Regulation Crowdfunding, Title III of the JOBS Act, or SEC equity crowdfunding goes by many names, and allows startups to raise up to $1M. The adoption of Regulation Crowdfunding ("Reg CF") is truly a once in a lifetime event, given the fact that it changed 80 years of securities law. However, it's still not perfect. Many will argue that the funding limit ($1M) is too low, or that the costs of legal, accounting, compliance, and/or portal fees, are too high. We say, you can either complain or use it to your advantage.
As an expert CPA in Regulation Crowdfunding and Reg A+, my favorite thing lately is to attend pitch competitions where various startups vie for the attention of VC and angel investors. At these events, there are usually 100+ people; 5 VC/Angel investors listening to pitches who couldn't be more dis-interested and 100+ people there looking on. The question I pose to each startup presenting is all the same:
"When you present are you better served facing the 5 people who likely won't like your ideas since it is not the next "unicorn" or would it be more beneficial to turn around and present to the 100+ people behind you who may be customers, stakeholders, and evangelicals for your Company?"
The so-called smart money, will tell you why Regulation Crowdfunding won't work, why it will never be successful, why it will never be as good as the connections smart money can provide. I call that market protection by the rich and powerful. To be honest, an enthusiastic customer base is more powerful than smart money will ever be. Enthusiastic follows is every startups trump card which makes equity crowdfunding under Tilte III of the JOBS Act such an advantage to early stage companies.
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.