The anti-child trafficking thriller “Sound of Freedom” just opened in theatres on July 4th. Based on a true story, it stars Jim Caviezal as former Homeland Security special agent Tim Ballard who quits his job with the agency and embarks on a mission to rescue children from traffickers in Latin America. Another true story relating to the film is that the cost of marketing it has been funded through an equity crowdfunding campaign under Regulation CF. What makes it even more interesting is that the investment instrument issued in this crowdfunding offering was not your typical stock, convertible note or SAFE, but rather something called a revenue participation right.Continue Reading Revenue Participation Rights as a Crowdfunding Instrument Alternative
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Push to Facilitate Liquidity in Private Companies
What do founders, employees and investors in privately held companies all have in common? Limited opportunity to sell their shares. That’s because of various legal, contractual and market factors that impede the sale of such securities, so liquidity is usually limited to acquisition of or public offering by the company. In recent years, there’s been…
Securities Safety Check for New TV Series “Unicorn Hunters”
A new reality streaming television series called Unicorn Hunters debuts May 10 in which startups will pitch to a panel that includes Apple co-founder Steve Wozniak, and the panelists after grilling the entrepreneurs will make decisions on whether or not to invest, similar to Shark Tank. But unlike the couch potato viewers of Shark…
COVID-19 Capital Needs Addressed by Temporary Relaxation of Title III Crowdfunding Rules
Title III crowdfunding may be an attractive capital raising alternative during the current Coronavirus pandemic because it allows companies to use the internet to solicit potential investors and not be restricted to accredited investors. But some of the requirements under Regulation Crowdfunding may diminish its utility for issuers with urgent capital needs as a result…
In my Backyard: Real Estate Developers can Use Equity Crowdfunding both to Fund Projects and Convert Opposition
Real estate developers should seriously consider equity crowdfunding to fund development projects for two major reasons, one of which has little or nothing to do with money. The first reason is that new securities offering legislation enacted in 2012 creates new legal capital raising pathways which allow developers for the first time to use the…
Regulation Crowdfunding Surpasses $100 Million but Still Needs Reform
A recent report on the state of Regulation Crowdfunding published by a major crowdfunding advisory firm is cause for both celebration and renewed reform efforts. The $100 million aggregate funding milestone and the prorated year over year growth data indicate that the market, while still in its infancy, is growing at a nice pace. Nevertheless,…
Good Choice: Important Capital Formation Reforms in Financial CHOICE Act of 2017 Passed by House
On June 8, 2017, the House of Representatives passed the Financial CHOICE Act of 2017 on a vote of 233-186. Congress loves acronyms, and here “CHOICE” stands for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs. Although the thrust of the bill is focused on repeal or modification of significant portions of the Dodd-Frank…
The JOBS Act at Five: Congressional Hearing Highlights Need for Further Reform
On March 22, the Subcommittee on Capital Markets, Securities, and Investment of the Financial Services Committee conducted a hearing entitled “The JOBS Act at Five: Examining Its Impact and Ensuring the Competitiveness of the U.S. Capital Markets”, focusing on the impact of the JOBS Act on the U.S. capital markets and its effect on capital…
House Passes Watered Down “Fix Crowdfunding Act”
On July 5, the House of Representatives passed a watered down version of the Fix Crowdfunding Act (the “FCA”) that was initially introduced in March. The bill seeks to amend Title III of the JOBS Act by expressly permitting “crowdfunding vehicles” and broadening the SEC registration exclusion, but leaves out three important reforms that were…
Title III Crowdfunding Goes Live Today with Much Potential, but Different Reality
Ever since the Federal securities laws were enacted in 1933, all offers and sales of securities in the United States had to either be registered with the SEC or satisfy an exemption from registration. The commonly used private offering exemption, however, prohibited any act of general solicitation. The JOBS Act of 2012 created a new…