Kickstart It

Zach Braff Can’t Legally Share His Multimillion Dollar Movie Deal With Kickstarter Donors

Dawww, we can't stay mad at these two. (Photo: Getty)

Poor Zach Braff. He’s catching so much guff, when all he really wants to do is strike the perfect balance between quirky and relatable.

He crowdfunded his latest film, Wish I Was Here, which we gather is like a male version of Raising Helen with some slight tweaks. It also stars Kate Hudson. It sounds nice enough.

But everyone’s pissed about the movie’s Kickstarter campaign. Mr. Braff is a big star, his detractors have argued. What’s he doing asking strangers for money when he’s got the connections to get big studios to invest in his movie?  Read More

Jumping the Gun

As Equity Crowdfunding Nears, Platforms Race to Be the First

(flickr.com/portland_mike)

Equity-based crowdfunding, whereby unaccredited investors plunk down money in a company in exchange for more money down the road, is set to be legal sometime in early 2013. Small investors and unfunded startups are waiting until after the Securities and Exchange Commission figures out how to write the rules so widows and orphans don’t get fleeced of their last pennies. That could take a while. But the timeline hasn’t stopped startups from competing to be the very first equity crowdfunding site. Some aren’t even waiting until the law is finalized. Read More

Caveat Investor

Amateur Hour: New Crowdinvesting Rules Mean Everyone Can Play Venture Capitalist

(Photo: James Cridland via Flickr)

It was glaringly sunny in Washington, D.C., on April 5, the day President Barack Obama signed the JOBS Act, and there was some confusion as to the location of the afterparty. One faction of Rose Garden attendees gathered on the roof of the W Hotel and wondered where everyone was. The rest assembled at Off The Record, a dimly lit bar in the basement of the Hay-Adams Hotel, and kicked things off with an icebreaker.

About 30 smartly dressed men and women, still sweating out the adrenaline of being three rows away from the president, stood in a circle. Many had worked with each other but never met. Each stated their names, the role they played in the bill, and perhaps a few words about the brave new world of so-called equity-based crowdfunding, which had just been legalized by one of the six constituent laws that make up the JOBS Act. The new rule will allow “ordinary Americans,” in the president’s words, to invest in a nonpublic company in exchange for shares for the first time since the enactment of the securities regulation that followed the 1929 stock market crash.

The mood was triumphant and boozy. Tim Rowe, a Cambridge-based venture capitalist, raised a glass and offered a toast to working together in the future. “The Marine Corps was founded in a bar in Philadelphia,” he said. “Big things can happen starting in a bar.” Attendees signed up to join a trade organization for the newly minted market. “There was the sense of elation that we had cracked the monopoly of Wall Street,” one attendee recalled. Read More

The Equity of the Crowds

As Equity-Based Crowdfunding Heats Up, Hedgeable Promises Free Platform

Mr. Kane. (Quora)

We’ve discussed before how the JOBS Act will allow anyone–including people who are not accredited investment professionals–to put money into startups via crowdfunding. It’ll be nine months before the SEC releases the final rules, but that doesn’t mean the sector is standing still. Today another player jumped into the fray: Online investment management service Hedgeable has announced that in early 2013, it will launch its own crowdfunding platform–and it’ll be free of charge. Read More

More Startups

In 9 Months, Anyone Can Invest in a Startup

(flickr.com/portland_mike)

Do you feel like there are a lot of startups? We feel like there are a lot of startups. The JOBS Act, an amalgamation of six bills that passed through Congress, is likely going to make even more startups, thanks to a section that will allow the average American to invest limited amounts of money in business plans. AngelList, the crowdfunding platform Indiegogo, and a crop of equity-based crowdfunding platforms are poised to take advantage—but not for a while. The Act requires the SEC to hammer out the rules for equity-based crowdfunding within nine months.

“The SEC needs to determine the actual guidelines,” said Nick Tommarello, one of the founders of WeFunder, an equity-based crowdfunding platform that decided to launch a preliminary site before the law passed. “Then we apply to the SEC.” Read More

Privacy is Dead

Hey Startups, You Can’t Use Fundraising Regulations as an Excuse to Keep Secrets Anymore

Of key importance to private fund managers engaging in fundraising, the JOBS Act directs the Securities and Exchange Commission (“SEC”) to eliminate the prohibition on general solicitation and advertising applicable to private offerings of securities to “accredited investors” under Rule 506 of Regulation D under the U.S. Securities Act of 1933 (the “Securities Act”). -JDSupra

For whatever reasons, sometimes startups and investors don’t want to talk about money. Publicly, that is. Amongst themselves, it’s quite standard.

There are myriad reasons why a source won’t disclose funding information to a journalist. A deal may not have closed, a company may be trying to fly low, or the financiers involved may be minor players who don’t want the spotlight. The secrecy may be because the investors and startups want to coordinate publicity in a way that has maximum impact (read: send press release exclusively to the TechCrunch rewrite robot). Sometimes, every party is worried about stepping on the other parties’ toes. But the reason given is always the same—blame it on the SEC.

After the president signs the JOBS Act today, that excuse will no longer be valid. Read More

The Equity of the Crowds

The JOBS Act, Which Rolls Back SEC Rules In Order to Help Startups Crowdfund, Passes in the House

JOBS Act supports via Angel List

Ready your startups, the early stage investing climate is about to go into overdrive. This afternoon, the JOBS Act (or Jumpstart Our Business Startups Act) passed in the House with an overwhelming vote of 380-41. Next, the bill moves to President Obama, who is expected to sign it into law.

It’s been a bit of a bumpy ride. The JOBS Act originally passed in the House a few weeks ago with a 390-23 vote a couple weeks ago. The Senate’s version of the bill, called the CROWDFUND Act (or Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure Act), added a number of safeguards for investors and passed last week 73-26. The JOBS Act was then revised to reconcile with the Senate’s bill, which is why the final version had to move back to the House for another vote.  Read More

Caught In The Webb

JOBS Act Jitters

Mr. Webb.

In one of my first Betabeat columns, I wrote about my concerns that the tech bubble has been only tempered by the larger economy. Once that economy rebounds, the unbridled enthusiasm in the tech sector will take off and the bubble will enter into the danger zone.

Even earlier–one year ago next week–I wrote my most popular blog post of all time. It was entitled “on the bubble.” I wrote it on my Tumblr. It was hella popular. Really. I wrote it one Saturday afternoon, in an almost stream of consciousness rant. I woke up, had some soup, and grabbed a Diet Coke and started writing. You can tell, when you read it (and do!) that it sort of hangs together, but that I come across new ideas as I’m writing it.

The basic premise of the piece, if you don’t feel like reading all 2,000 words of it, is that we are in the early stages of a tech bubble, and that most of these companies are funded by advertising, and advertisers don’t spend enough money, worldwide, to turn more than a few of these startups into “the next Google” or “the next Facebook,” even if all the ad money in the world went online. I still believe that. And I still believe that we’re in a bubble.

Finally, in the follow up discussions around my bubble post, I made this observation:

“We’re already hearing rumblings from the tech industry about how SOX [Sarbanes-Oxley --ed.] is burdensome, and SOX needs to be reworked, and SOX is interfering in the tech industry’s innovation. But it is not. SOX is going to be doing its job in this bubble. And if you want to actually look to see when this bubble’s gone to far, I would actually say that one of the easiest ways to measure how close we are to bubble busting, is to watch the chatter around SOX or, god forbid, action that lessens it. We’re at the end, then.”

Well, well, well. Little did I know it would come this soon. Read More