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Kore is the first of its kind, an All-In-One Platform that unites tools to securely and efficiently manage essential business data and facilitate compliance.
Oscar Jofre joined FintechTV to talk about the Genesis Global Trading lending arm. Genesis Global Trading is a top investment bank in the crypto world. They offer services such as trading and custody. Recently, Genesis had to temporarily suspend redemptions and new loan originations due to FTX’s collapse.
Kickstarter and equity crowdfunding are two different ways to raise money for a project or venture. Kickstarter is a platform where people can donate money to projects in exchange for rewards, such as early access to the product or a copy of the finished product. Equity crowdfunding, on the other hand, allows people to invest in a company or project in exchange for a percentage of ownership in that company or project and has raised over a billion since it was introduced. But what are their differences and similarities, and how do you ensure your crowdfunding platform is compliant?
A Unique Way to Raise Money: Kickstarter Vs. Equity Crowdfunding
Kickstarter is a crowdfunding platform that allows people to donate money to projects in exchange for rewards. The project creator sets a fundraising goal and a deadline, and if the goal is reached, the project receives the funding. Rewards can be anything from early access to the product or a copy of the finished product. Kickstarter is an all-or-nothing platform, meaning that if the project doesn’t reach its fundraising goal, the project creator doesn’t receive any of the money.
On the other hand, equity crowdfunding is a way for people to invest in a company or project in exchange for a percentage of ownership in that company. Equity crowdfunding is different from Kickstarter in a few ways. First, with equity crowdfunding, investors are actually investing in the company, rather than just donating money. Second, equity crowdfunding is not an all-or-nothing platform. Even if a company or project doesn’t reach its fundraising goal, the issuer still receives the money that was raised.
If you are trying to choose between the two platforms, it is crucial to consider your goals. If you are looking for a way to raise an amount of money quickly without giving up a percentage of your company, Kickstarter may be the better option. This is because of the all-or-nothing nature of Kickstarter, which means that you either reach your fundraising goal and receive the money, or you don’t receive any money and do not need to pay a fee.
However, if you are looking to raise millions of dollars while gaining not only investors but brand ambassadors, equity crowdfunding may be the better option. This is because, with equity crowdfunding, people are actually investing in your company and will want to see it succeed. Additionally, even if you don’t reach your fundraising goal, you will still receive the money that was raised, which can be used to continue growing your company.
Ensuring Your Crowdfunding Platform Is Compliant
If you are using a crowdfunding platform, it is important to ensure that the platform is compliant with securities laws, especially when it comes to equity crowdfunding. This means that the platform follows all the rules and regulations set by the government. To ensure the equity crowdfunding platform you use is compliant you to consider:
Knowing who and who is not doing this is often difficult to determine from the outside. If you are an investor, you look at the actual filing from the company to understand what the company has filed for and its ongoing obligations.
If you are looking for a quick way to raise money without giving up equity in your company, Kickstarter may be the better option. However, if you are looking to raise money and gain investors, equity crowdfunding may be the better option. Additionally, it is important to ensure that the platform you are using is compliant with all the rules and regulations set by the government, whether you are raising capital or you are an investor.
For many investors in the private market, one of the risks they face is the lack of a liquid market for selling shares.
Through a Reg A+ offering, however, accredited investors who purchased securities during a Reg D or Series A raise can sell a portion of their holdings, creating a powerful buy incentive.
The law allows issuers to allocate up to 30% of their Reg A+ offering to selling shareholders, and investors are under no obligation to sell stock.
What is a Selling Shareholder?
A selling shareholder is an individual or entity that sells securities of a company in a registered offering.
The shares sold by selling shareholders are first offered to other shareholders on a pro-rata basis before being made available to the general public.
Selling shareholders are typically early investors in a company who are looking to cash out some of their investment. They may also be employees or insiders who are looking to sell a portion of their holdings.
In some cases, selling shareholders may be venture capitalists or other institutional investors who are looking to exit their investment before a company’s IPO.
Selling Shares with a Reg A+ Offering
The Reg A+ selling shareholder allowance is a valuable tool for companies seeking to raise capital from accredited investors.
For investors to sell their shares with a Reg A+ offering, the company must file an amendment to their offering circular with the SEC that includes a selling shareholders section.
The amendment must disclose the number of shares being sold and the maximum offering price. In addition, all selling shareholders must be identified in the 1A.
The Reg A+ selling shareholder allowance is a great way for companies to raise capital while letting investors potentially get a return on their initial investment.
The allowance also provides an incentive for accredited investors to participate in a Reg A+ offering, as they can receive immediate liquidity without waiting for a company to go public.
If you’re considering a Reg A+ offering, consult with your securities attorney to determine if the selling shareholder allowance is right for your company.
When it comes to investing, celebrities are just like the rest of us. They need to do their research before putting their money into anything. Unfortunately, many stars have fallen victim to investment schemes in the past without doing the proper due diligence. However, an issue that is becoming even more prevalent is celebrities who use their influence and followings to promote securities, without including the proper disclosures, to unsuspecting fans and investors. So, with the SEC cracking down on celebrities and companies, it’s important to know what you’re getting into when dealing with an investment opportunity tied to a celebrity endorsement.
Celebrity Endorsement and Investment Opportunities
The SEC’s Office of Investor Education and Advocacy (OIEA) has warned investors not to make investment decisions based solely on celebrity endorsements. While celebrity endorsements exist for a wide variety of products and services, a celebrity endorsement does not mean that an investment is legitimate or appropriate for all investors. As the OIEA says, “It is never a good idea to make an investment decision just because someone famous says a product or service is a good investment.”
Celebrities can be lured into participating in a fraudulent scheme or be linked to products or services without their consent. According to the SEC, even if the endorsement and investment opportunity are genuine, the investment may not be good for you. Before investing, always do your research, including these steps:
Kim Kardashian and the SEC
The SEC’s announcement followed an investigation that found Kim Kardashian failed to disclose that she was paid $250,000 to publish a post on her Instagram account promoting EMAX tokens, a crypto asset security offered by a company called EthereumMax. The post contained a link to the EthereumMax website, which provided instructions for potential investors to purchase the tokens. Since the investigation, she has agreed to settle the charges and pay $1.26 million in cooperation. SEC Chair Gary Gensler noted that “investors are entitled to know whether the publicity of a security is unbiased,” and the SEC’s Director of Enforcement Gurbir S. Grewal added that “Ms. Kardashian’s case also serves as a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities.”
This case highlights the need for transparency surrounding celebrity endorsements of investments. Federal securities laws are clear that any celebrity or other individual that promotes a security must disclose the nature, source, and amount of compensation they received in exchange for the promotion. Without this type of disclosure, investors cannot make informed investment decisions. The SEC’s investigation is ongoing, and it remains to be seen if any additional action will be taken in this case. This case serves as a reminder that celebrities and influencers are not above the law. When considering any investment opportunity, it is important to do your own research and consult with a financial advisor to ensure it is right for you. Be sure to ask questions and demand transparency if you are asked to invest in a security based on a celebrity endorsement.
When it comes to real estate, most people think about buying and flipping properties for a quick profit. But what if you could buy a property, have the tenants already in place, and generate revenue from the time you acquired it? That’s what the Consumer Cooperative Group (CCG) is all about on a larger scale than individual properties. CCG is a cooperative of investors all across America who work together to purchase turnkey properties – including commercial, residential, and industrial – and generate revenue from the outset.
What makes CCG different from other real estate investment groups is its focus on education. “We don’t just tell you about our company; we also educate our investors at the same time because it is a requirement that our investors are not passive,” said CEO and Founder of CCG, Tanen Andrews. “There is a level of participation that we require from them because if they have equity they are part owners. So we require them to be active in what we are doing.”.
This focus on education means that CCG members are truly invested in the company and its success. “Cooperative members are the ones with the voting rights and the investors are the ones with no board voting rights but they have an opportunity to be a part of the membership to create multiple streams of income,” said Andrews. This allows for a two-way street of investment and education – both parties benefit from each other. But it’s not just about making money for CCG. They also want to make an impact on their local community. “Activating social events and making a change in a community are two separate things and we want to fund social aspirations that we want to see done and we want to be self-sufficient at the same time,” said Andrews. That’s why they focus on creating jobs as well as generating revenue.
“This is a multi-phase venture and the initial phase is the real estate. With Consumer Cooperative Group being a real estate cooperative, and we use that cooperative methodology to purchase real estate, pooling the funds of the people who could not traditionally invest in startup companies of this magnitude in exchange for equity,” said Andrews. “In addition to that, now we have access to go to Wall Street and directly list and provide liquidity for them on another level that they were never able to access,” said Andrews.
Owning real estate is a great way to build wealth, but not everyone can or should assume the active duties of a landlord, and CCG takes that element out of it. With tenants already in the properties, they are already generating revenue from the time that they are acquired.”We can buy these turnkey properties and have something to build upon instead of building from scratch,” said Andrews. “Our business plan is wrapped around our community. We are thinking about the financial growth of our market so they can compete. That’s why I love KoreConX. KoreConX is a platform that can be used in conjunction with what we are doing to keep some type of sustainability of our growth and manage what we are doing as we progress to the next level,” said Andrews. CCG wants to make sure they are educating as they are progressing, they are trying to maximize what is already there and build upon that.
“We have a Reg A going through the process right now after we went Reg CF first. Most people have never heard of the JOBS Act and most are jumping into traditional capital raising platforms, and I feel that is confusing. What we try to do is focus specifically on the JOBS Act so that we can eventually qualify for listing. We do not want to just make investors and members but we also want to create real entrepreneurs, we want to show them how to create a real viable business and repeat the process,” said Andrews. CCG provides those who did not always have the opportunity the means to be a part of business ownership.
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Regulation CF(RegCF), D (RegD), A (RegA+) Disclaimer
This communication may be deemed to be a solicitation of interest under Regulation CF (RegCF), D (RegD), A (RegA+) under the Securities Act of 1933, in which case the following applies:
As Regulation Crowdfunding offerings continue to grow in popularity, more and more investors are looking to get involved. RegCF gives investors the ability to invest smaller amounts of money into early-stage companies as non-accredited investors. This is why investors put $1.1 billion into RegCF offerings in 2021 and this is predicted to double in 2022. But what exactly is Regulation Crowdfunding? And how much can you invest in a RegCF offering?
Why Invest in RegCF?
Reg CF allows you to invest in some of the newest and most innovative companies. This is because early-stage startups often have a difficult time accessing traditional forms of funding, such as venture capital. Other offerings have fairly large minimum investment amounts, which non-accredited investors might have trouble affording (since this prime directive of investing is never to invest more than you can afford to lose). This traditional approach to capital raising meant that only wealthy investors could afford to participate.
Since RegCF is specifically set up around the crowdfunding paradigm, the minimum investment amount is more affordable to more people. This is why in 2021 over 540,000 investors put their money into over 1,500 Reg CF offerings, double the number of offerings in 2019 and 2020 combined. This showcases the clear and continued interest in this type of investment from the public.
Investing in a RegCF Raise
Regulation Crowdfunding is a process through which companies can offer and sell securities to the general public. This process was created by the JOBS Act, and it allows companies to raise up to $5 million per year from non-accredited investors. So what does this mean for investors? Well, basically, it means that you have the opportunity to invest in some of the newest and most exciting startups, even if you’re not an accredited investor. And while you can’t sell your shares for the first year, there are several other benefits of investing in a RegCF company, but you must be aware of how much you can invest before doing so. Because of the inherent risk of investing, the SEC has placed limits on how much nonaccredited investors can invest within any 12-month period.
In a 12-month period, nonaccredited investors are limited in the amount they can invest in a RegCF offering. This limit is based on the investor’s annual income or net worth, whichever is greater. If an investor’s annual income or net worth is less than $124,000, then the investor can invest up to the greater of $2,500 or 5% of the greater of their annual income or net worth. If both an investor’s annual income and net worth are more than $124,000, then the investor can invest up to 10% of their annual income or net worth, whichever is greater. However, the total amount invested in RegCF offerings during a 12-month period cannot exceed $124,000.
Accredited investors have no limit to how much they can invest in RegCF offerings and are defined as individuals that meet at least one of the following criteria:
Calculating Net Worth
To determine how much an individual can invest in securities through crowdfunding, it is vital to understand how Regulation Crowdfunding defines net worth. There are a few ways to calculate net worth, but the most common is to add up all your assets and subtract all your liabilities, according to the SEC. The value of an individual’s primary residence is not included in the calculation of their net worth, and neither is any loan against the residence up to its fair market value. Any increase in the loan amount in the 60 days before the purchase of securities will also be disregarded, to prevent artificially inflated net worth.
For joint calculations, you can also determine your combined net worth or annual income by adding your spouse’s income and assets to the calculation, even if the assets are not owned jointly. In these cases, the maximum investment cannot exceed that of an individual with the same net worth.
Once you understand how much you can invest, the only thing left is to do your due diligence! You’ll want to review the provided disclosures so that you can get the full picture of the investment’s risk to ensure it aligns with your level of risk tolerance.
A call center can be extremely helpful for companies looking to raise capital through a Reg A+ offering. By having a dedicated call center, businesses can easily keep track of all the investors who are interested in their company and ensure that they are meeting all compliance requirements. Additionally, a call center can assist investors with forms. This can help to build trust with potential investors and increase the chances of a successful raise.
For companies using RegA+, prioritizing compliance is essential for a successful offering; a non-compliant raises risks of SEC penalties. This can be a daunting task for companies, as there are many different regulations to keep track of, and some of these rules have implications for the call center.
In this regard, the call center cannot act like a broker-dealer, which means they cannot sell securities. If the investor has questions about whether or not an offering would be a good investment decision, the call center cannot answer this. However, if the issuer noticed that a potential investor was filling out a form that was not completed, a call center could reach out and see if there was a technical or logistic issue that the investor was experiencing, such as where they could find a routing number or where to fill in other important information.
Still, the call center can direct the investor to resources like the offering circular if they have questions about the investment and its risk. And if the issuer has placed a firm focus on compliance, the offering circular should be a significant source of information for investors to make their decision based on their risk tolerance.
A call center can also yield useful, practical information about the market, by noticing and reporting patterns about the sorts of questions clients are asking. Similarly, if there are trouble spots in an online application that are a source of confusion, the feedback from a call center can help to identify them and suggest improvements.
These are just a few of the ways a call center can be helpful in a company’s Reg A+ offering and beyond. We interviewed Sara Hanks for a KoreTalkX in which she mentioned the topic. Learn more here:
Are you a crypto investor? The market for digital assets is growing by leaps and bounds every day. But is the crypto winter almost over? Oscar Jofre, CEO at KoreConX, is a blockchain expert, and he is weekly on Fintech.TV to share everything we need to know about crypto and digital assets. He knows all there is to know about this market and how it works, so you can be confident that you’re making the right investment decisions.
There are about 5.5 million businesses that operate in the U.S. under the license of a brand, typically franchises like McDonald’s or 7-11 and even real estate groups like Century 21. Because of the nature of the franchise, advertising must follow corporate guidelines and be pre-approved, a process that can be costly and time-consuming for franchisees. In addition, many small franchisees can be faced with budgetary constraints that make the process even more challenging.
Founder and Chief Strategy Officer of LiveTechnology Holdings, Wayne Reuvers, described the typical process: “Branded entities and businesses selling branded products account for about $133 billion in media spend every year in the US. If I’m a Nissan [dealership] and I want corporate to support me, I have to build the ads, I pay an agency a fortune, it goes through the approval process and most get rejected, and then it turns around and I can run the ad.”
This is where LiveRetail comes in. Offering a free platform for these businesses to easily create and run compliant ads, LiveRetail removes this barrier by helping franchise locations drive higher sales, beating industry benchmarks consistently. Each location benefits from personalized creatives and messaging to effectively reach the target audience.
“We’ve turned this entire model on its head. We built a technology that allows us to onboard an entire brand – all of their stores, the brand details, the brand guidelines, the color, the items they want to promote, and everything else – in under four hours”, said Reuvers. Once this process is complete, LiveRetail can easily build a campaign for all the entities, prebuilding an ad for every product using the platform’s CreativeMatrix feature. The ads, compliant with brand guidelines, are sent to local entities. The ads can be posted for free on social media or can be run as ads using the hyper-targeted campaign that LiveRetail develops.
“Those who manage or run a franchise, whether they’re an owner or an operator, do not have time to build ads and the cost of getting a local entity to build ads is $400 to $4,000 but they still need to be brand compliant. We get rid of that by providing all the ads free to the entity, ready to run, and they look more professional than hiring a local agency. We remove the biggest barrier to small to medium-sized advertising spend on the internet, which is the cost of producing ads,” said Reuvers.
Within two clicks, a franchisee can share an ad on social media platforms like Facebook. They also have the option to subscribe to weekly posts on social media or run the creative as a paid ad. Paid ads can be sent to a hyper-targeted audience, ensuring it is seen by people most interested in the product or service being advertised. This is a game-changer for local franchises.
The company is using RegCF to raise capital, and one of the most attractive aspects of the exemption was the number of small business owners and entrepreneurs who are investors. They hope to develop strong relationships with the company’s investors, who in turn have the potential to be powerful brand advocates.
Seeking to simplify the creative process behind marketing, LiveRetail is creating innovative technologies aimed at reducing the cost and brand compliance burden for small franchisees and other branded entities. In turn, this will help these businesses drive more traffic to their stores and generate business.
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Regulation CF(RegCF), D (RegD), A (RegA+) Disclaimer
This communication may be deemed to be a solicitation of interest under Regulation CF (RegCF), D (RegD), A (RegA+) under the Securities Act of 1933, in which case the following applies:
The Howey Test is a simple but important test used by the US Securities and Exchange Commission (SEC) to determine whether an investment contract is a security. Whether you are an investor or a company offering a security, it’s vital to know about the Howey Test and how it applies to securities.
Utilizing the Howey Test
The Howey Test is used by the SEC to determine whether an investment contract is a security. The test is named after the Supreme Court case SEC v. W. J. Howey Co., which established the test in 1946. The Howey Test has three prongs:
If all three prongs are met, then the investment contract is considered a security and is subject to securities regulations. The Howey Test is crucial because it helps to protect investors from fraud and scams. There are many different types of securities, such as stocks, bonds, and mutual funds, and each has its own set of rules and regulations. The Howey Test ensures that all securities offerings are legitimate and that investors are not being misled.
The Howey Test applies to any investment contract, whether it is for a physical asset, like a piece of real estate, or a financial asset, like a stock. For the Howey Test to apply, there must be an investment of money. This can be in the form of cash, property, or even services. The second prong of the test states that there must be a common enterprise. This means that the investment must be pooled together with other investors’ money to make a profit. The third prong says there must be an expectation of profits. This means that the investor is relying on someone else, such as a company’s management team, to make investments and profits.
The Howey Test is not necessarily a test you can pass or fail. It is one of several tests used in securities law to determine whether an instrument being offered is a security or not. Other tests can also be used, such as the Reves test. Which should be applied depends, as the SEC says, on the facts and circumstances. An instrument is only a security if it meets all three prongs of the Howey Test.
Bringing it All Together
The Howey Test is a simple but vital test used by the SEC to determine whether an investment contract is a security. The test’s three prongs allow the SEC to evaluate different types of investments to see if they fit the definition of a security. The Howey Test is important because it protects investors from fraud and scams. Investors want to ensure they are not being misled and that the investments they are making are legitimate. The Howey Test is one way to help make sure that is the case.
The trucking industry in the United States is a vital part of the economy, responsible for transporting trillions of dollars worth of goods each year. However, it is also an industry that has been plagued by inefficiencies and low productivity for many years. This is where Tech Chain Software and their ResQ TRX app come in, changing the game for truckers across the US.
The ResQ TRX app from Tech Chain Software is designed to help truckers be more efficient and productive, while also reducing downtime. It streamlines the entire repair process, allowing drivers, owners, and fleet managers to request and approve service, monitor vehicle and repair status, and send payments all through the app. This makes it easier and faster for truckers to get their trucks repaired, reducing downtime and helping the industry as a whole run more smoothly. By connecting trucking companies to dedicated services, ResQ TRX also provides new business to the service companies that keep America moving. This makes it a win-win for both truckers and the industry as a whole. Telha Ghanchi, the founder and CEO of Tech Chain Software, is passionate about helping and serving truckers, and ResQ TRX is his company’s way of doing just that.
As the owner of a small trucking company himself, he knows firsthand the pain that truck drivers and owners go through when a truck goes down. That’s why he created ResQ TRX, to make it an easier and more efficient process for all involved. From the smallest owner-operator to the largest fleets and logistics companies, ResQ TRX is changing the game for how trucking companies do business. The app helps truckers stay on the road by providing them with access to rescue trucks, mechanics, and other resources when they break down. Additionally, Reg CF benefits the company by allowing them to transform investors into brand ambassadors that truly believe in the company and its vision.
Mega carriers make up only a small fraction of the companies in the industry and have access to mega repair centers if their trucks break down. However, since the majority of the industry is made up of small businesses, they are often left relying on Google to find the help they need when their truck breaks down. And in remote places, especially in the US, you need to sometimes look miles away to find a mobile mechanic who can look at the project. Since many truck drivers don’t carry the cash on hand to pay for the services, payment is a significant issue at these times as well as the trust of not knowing the job that the person is going to do to fix your truck.
“Every ten minutes you are late on a delivery it snowballs to how much the consumer pays. If you had three trucks and one of them breaks down you are losing 33% of your business,” said Ghanchi. With the trucking industry relying on invoices to be paid about 90 days after delivery, keeping operations afloat can be tricky when a truck is out of commission. This ultimately affects company owners, customers, and employees who rely on the shipment to be made on time.
As the market continues to grow, Ghanchi sees this as having a positive effect on truck drivers. A larger repair market will enhance repair service competition, allowing truck drivers to receive better repair pricing. Additionally, the company hopes to offer its debt function, with which the company will loan out the repair cost, allowing ResQ TRX to pay the mechanic and get the work done much faster to get back on the road instead of saving up money to fix this. This is one way they see they can make a huge impact on the industry. “If the truck is running the cash is rolling and they will have money to pay for [the loan],” said Ghanchi. “Our goal is to lower overall downtime in the trucking industry. We are also working with local trade schools to increase the capacity and mechanics of blue-collar workers. Mechanic shops can not take in more work without the resources so we are helping both sides, both the truckers to get their trucks back on the road quickly so they don’t go out of business and the mechanics so they can better serve this industry through ResQ TRX’s innovative solution.”
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Regulation CF(RegCF), D (RegD), A (RegA+) Disclaimer
This communication may be deemed to be a solicitation of interest under Regulation CF (RegCF), D (RegD), A (RegA+) under the Securities Act of 1933, in which case the following applies:
When it comes to investment, there are a lot of things to think about. You want to make sure that you’re making smart decisions with your money, and that you’re not being taken advantage of. That’s where the Financial Industry Regulatory Authority (FINRA) comes in. FINRA is an independent regulator for securities firms, and its job is to make sure that all firms operate fairly and honestly, and that investors are protected–giving investors confidence in the legitimacy of their investment while holding securities companies to a high standard. Keep reading to learn more about the role of FINRA and how they help to protect investors.
What is FINRA?
FINRA is a not-for-profit regulatory organization authorized by the US Congress to protect investors. FINRA oversees all US-based securities firms and is considered the front line of defense when it comes to investor protection. FINRA’s rules and regulations ensure that all securities firms operate fairly and honestly and that investors are given the information they need to make informed investment decisions. Operating under the auspices of the US Securities and Exchange Commission (SEC), FINRA is the largest independent regulator for securities firms doing business in the United States.
Who does FINRA protect?
FINRA exists to protect investors, which means that they provide rules and regulations that apply to all securities firms to create a level playing field. They do this through a variety of means, including registration and licensing, monitoring and examining firms, conducting enforcement actions, and providing investor education. FINRA also offers assistance and support to investors who have been wronged by a securities firm. By educating investors about their rights and responsibilities when it comes to investing, FINRA helps protect them from being taken advantage of. In terms of security firms, FINRA’s job is to make sure they are adhering to all relevant rules and regulations, and that they are providing accurate and complete information to their investors.
Why is FINRA important?
FINRA plays an important role in the investment landscape by ensuring that all securities firms operate fairly and honestly. This helps to create trust between investors and the industry, which is essential for a thriving economy. In today’s day and age, with crowdfunding being available to accredited and non-accredited investors, FINRAs role is more important than ever. Giving peace of mind to investors is one of the most important roles that FINRA plays.
What is the role of FINRA as it relates to investment crowdfunding?
Investment crowdfunding is a relatively new phenomenon, and FINRA has been working to create rules and regulations that will protect investors while still allowing this innovative form of investing to flourish. The role of FINRA in investment crowdfunding is to protect investors by ensuring that issuers are providing accurate and complete information about their offerings, and that platforms are properly registered and compliant with all relevant rules and regulations. By doing so, FINRA is helping to create a safe and transparent environment for this growing industry.
One of the key issues that FINRA is concerned with is the disclosure of information by issuers, which is essential to ensuring that investors can make informed investment decisions. When it comes to Reg CF offerings, FINRA Rule 251(a)(3) requires issuers to file a Form C with the SEC before they can solicit investors. Form C must include information about the issuer, the offering, and the use of proceeds. In addition, all materials that are used to solicit investors must be filed with FINRA. These filings give FINRA the ability to review the offering and make sure that it is compliant with all applicable rules and regulations.
The world of technology has completely revolutionized the way we view investments–no longer do people need to invest large sums of money to have access to incredible investment opportunities. Through the use of online platforms and computerized transactions, people can now make smaller investments that still have the potential to provide generous returns. This change has made it possible for more people to invest in the private market and other forms of capital, thus democratizing the process and giving more people a chance to participate in the economy.
Making Investments Accessible
In the past, making investments usually required working with a financial advisor and entailed putting down large sums of money. This often puts investing out of reach for the average person. However, with the advent of online platforms, virtually anyone can now get started in investing with relatively little money. For example, Acorns is an app that rounds up your credit or debit card purchases to the nearest dollar and then invests that spare change into a portfolio of ETFs. In this way, users can invest without even realizing it, while simply making purchases as they normally would. This convenience is one of the main reasons why investing has become more popular in recent years. And, with JOBS Act regulations, nonaccredited investors can use technology to pool their money and invest in startups that were only accessible to the wealthy.
While VCs have been known to invest large sums of money into startups, there are now platforms that allow nonaccredited investors to get in on the action with as little as $100. This is made possible through the use of crowdfunding platforms such as WeFunder and Republic. These platforms give everyone a chance to support the businesses they believe in and potentially make a profit from their investment.
Technology has also made it easier for people to keep track of their investments and monitor their portfolios. In the past, people had to rely on paper statements and manual calculations to track their progress. Now, numerous apps and websites offer real-time data and analysis of an investment portfolio. This makes it easy for investors to stay on top of their finances and make well-informed decisions about where to allocate their money.
A Technology-Driven Evolution
It is clear that technology has completely changed the landscape of investing. No longer do people need to have a lot of money to get started. With the click of a button, anyone can now invest in the stock market or support their favorite businesses through crowdfunding. This accessibility has democratized the process of making investments and given more people the opportunity to participate in the economy. In the past, only those with a lot of money could afford to invest. However, thanks to technology, that is no longer the case.
The changes that have been brought about by technology are sure to revolutionize the way we think about investments in the years to come even more than they have already. This not only benefits the common person who wants to invest their money but also smaller organizations and startups looking to raise capital. Through acts like Reg CF and Reg A+, businesses now have a better chance than ever before to get the funding they need from a wider pool of potential investors that are accredited and nonaccredited alike. This is all thanks to the power of technology and its ability to connect people from all over the world.
Thanks to technology, making investments has become more convenient and accessible than ever before. Whether you’re looking to invest a small amount of spare change or put together a portfolio of startups, there’s an online platform that can help you do it. This change from the past has democratized investing and given more people the opportunity to participate in the economy. In the years to come, we can only expect this trend to continue as technology continues to evolve.
It is no secret that the world of startups and entrepreneurship is male-dominated. From the early days of Silicon Valley to the present day, men have been the face of startups for the most part. However, this is slowly but surely changing. Women are starting to make their mark in the startup world and they are outperforming their male counterparts in several ways. One excellent measure of this change is that investments in startups that have at least one female founder outperform all-male-founded teams by 63%.
Successful Female Startups
One of the vital components of being a successful entrepreneur is the ability to grow a company. A recent survey showed that 32 percent of female-owned businesses are in active expansion mode compared to 27 percent of male-led businesses. In addition to being able to grow a company, female entrepreneurs are also more likely to focus on global opportunities. With only 2 percent of all venture capital (VC) funding globally directed towards female-founded startups, women are often forced to look beyond their domestic markets for opportunities. This global focus has led to female-founded startups outperforming their male counterparts when it comes to generating revenue from international markets.
Unicorns
Another area where female-founded startups are outperforming their male counterparts is in the number of unicorns being produced. A unicorn is a startup that has achieved a billion-dollar valuation. With 83 of 585 unicorn companies having women founders, female-founded startups make up 14.2% of all unicorns, showcasing the impressive returns that can be generated by investing in female-founded startups. Combined with women led-startups, in general, outperforming male-led startups one day we should be able to expect the same from unicorn companies as well.
Investment Returns
There are several reasons for this outperformance by female-founded startups. One of the key reasons is that women are often underestimated and have to work harder to prove themselves. This gives them a level of grit and determination that is essential for success in the startup world. In addition, women are often more risk-averse than men, leading to them making more calculated decisions when it comes to their business. This can lead to a number of benefits, including less money being wasted on frivolous pursuits and a greater focus on the bottom line.
One of the biggest challenges faced by entrepreneurs is access to capital. Women-led startups have historically had a harder time securing funding than their male counterparts. However, this is beginning to change as more and more investors are beginning to see the value in investing in female-founded startups.
With female-founded startups outperforming male-founded startups in a number of key areas, including revenue growth, global expansion, and unicorn production, this showcases that women are not only capable of being successful entrepreneurs but that they are also a force to be reckoned with when it comes to generating returns for investors.
Way back in March 2020, our values as a company were tested. At the time, I began to write this blog post but with my schedule, I totally forgot to complete it. But, with recent events, I felt it was important to publish.
With companies in any sector, you are approached for partnership opportunities and in most cases, the partnership is a win-win when each company stays in its lanes. When partnerships get really muddy is when there is a financial gain for one party at the expense of another or the clients they serve.
Our potential partner had a great service that we, as a company, were happy to send introductions to. After many meetings and demonstrations, the CEO reached out to discuss a partnership. We provided an overview of our ecosystem, our governance standards, and our ethics, and explained that since its inception, our company has had no financial relationship with any of our KorePartners anywhere in the world. This did not stop this CEO from offering us an incentive to send their firm business, which we respectfully declined. Our response was and remains: “We are happy that you provide this service, and we want you to provide the best service to our clients and all we ask in return is you take good care of them, and do your very best”.
The response was shocking: “I can’t partner with a company that is not financially motivated to send me business”. We respond, we understand that is how this business might have been done in the past but today it’s different for many reasons.
First, we are in a regulated sector. That means the securities regulators monitor all activities by Issuers (companies), Investors, Broker-Dealers, and Internediarities who are participating in a regulated offering for private companies.
As an example of how securities regulators monitor and catch those who try to circumvent the rules to get rich, on 30 September 2022 the SEC charged six individuals and two companies for a fraudulent scheme to promote securities in a RegA offering. Some of the charges were for failing to disclose precisely the kind of payment we declined to accept two years ago.
On 03 October 2022, the SEC charged influencer and celebrity Kim Kardashian for failing to disclose she was paid a fee to promote a cryptocurrency. She was paid $250,000 USD to promote a company and the fine issued by the SEC was $1.26M and included a 3-year ban from promoting any crypto asset securities.
You would think with these two SEC announcements, everyone would be reviewing their programs to make sure they are onside with regulators and more importantly, ethical and transparent to the clients we serve.
BUT NO!!!
On 07 October 2022, many of the Broker-Dealers and intermediaries were offered a carrot via email to be rewarded up to $13,000.00 USD by a provider if they brought them a client.
So who actually pays these premiums?
The answer is very simple: the Client “Issuer (Company)”. Make no mistake–it will be the client paying for this big incentive fee because it will ultimately come out of the proceeds of the raise.
Will this fee be disclosed to the client? Will both parties disclose their finders fee in this regulated transaction?
You may be thinking this is how it’s always been done, so why are we all spending so much time disrupting the current way things are?
Because there is a better way.
We need to conduct ourselves the same way we are telling the current establishment that they should behave. Sometimes disruption of the old ways is good. New innovations (and the revival of some good old ones) are disrupting the world in so many areas, including banking, insurance, auto, and capital markets. The JOBS Act was aimed at democratizing capital, and a big part of this was making it safer for new investors
So let’s not stop with just how they operate; let’s also disrupt the way we conduct ourselves in operating our companies. Let’s strive always to conduct ourselves more ethically, more transparently, and always compliantly
We at KoreConX never have and never will take any type of fees from anything, anyone, or any company for something we have not created. We have many partnerships with companies that see how a relationship can be formed that becomes a win-win: the better they serve the clients we introduce to them, the better we look, and the more people will want to use our platform. Our clients need to know we’re serving their interests when we point them at a KorePartner, not sending them to the highest bidder for their business.
Most of our KorePartners find this is actually to their own advantage; they know that when we recommend them to a client, it’s because they’re the best equipped to meet that particular client’s needs.
Everyone wins when the client wins.
Orion Capital is a small holding company that specializes in connecting investors with unique investment opportunities. With a focus on the little guy, Orion Capital allows anyone with an appetite for investment to participate in deals they would never have had access to otherwise. With a wide network of seasoned professionals from a variety of backgrounds, Orion can provide expert advice and guidance for nearly any opportunity that comes their way. RegCF is allowing them to offer a vehicle to open up their experience to a wider audience, giving everyday people access to high-quality investments.
Eric Shampine, a founding partner of Orion Capital, has been working in the real estate and investment world for years. He is a strong believer in the power of small investments to create big returns. “If you can diversify your portfolio across hundreds of small investments, whatever it may be, it lowers the risk for you and you still get to play in that investment world,” said Shampine. Orion Capital offers investors just that opportunity. By pooling together small investments from a large number of people, they can create a diversified portfolio that minimizes risk while still providing exposure to high-growth investments.
One of the key advantages of Orion Capital’s strategy is tapping into a wide variety of different industries and investment strategies. With a large network of contacts, they can quickly identify and assess opportunities as they arise. “We have a lot of different contacts in different industries and we’re always on the lookout for new investment opportunities,” said Shampine. This allows them to be nimble and take advantage of opportunities as they come up, rather than being tied down to one particular strategy or asset class. “While it is a less formal structure it is a very wide net of experience that can be very specific for whatever we come across,” said Shampine.
Mainstreet Investing with RegCF
Orion Capital is always looking for new opportunities to invest and provide investors with exposure to high-quality investments to diversify their portfolios, and they are now exploring this with a RegCF raise. This raise will allow them to expand their reach and provide even more people with access to these types of investments. “With this latest RegCF raise, the funds are a combination of assets. Initially, we are looking for smaller balance real estate assets that will provide consistent cash flow for the dividend we will be paying out to the investors. As I am building this, that is the first base we want covered to protect our investors’ capital and preserve dividends. Once that core is built up, I will look to deploy capital in investments with slightly higher risk. A little more opportunity for equity growth and scale it up that way, but this is not a fund where I’m looking to have only one or two major investments,” said Shampine. By utilizing RegCF, Orion Capital can provide even more people with access to these types of investments. Through equity crowdfunding, smaller investors can invest for a smaller stake in an investment opportunity traditionally not available to them.
The firm’s focus is on main street investments for main street investors. Multiple smaller assets diversify the risk; there are good investments to be made in things such as single-family homes, mortgage notes, mom & pop businesses, and other smaller investments people can relate to that provide equity growth and cash flow.
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Regulation CF(RegCF), D (RegD), A (RegA+) Disclaimer
This communication may be deemed to be a solicitation of interest under Regulation CF (RegCF), D (RegD), A (RegA+) under the Securities Act of 1933, in which case the following applies:
Over the past decade, fiscal stimulus and opportunities for liquidity have caused a surge within the private capital markets. Even though this year’s outlook is challenged by increasing borrowing costs and economies cooling, London-based research firm Preqin forecasts that the industry’s global assets under management will double to $18.3 trillion by the end of 2027, from $9.3 trillion currently. The study highlights how investors desire to seek alternative investment types in an economic environment characterized by uncertainties. While the first half of 2022 did see a fundraising drop in private capital by $337 billion from $495 billion in the same period last year. However, by 2023, private capital fundraising is expected to return to 2019 levels as the growing trend of private capital continues.
Private equity fundraising hit a record $561 billion in 2021, with North America leading the way, followed by Asia-Pacific and Europe, according to Preqin. According to McKinsey North America had about a 22% growth in private capital markets, compared to Europe with 17% and Asia with 13%. This means that for investors and companies raising capital, the US is a more attractive market than Europe and Asia and is a great place to market your private capital offering, notably through JOBS Act regulations like Reg A+ and Reg CF.
Private markets have been able to continue to grow during this pandemic because of the growth in digitalization and the internet. This has allowed for a decrease in face-to-face interactions, which has made it easier for managers to connect with LPs, as well as an increase in online tools and resources. For example, many fund managers have started using online data rooms, which allow investors to access documents and due diligence materials remotely. In addition, online investor portals have become more popular, providing LPs with 24/7 access to information on their portfolios.
The study found that the average private equity fund size has increased over the past decade, while the number of first-time funds has declined. The report attributes this to the “maturing” of the industry and the rise of large institutional investors, which have become an increasingly important source of private capital. Institutional investors, such as pension funds, insurance companies, and endowments, are allocating more of their portfolios to private capital as they seek higher returns. Private markets have outperformed traditional public markets in recent years, but that outperformance is expected to moderate over the next decade. Preqin’s study predicts that private equity returns will net 7.6 percent annually between 2018 and 2027, compared to 6.4 percent for public markets.
According to Preqin, the interest in impact investing has also increased in recent years. The firm estimates that there are now more than 3,000 impact funds globally, with assets under management totaling $228 billion. In particular, environmental, social, and governance (ESG) considerations are becoming increasingly important to private capital investors. A majority of private capital firms say that they consider ESG factors when making investment decisions, and almost half of firms say that they have adopted policies or strategies specifically focused on impact investing. As the private capital markets continue to grow, firms need to consider how they can best position themselves to capitalize on this growth.
The private capital markets are expected to continue growing in the coming years, presenting a unique opportunity for raising capital. In addition, the growth of the private capital markets may lead to more regulation, as policymakers seek to mitigate risk and protect investors. Overall, the study provides a positive outlook for the private capital markets. For firms looking to take advantage of this growth, it’s vital to consider how they can best position themselves to capitalize on these opportunities. For investors, this means considering which private capital investment opportunities offer the best potential returns. But regardless of how the private capital markets evolve, one thing is clear: they are likely to play an increasingly important role in the global economy.
RegA and RegCF have been around for a few years now and we are finding that some of our clients, especially those that have made multiple offerings, are getting to the point where they need to consider the implications of Section 12(g) of the Securities Exchange Act, which requires companies to become registered with the SEC when they meet certain asset and investor number thresholds.
Let’s start with the requirements of Section 12(g). It says that if, on the last day of its fiscal year, an issuer has assets of $10 million and a class of equity securities held of record by either 2,000 persons or 500 persons who are not accredited investors, it has to register that class of securities with the SEC.
Drilling down on each of those elements:
Since becoming a fully-reporting company is not feasible for early-stage companies, both Reg A and Reg CF are covered by conditional exemptions from the requirements of Section 12(g). The conditions for each are different.
Issuers need not count the holders of securities originally issued in Reg A offerings (even if subsequently transferred) as “holders of record” if:
Issuers need not count the holders of securities issued in Reg CF offerings (even if subsequently transferred) as “holders of record” if:
It’s important that the issuer’s transfer agent keep accurate records of which exemption securities were issued under, even when they are transferred. As of March 15, 2021, Reg CF also allows the use of “crowdfunding vehicles”, a particular kind of SPV with specific requirements for control, fees, and rights of the SPV in order to put all of the investors in a Reg CF offering into one holder of record. This is not available for Reg A, and still comes with administrative requirements, which may make use of a transfer agent still practical.
If an issuer goes beyond the asset or public float requirements of its applicable conditional exemption, it will be eligible for a two-year transition period before it is required to register its securities with the SEC. However, if an issuer violates the conditional exemption by not being current in periodic reporting requirements, including filing a report late, then the transition period terminates immediately, requiring registration with the SEC within 120 days after the date on which the issuer’s late report was due to be filed.
It’s good discipline for companies who have made a few exempt offerings and had some success in their business to consider, on a regular basis, counting their assets and their shareholders and assess whether they may be about to lose one or both of the conditional exemptions and whether they need to plan for becoming a public reporting company.
This article was originally written by our KorePartners at CrowdCheck. You can view the original post here.
Budding Technologies, Inc. is looking to change the cannabis industry with innovative technology and the use of blockchain through its product, Budbo.
The Budbo ecosystem consists of three unique products; Budbo App, Budbo Connect, and BudboTrax. Together, these touch all aspects of the cannabis industry from growers and product manufacturers to dispensaries and consumers.
The Budbo App features a patent-pending technology that allows cannabis users to log into the application and enter some demographic data that is then used to make suggestions on strains and products of cannabis that would be best for the user. Users are also rewarded for providing this data with cryptocurrency tokens that can be spent on merchandise or accepted by dispensaries. With this technology, new users can feel more confident in choosing the strains and products that would be best for them based on data like their weight, gender, and experience level. After answering several questions on a 1-10 scale, the algorithm can make these suggestions. Pick-up and delivery options are available to consumers with an easy-to-use interface.
For dispensaries, growers, and product manufacturers, Budbo Connect enables them to access the data provided by Budbo customers and other third-party APIs. In the Connect dashboard, companies can keep product information up to date so that it can be found by the most appropriate customer. In turn, companies can see what types of products are popular or sought after by cannabis users in their region. With companies able to tailor their inventory to what customers are looking for, they can reduce waste, increase sales, and find the right product manufacturers for these products.
Lastly, BudboTrax, is a supply chain management system built on blockchain technology that gives users the ability to track products and lab results so that they can know exactly where their product comes from and if it meets the quality standards that they are looking for. This feature allows cannabis users to be confident in the product by providing much-needed clear visibility into the chain of custody of the cannabis plant and subsequent product.
Working together, these three elements create a robust suite of tools to empower the cannabis industry and to serve cannabis users with access to the safest and best product available.
To aid in the company’s growth, Budding Technologies, Inc. is using Regulation Crowdfunding to raise funds for their company. “We chose the Reg CF as the vehicle because it’s a grass-roots way to raise capital that is for everybody, and we feel cannabis and our technology is for everybody. What makes the Reg CF so great, is that it allows anyone interested in Budbo, cannabis, and blockchain, to have the opportunity to invest in Budbo and get involved with the company,” said Luke Patterson, the company’s CEO.
Budbo is an innovative company that is changing the way the cannabis industry works. With their use of blockchain technology, they are helping customers verify the quality of the products being sold while also giving businesses valuable data about what products are being used in their area and users on what cannabis is right for them.
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Regulation CF(RegCF), D (RegD), A (RegA+) Disclaimer
This communication may be deemed to be a solicitation of interest under Regulation CF (RegCF), D (RegD), A (RegA+) under the Securities Act of 1933, in which case the following applies:
In today’s world, we are more connected than ever before. We rely on technology to keep us connected with friends and family, to keep us up-to-date on the latest news, to help us stay productive at work, and to even make investment decisions. But as we all know, with great power comes great responsibility. And, as we become more reliant on technology, the risk of our data being compromised also increases. To protect our data, we need to use security measures such as two-factor authentication (2FA), which aims to prevent identity theft, fraud, and other malicious activity.
What is Two-Factor Authentication?
Two-factor authentication (2FA) is an additional layer of security that can be used to protect your data. It works by requiring two forms of authentication to access an account or system. The first form of authentication is typically something that the user knows, such as a password or the answer to a security question. The second form of authentication is usually something that the user has, such as a phone or a credit card. The second form can even be more complex, like a fingerprint used to unlock a phone.
Why is Two-Factor Authentication Important?
Two-factor authentication is important because it helps to protect our data by making it more difficult for hackers to gain access to our accounts. By requiring two forms of authentication, 2FA makes it much harder for hackers to guess or force their way into an account. In addition, even if a hacker can obtain one form of authentication, such as a password, they still would not be able to access the account without the second form of authentication. 2FA is also important when it comes to compliance–keeping accounts secure from fraudulent transactions minimizes the risk to companies raising capital with JOBS Act exemptions.
How Does KoreID Help to Secure User Data?
2FA becomes incredibly important when dealing with sensitive data, like an investor’s financial information. With KoreID, trusted intermediaries like SEC-registered funding platforms or FINRA-registered broker-dealers can allow investors to use one set of login credentials to populate forms with the investor’s verified data. This enables investors to invest and reinvest more smoothly and 2FA helps to secure their sensitive information.
By using KoreID, investors can take advantage of the increased security that two-factor authentication provides. Two-factor authentication is an important tool that can be used to help protect your data. In today’s world, we need to do everything we can to protect our data and 2FA is one of the best ways to do that by making it more difficult for hackers to gain access to your accounts.
