Crowdfunding: Supporting Causes and New Investment Opportunities

By Andrew J Thompson

The crowdfunding craze of the last few years was initiated by groups like Kickstarter, Indiegogo, and GoFundMe.  Each of these platforms offer the means for cause oriented funding of projects reaching millions of interested contributors.  But none of these exist in such a way as to offer anyone who invests in a project or cause to obtain or receive any profit or continuing return on investment.  You may receive coupons, event invitations or other opportunities to engage with the cause you are supporting, but you will never receive a dividend, or other income or gains from the money you contribute via these platforms.

The JOBS Act, and particularly Title III of that Act, was passed and signed into law in 2012, expressly purposed to enable small businesses to attract investments from “small investors” by authorizing the creation of small scale, intermediaries, i.e. broker/dealers, and exchanges, that function to place small business investors into investment opportunities with businesses raising no more than $1,000,000 per year.

The problem is that over two years have passed and the SEC has failed to promulgate anything more than a proposal for the regulations required under the Act for the intermediaries to exist, and be excepted from the more intensive, existing SEC filing requirements.

This creates an enormous market gap for quality, small startups, and hungry entrepreneurs seeking capital for their businesses.  A number of states, Michigan, Indiana Georgia, and Kansas among them, have created a simplified form of state based crowdfunding exemption that augments that already existing SEC exemption for intrastate securities offerings.

These new laws and those proposed in other states may actualize the visions and work of small businesses seeking capital they are unable to attain from traditional, bank sources, as well as the networks and promoters of small business opportunities like the Silicon Valley’s Hackers and Founders or Midwestern startup networking group, The Verge.

But while the investment world and small businesses await final SEC approval of long overdue regulations, small businesses continue to struggle to obtain funding and are forced to rely on intrastate offerings if they seek to go beyond the limitations of bank funding or the heavy restrictions of Regulation D offerings (which are designed for a limited number of high net worth investors).

The Thompson Law Office is initiating a concerted effort to bring together small business owners needing non-traditional sources of investment capital to accomplish their short- and intermediate-term business objectives.  If you are an Indiana business owner who wants to enhance your growth potential by attracting important business capital that is currently beyond your reach, please contact the Thompson Law Office at andrew@thompsonlawindiana.com or calling us at (317) 564-4976 today.

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About Drew Thompson

Andrew Thompson is an attorney with 27 years of experience, now with the Thompson Law Office located in Indianapolis, Indiana. Andrew also founded Tinker Street Funding (Equity Crowdfunding platform) in 2015 and FLA-21 (Funding, Legal counsel and Advocacy) in 2016. Mr. Thompson ran for Congress in 2016 on a platform of fighting for the restoration of individual liberty and limited government. Mr. Thompson's practice involves helping startups and small businesses establish the business platforms to succeed, and protecting those businesses, homeowners, parents and families in business, the courtroom, and life.
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