We are now in 2019, the fourth full year equity crowdfunding has been in existence. Looking back, many, including myself expected 2018 to be a breakout year…unfortunately that wasn’t exactly the case. So, we continue to ask, what does the next year and next five years have in store for the equity crowdfunding industry, and more specifically Reg A+?
When most people think about Regulation A+ (“Reg A+”) they only think about low-level crowdfunding. But Reg A+ is really so much more than simply a crowdfunding mechanism. Besides being powerful due to the ability to use advertising, general solicitation, and access your customers, it is incredibly flexible.. In fact, it may be the most flexible way to raise money around.
The official, unofficial guide to accounting for SAFE's.
Successful Regulation Crowdfunding (Reg CF) issuers now being required to file their From C-AR Annual report.
On April 25, 2017, the SBDC of San Mateo is sponsoring an event titled "SOURCES OF EQUITY CAPITAL & HOW TO PREP YOUR CLIENTS." DBBM's own David Gosselin will be there to speak on behalf of the equity crowdfunding industry based on his industry leading experience in the space.
Unlike more traditional forms of equity financing (VC financing, angel financing, private equity) equity crowdfunding through Regulation Crowdfunding (Reg CF) an Regulation A+ (Reg A+) allows entrepreneurs the ability to dictate terms, utilize affinity groups, and market to the public. These are drastic differences compared to traditional equity financing.
dbbmckennon is a full service CPA firm with offices in Orange County, San Diego and Santa Monica. We specialize in companies filing with the SEC and utilizing equity crowdfunding through Reg A+ and Regulation Crowdfunding. For additional complimentary information regarding this topic or other questions you may have please call one of dbbmckennon‘s offices located in Southern California or contact us here.
In these early days of Regulation A + (Reg A+, raises up to $50 Million) and Title III Regulation Crowdfunding (Reg CF, raises up to $1 Million), one of the hardest things to do as a potential issuer utilizing equity crowdfunding is to vet the service providers you want to work with.
Choosing the people your company works with, the people that give you advice, the people you trust is one of the most important things to do as a business. Bad advice can set you back years, while good advice can accelerate you forward.
Often we get the questions:
How do we (the issuer) choose a CPA firm for equity crowdfunding?
Why should I choose you over another firm?
Both great questions! Let’s cover both types of equity crowdfunding as they will dictate different responses.
Regulation Crowdfunding (Raises up to $1M) have less regulation. The financial statement reviews required can be performed by almost any CPA firm so long as they are registered to sign attestation reports in the state where you as the business owner are located. Many firms only provide tax services and are specifically precluded from doing this work. However, for Reg CF, firms don’t have to be PCAOB registered, but they still must be registered with state(s). One of the common issues that has come up, is CPA firms are issuing reports for issuers that are not in their home state. If the CPA firm is not registered in the issuers’ home state or have practice privilege there, (every state is different) then the opinion can be deemed invalid and your campaign could flop before it starts.
For Reg A+, you should use a PCAOB registered firm (although not required in certain circumstances) in the chance you want to, or someday may want to be listed on a public stock exchange. All the same rules apply as Reg CF, make sure you use a CPA firm that can work in your home state.
So what sets CPA firms apart? You can see from the initial 100 filings for Reg CF companies and from review of many of the Reg A+ filings, some financial statements are better than others. Whereas financial statements are ultimately the responsibility of issuer management, CPA firms should be making sure they go out nice, neat and clean with all required information (a requirement of the opinion they issue). It is apparent (very obviously to people who know) that some firms are swimming in waters that are too deep for them. They just don’t know the requirements and maybe shouldn’t be doing the work in the first place. That is a significant issuer for an issuer as the issuer is ultimately responsible for everything.
However, the real difference maker is if the CPA firm makes Reg A+ and Reg CF an emphasis in their practice. CPA’s should be well connected to marketing firms, portals, SEC attorneys’, all of whom are in the equity crowdfunding space. If they aren’t connected, THAT is the difference.
The long await for May 16, 2016 is finally over and Title III Regulation Crowdfunding ("Reg CF") is now legal!
Public companies are becoming much more integrated with social media, and so should you. Last July, Netflix CEO Reed Hastings announced on his personal Facebook page information relevant to the company that had not previously been reported. The SEC has since reported that companies may release information on social media, so long as investors are made aware the announcement is coming. So what does this mean to investors? Social media is allowing companies to connect with customers in whole new fashion. One of the ways in which they are using social media is through the use of push notifications. When a company you follow on Twitter or Facebook makes an announcement, push notifications can be enabled to allow a pop up on your phone notifying you of what has happened. This allows the user to no longer have to seek out information, but instead have information sent directly to their phone. With the constant clutter and filler bombarding users on the web, the ability to receive information direct from the company without external influence can be invaluable.
However, a reliance on social media still has its downfalls. As has been seen in recent months, social media accounts are still susceptible to hackers, who may post false information. Despite the risk, with over 1 billion users worldwide, the influence of a company’s like Facebook and Twitter are a resource that should not be ignored.
dbbmckennon is a full service CPA firm with offices in Orange County and San Diego focused on providing quality accounting and consulting services at reasonable rates. For additional complimentary information regarding this topic or other questions you may have please call one of dbbmckennon‘s offices located in Southern California or contact us here.