May 20, 2016
This was an historic week in the securities industry. Rules that have been in place for more than 80 years were smashed and replaced with new, modern rules that allow citizens from every walk of life to invest in start-up companies right on the Internet. In the past, private placements had to be kept private which effectively meant that you had to be a millionaire to get into a private placement and make any money.
Nothing seems more un-American than having to be a millionaire to make money in the United States of America. But the final deployment of the new rules, as a result of the JOBS Act of 2012, with partial implementations in 2013, 2015 and now 2016, has modernized the old capital formation rules and is changing the landscape of fund raising – for the better.
It’s unclear if the new rules under Title III of the JOBS Act will have much impact on real estate. Allowing non-accredited investors into real estate deals that require a substantial amount of capital doesn’t seem like it’s going to make a very big difference in an overall capital raise. This is compounded by the limits on projects: deal sponsors are restricted to $1M per year and individual investors can only invest (generally) about $5,000 each. So, not much money is going to come from non-accredited investors on a deal-by-deal basis for real estate. But for early stage companies, these small amounts could be a game changer.
The new Title III rules were enough to cause celebration in the streets of Washington DC this week. Hundreds of entrepreneurs, lobbied for the bills that became the JOBS Act, and many of us have been educating the investing public about how all of these new rules work.
Our company has put together a consortium of professional syndicators, who are promoting deals to accredited investors. We already have 53 groups that have joined our company and have signed our Operating Agreement. Our website will be live this summer. We’ve procured relationships with two different broker/dealer (BD) firms. One BD will oversee the relationship with the investors. The other is charged with overseeing the promoters (who are refered to as “issuers”.
We are very serious about making CrowdFunding work. Investors want more choices and deal sponsors want more investors. It’s a win/win for everyone. And we are dedicated to educating the marketplace and sharing information about how these new rules can positively and safely affect investors from every walk of life.
We teach this material in-depth at the Syndication and Hedge Fund Symposium that we host twice a year. The next one will be held in late October 2016 in Las Vegas, Nevada. We hope you’ll join us.
We also hope that you’ll partake in the new capital raising opportunities that exist. And if you’re a professional sponsor please consider joining our CrowdFunding company. Please be in touch with me so that we can share more about how this works and what the opportunity is for you to join us and participate in the modern capital raising revolution.