A Message From ZooAtlanta’s CEO – What We Can All Do

Here is a good article with a great message by ZooAtlanta’s CEO, Raymond B. King.  He explains how ZooAtlanta has successfully partnered with Fanforce, an Atlanta-based start-up company that focuses on capturing and using customer information.

But the purpose of the article is not to hype the partnership itself, but rather explain why an established Atlanta organization should partner with an early-stage one.

The article is a rallying cry for Atlanta’s business community to engage with more of Atlanta’s early-stage companies.  “We must embrace the innovation in our own backyards,” Mr. King writes, “making it easier for our robust entrepreneurial community to do business with local organizations.”

Mr. King’s message is consistent with an earlier SterlingFunder blog post in which we called for Georgians and Georgia businesses to rally behind equity crowdfunding.  Businesses should do this not for SterlingFunder’ sake, but for the sake of economic growth in Georgia.  Equity crowdfunding drives capital to start-up and early-stage companies.  Those companies, in turn, create new jobs, occupy empty office space and add to the tax coffers.  Large returns to investors are another key objective of equity crowdfunding.  In other words, equity crowdfunding is good for everyone.

For equity crowdfunding to work in Georgia – one of the first states in our country to adopt equity crowdfunding – the business and investment communities must get behind it and get involved.  So, the message is simple: get educated on equity crowdfunding, get involved and help these young companies grow and prosper.  Everyone wins.

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Verifying your Eligibility as an Investor – The Law and The Solution

If you’ve been to SterlingFunder before, you know that equity crowdfunding is likely to transform capital formation in the United States. Since securities laws have, at long last, been updated to accommodate the Internet age, investors can take advantage of new investment opportunities online.

A significant issue SterlingFunder and the rest of the crowdfunding industry faces is the legal requirement of verifying investors. Verification of an investor’s state of residence and possibly his/her income (depending on the type of investment) are required. Furthermore, for each deal, it is up to SterlingFunder to confirm that each investor is eligible to actually invest. Investing is not just making a purchase online, it’s agreeing to become a part of something you believe in with the risk of your own capital. Investing in equity crowdfunding is an exciting opportunity, experience, and potentially rewarding.

Still, the industry’s current solutions for meeting these verification requirements are far from advanced. The SEC has said that collecting sensitive information like investor tax returns would be enough proof of investor eligibility, but that is rather invasive for the investor. Alternative solutions take the matter out of SterlingFunder’s hands and have a third-party verify investor eligibility. This is attractive to investors since they will not have to provide personal information on multiple equity crowdfunding platforms.

For equity crowdfunding to be feasible on a large scale, the industry needs a verification method that puts the interests of investors first. We looked for an inexpensive and fair solution for our investor-customers. That’s how we came across Accredify, whom we recently partnered with. Accredify agrees with our vision of putting investors first.

Accredify’s solution leverages publicly available government databases and financial technology to make the verification process online secure and quick for an investor. Best of all, when using their system we don’t actually have to see an investor’s personal information, instead we rely Accredify’s certification process. As another plus for investors, you don’t have to provide you personal information on other crowdfunding sites – instead use Accredify’s certificate.

In short, partnering with Accredify delivers a number of benefits to our investor-customers:

1. Verification is Instant – Since Accredify gives you the tools and reminders year round to stay verified, meeting compliance with a portal becomes instant thanks to their “Facebook Connect” style API.

2. Your Personal Information is Not Exposed - Since we can rely on Accredify’s certificates for verification, we will never ask you to supply your personal information. Instead, we can focus on what we do best, providing you the information you need to feel comfortable about your equity crowdfunding investment decisions.

3. Universal Certification - You can feel comfortable about investing online, knowing that you have taken the right steps to do so.

We’re excited to partner with a company that shares our values. We know that by giving investor-customers control of their verification, we can focus on providing a better platform experience.

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Three Powerful But Underused Features on SterlingFunder

SterlingFunder is a complete and robust website. It is part crowdfunding portal and part crowdfunding library. While we are continually working on improvements and new add-ons, there are a number of powerful features that are underused. Here are three of my favorites:

  1. The Learning Hub Knowing that equity crowdfunding is new and unknown to most people in the country, we devoted a lot of resources to providing educational content. Knowledge is power. The Learning Hub includes FAQs, articles, videos, a blog and a detailed glossary.
  2. Follow Button. Once you are on a particular campaign page on SterlingFunder, you’ll see a blue “Follow” button. By “following” an equity crowdfunding campaign, you will have quicker access to campaign information and updates.
  3. Dashboard. Every user has a Dashboard. In your Dashboard, you can quickly access any crowdfunding campaigns you are managing. You can also view the campaigns you are following, so you quickly get to those you care most about. Once you’ve made a crowdfunding investment, it will appear in your Dashboard – think of it as your online portfolio.

Put these powerful features to use to enhance your experience on SterlingFunder.

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Reward Crowdfunding as Business Confirmation

Reward-based crowdfunding has grown rapidly. But, despite what you think, its benefits do not stop at accumulating capital for a new business. Reward crowdfunding is a good way to test all or some aspects of your business. If your reward crowdfunding campaign is successful, you should endeavor to understand why it succeeded. Is there a strong demand for your product? Did your marketing approach pull in the money? Or maybe your entrepreneurial resume so strong that people just wanted to go along for the ride with you?

The bottom line is that you should use the feedback you received from investors and potential investors to shore up strengths and address weaknesses.

The same is true for unsuccessful reward based crowdfunding campaigns. A failed campaign does not mean your business can’t succeed. If your campaign was not successful, you should endeavor to understand why, by reviewing feedback you received. Another way to get information is to send an inmail on SterlingFunder to users who followed your campaign but never backed it. People generally want to help, so a nicely worded message asking what you could have done better, will likely get you helpful feedback.

Again, reward and even equity crowdfunding is not ONLY about raising money. It is about high quality interaction with friends and strangers, which you can use for market research to refine your business and your campaign. Keep that in mind as you move forward.

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Equity Crowdfunding Tips for Investors

As the dawn of equity-crowdfunding nears, I continue to hear a number of tips for investors interested in equity crowdfunding.  I have not created a comprehensive inventory yet, but I think these four are the most important:

1.  Invest in people.  When you invest in start-up or early stage companies, you are largely investing in the talent and dedication of the CEO.  You should feel confident that the CEO and any team he/she has put in place, can move the business forward; in investment jargon, that he/she and the team “can execute the business plan.”

2.  Trust your gut.  Intuition is an effective decision maker.  Often, trusting your gut on an investment will lead to better decision making than will prolonged contemplation or deliberation.  As Donald Trump says, “it pays to trust your instinct.”  This rule applies to equity crowdfunding as well.

3.  Do Your Due Diligence . . . Together.  Investors always need to take reasonable steps to assess the business and determine its potential as an investment.  The beauty of equity crowdfunding is that investors engage in due diligence together, even if they don’t know each other, by sharing the information they have uncovered.  While each investor decides for himself/herself whether or not to invest his/her money, the due diligence can and should be done together.

4.  Don’t Over-Invest.  Do not invest more than you can afford to lose.  This rule applies to equity crowdfunding as well as all other types of investments.  Every investment carries risk, including crowdfunding investing.  Keep this rule near the top of your mind.

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David Cummings

David Cummings is an Atlanta success story. He’s a highly successful serial entrepreneur, founder of Atlanta Tech Village and an influencer in Atlanta’s start-up community.

David recently wrote on his blog about the challenges CEOs face in raising capital for their startups. He noted that “fundraising is a full-time job” and “incredibly difficult,” especially when coupled with build a business. He described spending four months as CEO tracking down capital only to call off the process and swear off institutional capital.

The challenges described by David are ones equity crowdfunding is designed to beat. Once it hits its stride, crowdfunding should provide deserving startups with capital without the endless meet-and-greets, out-of-town trips and redundant presentations. Equity crowdfunding can be done from the local coffee shop, tech incubator or home office, letting CEO and his/her team focus on building the business.

While equity crowdfunding will make raising capital easier, it still won’t be easy. A startup looking to raise capital through equity crowdfunding needs the same ingredients as those raising money offline . . . but the time spent to raise it should be much less.

We are working to generate equity crowdfunding success stories, and hope David will write about them on his blog soon. Please sign-up at SterlingFunder and get involved.

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Georgia Secretary of State Speaks Out About Equity Crowdfunding and the Invest Georgia Exemption

We are glad to have found on YouTube a video by Georgia Secretary of State Kemp about the Invest Georgia Exemption, which is Georgia’s equity crowdfunding law. Also appearing in the video is Vincent Russo, who was the department’s top lawyer before leaving for private practice a few months ago.

The video describes the basic mechanics of the Invest Georgia Exemption, as well as the Secretary’s motivations for adopting this ground-breaking rule. “One of my goals as Secretary of State was to try to help small business owners, help entrepreneurs,” Mr. Kemp said, and “also cut government red tape. This is how the concept for the Invest Georgia Exemption came about.”

He wisely noted that private sector works best when government gets out of the way.

Mr. Russo explained that “IGE is a way that small businesses here in Georgia and investors here in Georgia, can grow their business ventures.”

This equity crowdfunding rule has put Georgia on the crowdfunding map nationally. Once Georgian companies and investors become fully involved, the rule will start to work, making capital easier to access for businesses and providing an entirely new asset class for investors. Please help spread the word about Georgia’s equity crowdfunding laws and get involved on SterlingFunder.

Information about the Invest Georgia Exemption from the Georgia Secretary of State can be gotten by contacting [email protected] or calling (404) 656-2881.

You can also learn more about the Invest Georgia Exemption here.

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Update on the Federal Equity Crowdfunding Law

We are frequently asked by customers and reporters, “when can we equity crowdfund?!”

As many of you know, Georgia was only the second state to allow equity crowdfunding – so SterlingFunder has already been facilitating equity crowdfunding transactions.

The JOBS Act is the federal law that paved the way for equity crowdfunding to take place nationally. (Georgia has its own, what you could call, “mini-JOBS Act,” that allows SterlingFunder to operate now.  Georgia’s rule is actually called the “Invest Georgia Exemption.”) 

Before anyone, no matter what state you live in, can use the JOBS Act, the Securities and Exchange Commission (“SEC”) needs to finalize its crowdfunding rules.

The SEC proposed its crowdfunding rules in October 2013.  The public had until February 3, 2014 to provide comments on the proposed rules.  The next step is for the SEC to review the public comments and write and vote on final crowdfunding rules.  Given that the SEC received thousands of public comments – with many multi-page comments – it will likely take several months for the SEC to review and finalize rules.  As a result, we estimate that the final rules will issue during the Summer of 2014.

In the meantime, you can equity crowdfund in Georgia and can also take advantage of SterlingFunder’s reward-based crowdfunding program.  Hope this was helpful – contact us with any questions.

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You Can Help Georgia Realize a Stronger and Faster Economic Recovery

Along with the rest of the country, Georgia continues to fight its way out of the Great Recession. With that in mind, I wonder how many Georgians have considered what they can do to help the State realize a stronger and faster recovery. And for those willing to pitch in, do they know what to do?

A healthier state economy benefits us all. Schools, courts, hospitals, parks and playgrounds are built, expanded and refurbished. There are more firefighters and more police patrols, keeping us safer. Public agencies return to regular staffing levels so the government runs smoothly. When the state does well, our quality of life gets better.

In my experience, many Georgians are unaware of opportunities created by state lawmakers to push Georgia closer to a full economic recovery. Many of these measures are directed at making it easier for small businesses to start and grow. Lawmakers created these measures because small businesses create new jobs locally, occupy nearby empty office space, and pay state and city taxes here. Supporting the growth of small business is a classic “win-win.”

Several of these great Georgia initiatives will prove to be entirely useless unless the general public knows about them and puts them into action. Some of these key initiatives are the Invest Georgia Exemption, the Invest Georgia Venture Capital fund and the Angel Investor Tax Credit.

The Invest Georgia Exemption gives all Georgia residents an opportunity to easily invest in Georgia-based businesses. By providing capital to a Georgia business, Georgians are giving it some of the funds it needs to get started or to grow. In exchange, the investor becomes a part owner in that particular business and share in any profits distributed to shareholders. This process is called “equity crowdfunding.” Several Georgia-based portals make investing through crowdfunding an easy way to get involved. (Disclaimer: I am the CEO of one of them, SterlingFunder).

The Georgia Angel Investor Tax Credit is another initiative by the legislature to help spur investments in early-stage, Georgia-based business. This law furnishes a state tax credit to angel investors who provide capital to qualified Georgia-based companies. Speak to an accountant about eligibility, but this may help you to invest in early-stage businesses.

The Invest Georgia Venture Capital Fund is a $100,000,000.00 fund intended to fuel investments in Georgia companies over a five year period. Forty-percent of these funds will go to early-stage companies, with the balance going to companies in the growth stage. While this law has passed, the state legislature has only appropriated a percentage of $100 million total. You can help my encouraging your local representatives to fully appropriate this fund, as well as encourage local business you aware of to seek out investments from this fund.

There has also been legislative action to spur the funding of small businesses that do not depend on Georgians to take action, but are still important. Most notably, new laws allow pension funds for Georgia firefighters and teachers to invest in alternative investments – like early-stage businesses — to grow those funds more rapidly.

The City of Atlanta is working hard too, with Invest Atlanta, a program of Atlanta’s Development Authority. Invest Atlanta provides tax incentives and bonds for property development, loans for small business expansion and start-up and uses other incentives to promote Atlanta as a great home for small businesses.

For many of these initiatives to have an impact, Georgians need to know about them and get involved. Good economic programs are not, by themselves, enough to hasten the full economic rebound we need. Georgians should get involved, and a great way to do that is to support new and early-stage businesses through investment, word-of-mouth and patronage. Ultimately, this will benefit you, your children, your community and our entire State.

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Message from Ed (Non-accredited Investor)

Equity crowdfunding stands to directly benefit two groups: the companies receiving capital to start and grow and investors who share in those companies’ profits.  (There are also indirect beneficiaries, a discussion for another post, including communities and municipalities who will benefit from the economic activity of local new and growing businesses).

At SterlingFunder, we occasionally receive comments from investors and I wanted to share this one with you.  While equity crowdfunding continues to take shape, this non-accredited investor, a Georgian named “Ed,” already appreciates the potential of this new capital formation tool:

You have done an almost unbelievable job in bringing investment opportunities to unaccredited investors in Georgia. I thought I would have to wait for years. Thanks!  Usually Georgia is one of the last ten states to adopt meaningful change. To be an early adopter in the legislature and to have you follow up to give unaccredited investors meaningful opportunities was really unexpected. I am retired and unlikely ever to have a million dollars in assets excluding my home residence. Nonetheless, I do want to invest a moderate amount in the future of our country. This is not to get rich quick, it is to make a better future for the next generation.

Ed, thank you for sharing and allowing us to publish your email!  We look forward to working with you and tens of thousands of other Georgians looking to make a difference.

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