policy.

About David Drake

David Drake is the founder and Chairman of LDJ Capital in New York City and of The Soho Loft Capital Creation Event Series (“TSL”) covering the Private Company Marketplace and Capital Formation. Mr. Drake is an expert and a thought leader on the USA JOBS Act (Jumpstart Our Business Start-Ups Act) including Reg A+, Reg D 506, Crowdfunding Capital and Onramp IPO. He is a founder and former executive board member of the Crowdfund Intermediary Regulatory Advocates (CFIRA) and of the leading global trade association Crowdfunding Professional Association (CfPA). He was part of the U.S. Commerce department delegation as the JOBS Act expert at the US and European Transatlantic Economic Council (TEC) forum last July 2012 in Rome and Brussels where he met with European Ministers and national legislators. He writes extensively on these topics and his articles and editorials are published by leading industry websites such as forbes.com, pehub.com, equities.com, cfira.org, crowdsourcing.org, sme-world.com and loftfi.com to name a few.

Crowdfunding is rapidly changing the real-estate investment market, offering developers new ways to finance projects, small investors a way in, and the socially conscious an avenue to support their local communities—and their local farms.

Here is a rundown of the real-estate crowdfunding firms I think will have the biggest impact. (Full disclosure: I have advised Primarq (number 7) on its secondary market strategy, where investors can sell their shares without having to liquidate the actual properties.)

 1. Fundrise –The company lets people invest in their local communities, earning profits while becoming socially involved. Since its August launch it has raised $575,000 for two projects in Washington, DC—a food market and the rehabilitation of a closed library into an apartment building with retail space.

2. Realty Mogul– Launched last month, this firm already has funded two deals (worth about $200,000) while raising $500,000 in seed money. Accredited investors pool money to buy shares of pre-vetted investment properties for as little as $5,000. It was incubated by Microsoft Techstars and won top awards in pitch competitions.

3. RealtyShares– This platform went on beta launch in November; it claims 289 investors intending to invest $1.5 million. As little as $500 can buy shares in commercial real estate, apartment buildings, and homes. It is led by a team of Berkeley students trained in finance, engineering, law, business, and media studies.

4. Fquare– The firm  lets you invest in pre-vetted farmland for as little as $5,000. Farmers sell their land for 3-6% annual interest on 5- to 20-year leasebacks; once the lease expires investors sell the land and share the profits. There’s also a program to rent farm; instead of paying rent, the farmers deliver their harvest to food banks.

5. Collaperty – The first real-estate crowdfunding network is still little more than social. It lists real-estate opportunities and connects investors . It currently has 79 members collaborating on 14 real-estate deals, and is raising $22,487,456 in equity.

6. Prodigy Network– This platform for class-A real-estate investments serves the United States and Latin America; it is crowdfunding for various projects in New York and Bogota. Its investors have put $171.8 million into a skyscraper that will be Colombia’s tallest building. Prodigy has produced $8 billion in sales since its 2003 launch.

7. Primarq– The NASDAQ of residential real-estate equity has developed a platform where investors help consumers buy homes, and home-owners can monetize the value of their homes. It also offers a secondary market where investors can sell their shares without having to sell the actual properties.

8. Globerex– Still in beta, Globerex is focused exclusively on commercial real-estate deals of $500,000 to $50 million. Users can create and track deals involving their own investors or those in the Globerex community.

9. CrowdMason– Also, in beta testing, CrowdMason is very basic, letting members identify and monitor commercial real-estate deals, in which sponsors will be required to make significant investments of their own equity.

10. iFunding–This firm chooses real-estate projects for you and shares the profits. For a $1,000 minimum, members can buy into any piece of the site’s portfolio of multi-family, hospitality, office, and residential properties. Each project is a distinct limited partnership that pays dividends in as little as six months.

About The Soho Loft (www.thesoholoft.com)

The Soho Loft Capital Creation Events (”TSL”) is a corporate strategy and advisory services company specializing in financial innovation and economic sustainability. Through its global events and media platform it advances diligent mainstream and alternative investing for start-up entrepreneurs and small and medium-sized enterprises. TSL provides visionary leadership and relevant education in the areas of capital formation, crowdfunding, angel networking, non-conventional funding, eb5 green card programs, micro-finance, venture capital, private equity and hedge funds.

TSL is a subsidiary of LDJ Capital based in New York USA. Its founder and Chairman, David Drake, is a founding member of Crowdfund Intermediary Regulatory Advocates (CFIRA) and of Crowdfunding Professional Association (CFPA). He played a key role in the passing of the JOBS Act (Jumpstart Our Business Startups Act) in the United States. His advocacy for financial innovation has taken him to the global stage when he joined the U.S Commerce Department’s delegation to Brussels and Rome at the Transatlantic Economic Forum for SME Policy last July 2012 where he met with European ministers and national legislators. He is an international speaker and prolific writer on these topics.

Overall, TSL’s mission is to bring global awareness and develop infrastructure to facilitate innovative capital formation and access and spur job creation. As such, The Soho Loft operates as the leading global corporate strategy adviser on financial and economic policy.

About David Drake

David Drake is the founder and Chairman of LDJ Capital in New York City and of The Soho Loft Capital Creation Event Series (“TSL”) covering the Private Company Marketplace and Capital Formation. Mr. Drake is an expert and a thought leader on the USA JOBS Act (Jumpstart Our Business Start-Ups Act) including Reg A+, Reg D 506, Crowdfunding Capital and Onramp IPO. He is a founder and former executive board member of the Crowdfund Intermediary Regulatory Advocates (CFIRA) and of the leading global trade association Crowdfunding Professional Association (CfPA). He was part of the U.S. Commerce department delegation as the JOBS Act expert at the US and European Transatlantic Economic Council (TEC) forum last July 2012 in Rome and Brussels where he met with European Ministers and national legislators. He writes extensively on these topics and his articles and editorials are published by leading industry websites such as forbes.com, pehub.com, equities.com, cfira.org, crowdsourcing.org, sme-world.com and loftfi.com to name a few.

The article also appeared in Forbes with the same title:

http://www.forbes.com/sites/groupthink/2013/04/19/crowdfundings-latest-invasion-real-estate/