History of Crowdfinancing

This brief history includes rewards, donation, debt, and equity crowdfunding platforms in the USA, going all the way back to 2003. By David M. Freedman and Matthew R. Nutting Crowdfunding is a method of collecting many small contributions, by means of an online funding platform, to finance or capitalize a popular enterprise. Crowdfunding gained traction in the […]

Wisdom of the Crowd

By David M. Freedman and Matthew R. Nutting On equity crowdfunding portals and platforms, you will have an opportunity to collaborate on deal selection and due diligence with other investors. Like social networks, the portals/platforms will show profiles of the investors who participate in these discussions, so you can assess their expertise and credibility. The […]

Fraud Protection

How to Avoid Fraud in Equity Crowdfunding By David M. Freedman When Congress passed the Jumpstart Our Business Startups (JOBS) Act in 2012, the most common fear expressed in connection with Title III of the act was fraud. Yikes! When the Securities and Exchange Commission issued its proposed rules for Title III in October 2013, […]

Crowdfinance News

CrowdFinanceHUB’s news blog features news analysis and insights for all investors in Title III equity crowdfunding. In addition, the following websites offer reliable news and views about the crowdfunding industry: Accredited Investor Markets publishes articles and columns on venture capital, angel investing, and crowdfunding—not exclusively for accredited investors. http://www.AIMkts.com CrowdFundBeat is a rich-media blog published […]

Title III of the JOBS Act

By David M. Freedman and Matthew R. Nutting Title III of the Jumpstart Our Business Startups (JOBS) Act of 2012 allows all investors, regardless of income or net worth, to invest in startups and growing private companies via funding portals that are registered with the Securities and Exchange Commission. Background: the JOBS Act The JOBS […]

Title IV (Regulation A+)

By David M. Freedman and Matthew R. Nutting Title IV of the Jumpstart Our Business Startups (JOBS) Act of 2012 expands the moribund Regulation A exemption by increasing the raise limit from $5 to $50 million. Non-accredited investors could participate in Reg A offerings before 2012, and they still can under Title IV but with […]

Intrastate Equity CF

By David M. Freedman and Matthew R. Nutting The Jumpstart Our Business Startups (JOBS) Act was signed into law in March 2012. Title III of the act, which legalized equity crowdfunding, could not launch until the SEC issued final rules for the operation of funding portals. For 37 months after the law was signed, U.S. […]

Portals & Broker-Dealers

By David M. Freedman and Matthew R. Nutting Two kinds of intermediaries may conduct Title III equity crowdfunding offerings and transactions: (1) funding portals that are not registered broker-dealers, and (2) offering platforms that are registered broker-dealers. Both kinds must be registered with the Securities and Exchange Commission (SEC). There are important distinctions between funding […]

What’s an Angel Investor?

By David M. Freedman and Matthew R. Nutting An angel investor is an individual who provides capital from his or her own funds to a private business owned and operated by someone who is neither a friend nor a family member. Angels often provide the first round of “outside” capital—that is, outside of the founders’ […]

Title III Deal Flow

What Kind of Startup Would Want Hundreds of ‘Small’ Angel Investors? By David M. Freedman and Matthew R. Nutting Smart entrepreneurs, some Title III crowdfunding skeptics say, do not want hundreds or thousands of unsophisticated angel investors mucking up their capitalization tables, annoying founders with questions, suggestions, job applications, and—gulp—complaints. In October 2015 the SEC […]

Private Securities

Updated June 2, 2016 By David M. Freedman and Matthew R. Nutting Title III equity offerings are predominantly C corporation stock, limited liability company (LLC) membership units, convertible debt, and a relatively new structure called a simple agreement for future equity (SAFE). This article covers the fundamentals of each of these securities, and their advantages […]

Secondary Markets

By David M. Freedman and Matthew R. Nutting Crowdfunded equity investments are generally illiquid for two reasons: (a) the one-year holding period and (b) the lack of organized secondary markets for Title III shares. Restrictions on Transfers of Title III Securities The JOBS Act imposes a one-year holding period (with exceptions) on securities issued via […]

Business Plans, Part I

10 Questions a Business Plan Must Answer By Akira Hirai The business plan is one of the documents that issuers must provide to investors in Title III offerings. Here are the ten critical questions a strong business should answer: 1. What’s the problem? First, the company needs to explain what problem it proposes to solve. […]

Business Plans, Part II

4 Business Plan Red Flags By Akira Hirai This article takes a different approach from the previous one. Here I tell you about common omissions and mistakes in business plans, any of which should make you cautious about the company’s offering. 1. Value inflation. Phrases like “unparalleled in the industry,” “unique and limited opportunity,” and […]

Management Team

By David M. Freedman and Matthew R. Nutting The most important trait of being a successful angel investor is: good judge of character and talent. When you invest in a company that has a limited track record in terms of revenue or product distribution, you need to judge whether the founder (or founding team) has […]