Most large public companies provide D&O insurance to their directors and officers. It also often is included in the entrepreneur-investor term sheet offer, a kind of pre-nuptial agreement for prospective business partners. A typical term sheet offer includes the valuation and capitalization provisions, the financial terms, and the control terms. It should include D&O insurance as well.

As of year-end 2012, the largest direct writers of D&O coverage in the United States were American International Group, Inc., XL Group Ltd, The Chubb Corporation, HCC Insurance Holdings, and Travelers Companies, Inc.

Most claims for reimbursement under D&O insurance historically have been related to securities litigation and regulatory actions and settlements. More recently, there also have been many claims related to mergers and acquisitions. Many large D&O claims also arise from corporate malfeasance or regulatory investigations, the types of stories that receive wide coverage in the business and mainstream media.

A D&O policy also should protect you from claims against the company by stockholders, employees, and customers. Nearly half of all D&O claims come from employees; a study by Watson Wyatt Worldwide in 1997 found that one-third of all companies have had at least one claim made against their directors or officers, though most are at large companies, with more than $100 million in assets.

In case of a lawsuit, D&O insurance reimburses the company’s directors and officers for any losses they incur as a result of legal action brought against them for alleged wrongful acts related to their position. A good policy provides broad indemnification coverage, including defense costs incurred from civil/criminal actions, regulatory investigations, court appearances, and trials.  Before investing, review the indemnification policy, and review it thoroughly.

So, angel investor, take a lesson from the VCs. Become an officer in the company in which you are investing, and make sure you are covered by its D&O insurance. If it’s not on your term sheet, demand that it be included.

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.

Bruce E. Methven (Guest Contributor)

With private placement offerings (not public offerings), investors must hold the securities for certain minimum periods of time.  These securities are called “restricted” because of these conditions regarding resale.  The basic purpose of holding periods is to ensure that an investor is not buying the securities for someone else.

Federal Rule 144 provides the basic guidelines for resales to third parties for private placement offerings that cross state lines.  Rule 506 offerings are an example.  In addition, some state securities laws apply Rule 144 for certain single-state offerings even where the recipient is a resident of that same state.  This is the case, for example, with California 25102(n) offerings.  Single-state offering exemptions that do not specify a holding period for resales to residents of that state probably have to be held for at least six months, by analogy to the shortest specified holding period under Rule 144.

(Although Rule 144 is the holding-period rule that applies most often, different offering exemptions can have different holding periods.  Securities sold under the Model Accredited Investor Exemption must be held for at least 12 months.  Rule 147 prohibits the resale of securities purchased in single-state offerings to persons outside that state unless nine months have passed from the last sale by the issuer of the offering.)

The holding period under Rule 144 depends on whether the owner is an “affiliate” of the issuer, and whether the issuer is a “reporting company,” meaning whether the company is required to file quarterly reports with the SEC.  (Generally, only companies that have had a public offering of their stock are reporting companies.)  Rule 144 also imposes some addition requirements on resales of the stock.

Who Is an Affiliate?

Although the SEC definitions are not precise, generally an “affiliate” is someone who is a director or officer of the company, or who holds at least 10% of the ownership of the company.  In addition, a spouse of an affiliated person or a relative of either the affiliated person or the affiliated person’s spouse is also considered an affiliated person.

Further, a (separate) company in which an affiliated person owns 10% or more of the ownership – or a trust where an affiliated person is a beneficiary of 10% or more of the trust assets – is an affiliated person.

Securities held by affiliated persons are called “control” securities.  (These are a subset of “restricted securities.”)

Restricted Securities of Non-Reporting Issuers

The holding periods for restricted securities of non-reporting issuers (the usual situation) begin when the securities have been fully paid for and last as follows:

For those who are not an affiliate and have not been an affiliate during the last three months, there is a one-year holding period.  After that, the securities can be sold without any further requirements.

For affiliates, there is also a one-year holding period.  After that, though, the securities can only be sold if certain requirements (“Affiliate Requirements”) are met.

First, the company must make publicly available information similar to the information required to be included in an annual report to shareholders.

Second, in most cases an affiliate in each three-month period can sell only the greater of a) 1% of the outstanding shares of the same class being sold or b) if the class is listed on a stock exchange,  the OTC Bulletin Board or the Pink Sheets, 1% of the average reported weekly trading volume during the preceding four weeks.

Third, the sale must be handled as a routine trading transaction and a brokers cannot receive more than a normal commission.  In addition, neither the broker nor the seller may solicit orders to buy the securities.

Lastly, an affiliate must file a notice with the SEC on Form 144 if the sale involves more than 5,000 shares or the aggregate dollar amount is greater than $50,000 in any three-month period.

Restricted Securities of Reporting Issuers

Generally, companies that have not had a public offering of securities are not reporting issuers.  Still, where they are reporting issuers, the following holding periods apply to their private offerings, with the periods beginning when the securities are fully paid for.

For those who are not an affiliate and have not been an affiliate during the last three months, there can be no sales for six months.  Sales may be made between six months and one year, although current public information about the company must be supplied.  After one year the securities can be sold without any requirements.

For affiliates, no resales within six months are permitted.  After six months, the securities may be resold if the Affiliate Requirements discussed above are met.

Effect on Gift Recipients and Purchasers

The Rule 144 holding periods do not apply to a gift (versus a sale) of securities – but the recipient must satisfy the holding periods and requirements as if he/she were the original purchaser.

Where the securities are sold and the requirements of Rule 144 are met, the purchaser receives the stock without any holding restrictions.

Crowd funding is growing in popularity and proving to be a wonderful source of assistance for start-up businesses and new community projects that otherwise would fall by the wayside. Female entrepreneurs and business owners seem interested in crowd funding, but at the same time there are not enough such women in the UK. They seem to be involved more in projects such as business mentoring and support roles, rather than taking on the more substantial financial backing process.

When starting up a business, the most important factor is probably the financial implications. A good business plan is essential, but it is also good practice to research extensively about your funding options. There are the possibilities of bank loans and other finance for business lending according to money.co.uk. Other young business entrepreneurs may seek assistance from crowd funding organizations, or simply appeal directly to the eminent professionals that they know about. Here are details of some of the UK businesswomen known to be active in the crowd funding scene. While not directly advocating crowd funding, these women are influential in their circles, and all keen to share and develop the careers of aspirational young people that want to stand out in their specialist field.

Business Women on Television

Julie Groves is the MD of crowd funding organisation Trillion Fund, who specialise in renewable energy resources and products. She has been appointed as the first Chair of the UK Crowdfunding Association (UKCFA). Karren Brady is a popular media figure after her appearance on television show The Apprentice alongside Lord Alan Sugar. She is an enigmatic and driven woman, having forged her career in the very male-dominated football industry. She is now on several company executive boards, she is a motivational speaker, and she works with charities and other organizations to develop their business plans and growth.

Members of Parliament

Martha Lane Fox. Image from: www.telegraph.co.uk

Martha Lane Fox is an internet entrepreneur, board director, and sits in the House of Lords as a Baroness. It is within this role that she is currently working on a campaign to improve the computer literacy of underprivileged people in Britain. She is keen to promote the importance of internet business, especially after the dramatic burst of the dotcom bubble. Angela Knight is the former chief executive of the British Bankers Association, a former member of parliament, and began her career as an engineer and entrepreneur. She now serves as chief executive of trade body Energy UK, and is a non executive director. Again she comes from a troubled profession of late, but shows that determination and tough spirit will always shine through in the face of adversity.

Politics and Campaign Groups

Sarah Brown is the wife of former British prime minister Gordon Brown. She is a PR professional by trade, having set up a successful partnership firm after working in brand consultancy for several years. More recently she has become involved with women’s charities, and founded an organisation that investigates complications during pregnancy, following her own personal experiences. Ceri Goddard is chief executive of the Fawcett Society, a campaign group for women’s rights in the UK. She writes for several influential newspaper organisations and magazines, reporting on the situation for women in the UK labour market.

Harriet Lamb is executive director of the United Kingdom Fairtrade Foundation, and has devoted her professional career to raising the profile of Fairtrade in the UK to benefit people from poorer countries. She has campaigned for the UK minimum wage and for refugee rights during the course of her career. Camila Batmanghelidjh is a colourful character, quite literally, and has made her mark in the development of care and support for underprivileged young people in the UK. She is especially known for her charity work with vulnerable children in London.

Women in Science and Economics

Professor Dame Athene Donald is a British physicist of great esteem. She works with the University of Cambridge and Robinson College Cambridge, and chairs the Athena forum. This is an organization that works to help women advance their careers in science, technology, mathematics and medicine, and improve their representation in UK higher education. Yvette Cooper is a prolific politician and member of parliament for the UK Labour party. She is well known for her campaign work for women and equalities in the UK, and is recognised as one of Britain’s most powerful and influential business women.

June 4, Washington, D.C. – The Champions of Change ceremony of the White House is  a program to win the future across America by honoring people who are making a difference in their communities and inviting them weekly to share their stories and ideas.

On June 4, the White House chose to honor 12 Crowdfunding Pioneers as Champions of Change. Crowdfunding is a game-changer that these entrepreneurs advocated, adopted and propagated and by so doing they embody its promise to fuel the growth  of startups, small businesses, and innovative projects across the nation.

Image from Kiva.org

Those honored were as follows:

Amy Kaherl, Director at Detroit SOUP

Andrea Seabrook, Founder of DeCodeDC

Aurora Anaya-Cerda, Owner of La Casa Azul Bookstore

Chase Adam, Founder of Watsi

Emily Nunez, Co-founder and CEO at Sword & Plough

Eric Stackpole, Co-founder OpenROV

Marcin Jakubowski, Founder and Director at Open Source Ecology

Max Hodak, Founder of Transcriptic

Michele Clark,  Executive Director at Youth Employment Partnership

Noha Waibsnaider, Founder of Peeled Snacks

Peter Platzer, Co-founder and CEO at NanoSatisfi

Premal Shah, Co-founder and President at Kiva

“Today’s awards showcase the myriad ways crowdfunding is changing America. As Paulette Aniskoff, Director of the White House Office of Public Engagement, highlighted: It’s amazing when the honorees include everyone from healthy fruit snack creators to designers of underwater robots,” says Christopher Tyrrell.

Among those invited to witness the ceremony were other crowdfunding thought leaders, such as:

Alejandro Cremades, CEO at Rock The Post

Alon Hillel-Tuch, CFO at RocketHub

Bruce Lipnick, CEO at Crowd Alliance USA

Candace Klein, CEO at SoMoLend

Christopher Tyrrell, Managing Director at Nehemiah Investments

David Drake, Founder and Chairman of LDJ Capital and The Soho Loft

David J. Paul, CSO at GATE Impact

James Jones, CEO at the Self-Directed IRA Investment Institute

Kim Wales,  Founder of Wales Capital

Robert Taylor, Founder of FundSafe

Vince Molinari, CEO at GATE Technologies

Crowdfunding has been growing rapidly globally with America leading the way. It has been revolutionizing the financial system and revitalizing the markets – giving regular Americans an alternative source of funding; fueling new and innovative ideas; bringing together new entrepreneurs and new investors; creating new and more jobs; and ultimately, boosting socio-economic growth.

About The Soho Loft (www.thesoholoft.com)

The Soho Loft is an event-driven financial media company that advances innovative 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, microfinance, venture capital, private equity and hedge funds. A subsidiary of LDJ Capital based in New York City, USA, its founder and Chairman, David Drake, is  founder and former executive board member of Crowdfund Intermediary Regulatory Advocates (CFIRA) and Crowdfunding Professional Association (CFPA). He is a strong advocate of financial innovation, the US JOBS Act (Jumpstart Our Business Startups Act) and other entrepreneurial and investment policies  through his work as an international speaker and writer.

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.

For press inquiries, contact carmen.campo@thesoholoft.com.

]]> http://thesoholoft.com/2013/06/13/crowdfundi%e2%80%8bng-pioneers-as-champions-of-change/feed/ 0 http://thesoholoft.com/2013/06/11/ride-the-crowdfunding-wave-with-the-big-names-in-investing/?utm_source=rss&utm_medium=rss&utm_campaign=ride-the-crowdfunding-wave-with-the-big-names-in-investing http://thesoholoft.com/2013/06/11/ride-the-crowdfunding-wave-with-the-big-names-in-investing/#comments Tue, 11 Jun 2013 20:02:29 +0000 Emman http://thesoholoft.com/?p=8420 Billionaire Donald Trump rocked the business world when he announced last month that he was backing FundAnything, a crowdfunding service similar to Kickstarter.

What is it with crowdfunding that even a business giant such as Donald Trump is drawn to it?

Crowdfunding has truly revolutionized early-stage investing.  Venture capitalists, business angels, and crowdfund investors each play an important role in the burgeoning and dynamic entrepreneurial ecosystem in the United States and worldwide, keeping it vital and thriving.  Today’s entrepreneurs need more dependable and trustworthy experts to introduce new financial models.

Image from http://www.billzanker.org/

This is the need that binds The Soho Loft, an event-driven financial media company, and FundingPost, a company that links entrepreneurs to investors worldwide.  For the past 11 years these two pillars have been jointly staging networking events designed to empower businesses through financial innovation.  It’s a partnership committed to educating people about crowdfunding and other means of capital formation.

One such networking event, the Venture Capitalist and Angel Event, was held May 2 in Las Vegas, bringing together Vegas-based entrepreneurs, investors, and service providers.

Crowdfunding leaders at the event emphasized the unique benefits of raising capital from the crowd, such as the record-breaking speed at which a startup can raise funds through crowdfunding.  They gave tips on how to create successful crowdfunding campaigns and shared important updates on the JOBS Act and equity crowdfunding. The crowdfunding panel included Joseph Barizonsi (co-founder and CEO, Community Leader, Inc.) and Scott Purcell, founder of Arctic Island.

Angels and venture capitalists who graced the event included Patrick Armstrong (analyst, Capital Partners), Michael A. Dinan (president & CEO, Dinan & Company), Rick Gibson (HOT Ventures), Ian McNeil (angel investor, Vegas Valley Angels), and Jack Porter (founder and  managing director, Forward Accelerator). They talked about the sectors they were looking at and what is most important to them when considering an investment.

One highlight of the event was a pitching workshop in which entrepreneurs were coached on their elevator pitches and then actually got to present them to the investors who were present. The workshop was run by Joe Rubin, director of FundingPost.

Dominic Marrocco, founder of Entrepreneuria, gave the keynote speech, inspiring participants with his success story of becoming a millionaire before the age of 21. Marrocco says that he has had so many opportunities in business because he thrives on chaos. “Where I’m most comfortable is existing variables and intangibles,” he said.

That business philosophy embodies the spirit of financial creativity crowdfunding has enabled. In just a few years, crowdfunding has moved from the fringes of the financial world to the mainstream, as the big guys in business joined up. Truly, the traditional methods of building businesses are morphing, and the demand for more innovative methods of capital creation is growing.  Venture events conducted by The Soho Loft and FundingPost have all been sold out.  People are hungry for change.

If you are interested in meeting, or being, an early stage investor, watch for our next event.  It might just be in your city.  After all, if Donald Trump is into crowdfunding, why shouldn’t you be also?

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.

Just recently, Donald Trump extended his name to another platform—crowdfunding.  On May 8, he announced he was backing FundAnything, a crowdfunding site similar to Kickstarter.  FundAnything CEO Bill Zanker is banking on the Trump name to drive people to his site.

Donald Trump

The possibility of connecting with Trump is a major selling point for the site.  Each week, Trump pledges to personally fund and tweet about the campaigns in which he is interested  in.  And with more than two million Twitter followers, he really should be able to drive traffic.

This site is also not called FundAnything for nothing.  Unlike most crowdfunding sites, this one is not purely for businesses.  Trump’s choice campaigns include oddities like oxygen treatment and tuition.

But not everyone is lucky enough to get funding from Trump, or to connect with him. That space also is filled by a partnership formed between The Soho Loft, an event-driven financial media company, and FundingPost, a company that links entrepreneurs to investors worldwide.  Together, they empower businesses through their capital investing events. Their partnership has resulted in more than 220 sold-out “value” events in 22 cities over the past 12 years.

Last April, this formidable partnership linked up venture capitalists, angels, and crowdfund  investors with aspiring technology entrepreneurs in New York and Chicago.  The two forums allowed emerging companies to showcase their businesses to a wide group of investors.  “We are excited about this fantastic opportunity for an early-stage company to meet face-to-face with investors,” says FundingPost director Joe Rubin. “Early-stage VCs are always on the lookout for great ideas, and we are proud to provide a forum to help them locate promising new ventures.”

“FundingPost and The Soho Loft put together great, engaged crowds for events all over the country.  I’ve spoken at more than one, and they had one thing in common: one of the most attentive, intelligent audiences anywhere,” says Chris Tyrrell, managing director of Right Strategies, one of the crowdfunding resource persons at the April 18 New York conference.

The events gathered a great mix of all early-stage entrepreneurs, and helped them better understand the new ways of raising capital.

James Han, co-founder of SeedInvest, says “the New York City Angel and Crowdfund Investors Conference was a phenomenal event, and provided a healthy forum of discussion and education for investors, entrepreneurs, and industry experts alike; a friendly meeting between fresh ideas and the wisdom of industry veterans toward the future of angel investing.”

The new business environment calls for the creation of new ways of funding, and many companies want to know more about these new investment models. Entrepreneurs today need reliable experts to lead them through the new ways of capital raising.

The big names (including Trump) attached to crowdfunding will bring it to new heights, in terms of awareness and lasting impact.  So if you are still unable to jump-start your business due to lack of capital, don’t let this hurdle stop you.  Step up instead, and register for our networking events.

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.

]]> http://thesoholoft.com/2013/06/11/the-trump-brand-of-crowdfunding/feed/ 0 http://thesoholoft.com/2013/06/10/waterfall-distributions-for-investors/?utm_source=rss&utm_medium=rss&utm_campaign=waterfall-distributions-for-investors http://thesoholoft.com/2013/06/10/waterfall-distributions-for-investors/#comments Mon, 10 Jun 2013 18:21:09 +0000 Emman http://thesoholoft.com/?p=8401 Managers who are organizing an investment fund (or even raising money for an operating company) at times want to make the investment more attractive to investors by adding provisions that require at least some payments to the investors before management is fully paid for its efforts.  These are often called “waterfall” provisions.  (Think of a dry, tiered waterfall; as the rains come the water fills the top pool first, then flows over to fill the next lower tier and so on.)

Waterfall provisions can also be used to additionally reward the organizer/manager if profits exceed a stated percentage and to return capital over time to investors.  There are many variations to these provisions.  Waterfall provisions are generally used with limited liability companies and limited partnerships, although they can also be used with corporations depending on how preferred stock is structured.

Just to be clear, where management contributes cash to a fund or company, that contribution is generally treated the same as other investment money.  The waterfall provisions apply to the manager’s compensation (sometimes called a “carried interest”) for organizing and managing the fund.  (Investors in a fund often are more willing to invest if a manager has “skin in the game” in the form of the manager’s own money.)

Waterfall provisions frequently provide that, after expenses are subtracted, revenues generated by the fund are distributed to the investors until a specified rate of return (often 8%, compounded annually) has been provided, then a percentage (which can be as high as 100%) of the remaining money is applied to return capital to the investors before the management is paid.  (Real estate funds may provide for slightly more than 8% and debt-focused funds may have a lower rate, although current market conditions also have an effect.)

After the investors have been paid, usually there is a catch-up payment to the managers until they have received the same percentage of profits as the investors (not counting the return of the investor’s capital contributions).  The management “fee” is often 20%, although private equity funds and real-estate syndications sometimes pay management 15% initially, perhaps rising to 20% if certain financial goals are met.  After the management catch-up amount is paid, the remainder may be distributed pro rata to both investors and management, counting management’s percentage as ownership, at least until any total limit on the management’s compensation or the investor’s return is reached.

The return of capital can also employ a different waterfall schedule that is used when assets are sold.

The specified return to investors often applies to all capital contributions to the fund beginning with the date when the contributions are made until the times when those contributions are returned.  Some funds, though, provide the preferred return only on invested capital only, so that it does not apply to capital used for expenses of the fund.

Of course, in general waterfall provisions tend to be more favorable to investors when a startup is involved or management does not have a track record.

This guest post is by Bruce Methven and published with his permission.

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]]> http://thesoholoft.com/2013/06/10/waterfall-distributions-for-investors/feed/ 0 http://thesoholoft.com/2013/06/07/campaign-live-get-dc-kids-dancing-with-the-washington-ballet-on-indiegogo/?utm_source=rss&utm_medium=rss&utm_campaign=campaign-live-get-dc-kids-dancing-with-the-washington-ballet-on-indiegogo http://thesoholoft.com/2013/06/07/campaign-live-get-dc-kids-dancing-with-the-washington-ballet-on-indiegogo/#comments Fri, 07 Jun 2013 14:47:09 +0000 Emman http://thesoholoft.com/?p=8375 The “Get DC kids dancing with The Washington Ballet!” is a crowdfunding campaign on Indiegogo. Through its DanceDC program, The Washington Ballet provides an outreach and educational scholarship that combines creative movement with an integrated language arts curriculum for D.C. public school children. The program currently operates in 8 D.C. public schools and nearly 400 D.C. public school students receive scholarships at The Washington School of Ballet’s campus at THEARC in Anacostia, Washington D.C.

The Washington Ballet is asking for your direct support. A $10 donation pays for one pair of tights for a DanceDC student; a $20 donation pays for one pair of ballet slippers for a DanceDC student; a $50 donation pays for healthy snacks for one Summer Intensive student at TWB@THEARC; a $100 donation pays for one costume for a student in the Spring performance; a $200 donation pays for two (2) DanceDC tickets to see The Nutcracker; a $500 contribution will provide transportation for 50 children to attend a TWB production at the theater; and a $2,000 contribution will support 1 year of Ballet Level 1 or 2 for one child.

The Washington Ballet (TWB) is a ballet company based in Washington D.C. It was founded in 1944 by the late Mary Day and Lisa Gardiner, and was then known as The Washington School of Ballet. In 1976, it was incorporated as a professional company and became one of the pre-eminent ballet organizations in America.

The ballet company is composed of an ensemble of 18 world-class dancers, putting together shows of the highest caliber on stages throughout the national capital area, performing a wide variety of works from classical to new creations.

Today, the company is headed by its Artistic Director, Septime Webre, a Cuban-American who joined the company in 1999, and at that same time he initiated DanceDC.

It’s school arm, The Washington School of Ballet (TWSB), provides the highest caliber of dance training to more than 1,000 students each year across 3 locations. It is recognized nationally and internationally for its classical training and dedication to excellence in dance and dance education.

“In the last ten years, The Washington Ballet has enriched more than 100,000 lives across the District and we are constantly pushing to do more. The Washington Ballet at THEARC and DanceDC programs serve as a home-away-from-home for the underserved children and young adults of the district’s poorest wards, where one in three live below the poverty line. Not only do these programs bring the arts into the lives of our city’s youth, they offer a safe and educational environment for children,” says Blaire Massa, Assistant Director of Development at The Washington Ballet.

Bruce H. Lipnick, Chairman and CEO of Asset Alliance, says “As a supporter of the Washington Ballet, I feel that they have achieved some extraordinary new productions that have made Septime Webre and the talented company of dancers a truly world class ballet company. It is so impressive to see their DanceDC programs continue to have an impact on thousands of children throughout Washington DC area. Everyone should donate a small amount to show support.”

Since its creation, The Washington Ballet has been bringing joy and the artistry of dance to the nation’s capital; it has been providing the highest caliber of dance training, and it has been serving and involving the entire community in all its endeavors.

You can learn more about The Washington Ballet through their website (www.washingtonballet.org), join their Facebook page, watch their videos on YouTube, and follow them on Twitter.

Again, the Washington Ballet is asking for your direct support, to run its programs all over the city – to bring dance into the lives of Washington D.C.’s most under-served youth. If you’re interested in helping, go to:

http://www.indiegogo.com/projects/get-dc-kids-dancing-with-the-washington-ballet

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.

For press inquiries, contact cc@thesoholoft.com.

For more updates on global crowdfunding, other alternative investment activities, or if you have thoughts to share about this article, Reach out to me directly at David@LDJCapital.com. Thank you.

These champions will be honored in a ceremony to be held on June 4 at the White House.  “The event will honor entrepreneurs who exemplify the promise of crowdfunding to fuel the growth of startups, small businesses, and innovative projects across the nation.”

One of the early adopters of crowdfunding who has been invited to grace this important event is David Drake, Founder and Chairman of LDJ Capital in New York City and of The Soho Loft (TSL), an event-driven financial media company, which promotes and facilitates capital formation for the private company marketplace (PCM).

Mr. Drake is the co-founder and founding Executive Committee Board Member of the Crowdfunding Professional Association (CFPA.org) – a national and global trade association with the leading global crowdfunding platforms as members. He is also a Founding Board Member of the CrowdFund Intermediary Regulatory Advocates (CFIRA) Executive Committee, the leadership group heading up US crowdfunding for equity developments.  Mr. Drake is an expert and a thought leader on the USA JOBS Act (Jumpstart Our Business Startups Act), including Reg A+, Reg D 506, Crowdfunding Capital, and Onramp IPO. Mr. Drake was involved in lobbying senators and congressmen for the said Act, which the President signed into law April 5, 2012. The Securities and Exchange Commission is now working with CFIRA.org to identify best practices in the crowdfunding industry.

On the Champions of Change, Mr. David Drake has this to say, “These fellow leaders have tirelessly worked towards a new future for our generation.  The legal challenges behind the SEC 1933, 1934, and 1940 Acts are being hurdled, and we are sprinting towards a brighter future; thanks to this generation of crowdfunders.  I am proud to have been able to work with crowdfunders all over the world and will, without fatigue, continue to write about it on a regular basis.”

About The Soho Loft (www.thesoholoft.com)

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.

For press inquiries, contact cc@thesoholoft.com.

Led by its CEO Jilliene Helman, Realty Mogul, the L.A.-based crowdfunding platform crossed the $1 Million mark and has now crowdfunded $1.2 Million in transactions, exceeding expectations, and proving once more that crowdfunding works and it’s here to stay. Helman was amazed at the speed with which the company was able to raise funds – raising $615,000 in under three hours – it is among the fastest raises in crowdfunding history.

Realty Mogul is an online platform where accredited (and international) investors can buy shares of pre-vetted properties (commercial and multi-dwelling residential projects) for as little as $5,000. It boasts of a diversified portfolio of locations, property types, and operating partners; and provides steady returns, through either rent checks or loan payments.

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

– More Information on Realty Mogul

White House to Hold Champions of Change Ceremony for Crowdfunding Pioneers

The White House on June 4th will be holding the Champions of Change Ceremony for Crowdfunding Pioneers. The ceremony will honor entrepreneurs from all over America who exemplify the promise of crowdfunding to fuel the growth of startups, small businesses, and innovative projects. This comes as the legal challenges behind the SEC 1933, 1934 and 1940 Acts are being hurdled, and the crowdfunding industry sprints towards a brighter future for America. David Drake has been invited to grace this very important event.

– More Information on Champions of Change