SXSW2017 Equity Crowdfunding
Presenters: Slava Rubin (one of the founders of IndieGogo), Bill Clark (CEO of Microventures)
First Democracy VC is their joint venture that focuses on Equity Crowdfunding that was made possible by Reg CF, Title III. Slava and Bill said all of their ventures thus far has reached their funding goals. A slide they shared (at the end of these notes) shows that as March 2017 about 230 Reg CF offerings have been filed with the SEC (this is since it ‘went live’ in May 2016).
Slava shared a brief timeline leading up to the availability of equity crowdfunding.
- 1933 Securities Act (created SEC, accredited investors, IPOs)
- 2012 JOBS Act (which contains Reg CF about equity crowd funding)
- 2016 (May) JOBS Act goes live
Three types of Equity Funding
- Reg D506 – accredited investors only. Form LLC, can only have 99 people to invest
- Reg A, mini IPO. Raise up to $50Million
- Reg CF, Title III (which was created out of the JOBS Act): raise $1 million in 12 months. If you raise over $100,000 requires financial review. Have to use a portal, other rules apply.
Types of CF raises
- Equity Campaign
- Revenue Share: Investors get a percentage of sales until the initial investment is paid back. Example: invest $100K, if they are successful, returns $150K, but no equity. This type of CF raise can include perks in an equity campaign (similar to a kickstarter or indieGoGo campaign).
A slide the gents shared on current equity crowdfunding statistics is shown below.