Exciting news from our friends east of Lake Washington came out last week! The City of Bellevue is developing a plan to launch a website that will take advantage of Washington’s new crowdfunding bill. The City’s goal is to provide local companies a new way to raise money from smaller, local investors.

What is crowdfunding?

As we’ve discussed in previous posts, equity crowdfunding allows companies to advertise to and raise investment from the “crowd,” i.e. the general public. This is significant because traditionally companies could only access capital from “accredited investors” (or high net-worth individuals) due to the SEC restrictions and compliance costs associated with raising funds from non-accredited investors.

With crowdfunding, non-accredited and accredited investors alike can invest in companies they believe…

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As of earlier this month, you can officially use crowdfunding to raise money in Washington for your small business. This new way of raising money allows you to publicly advertise to all investors that you are selling stock in your company. Traditional securities offerings restrict advertising and limit offerings to those investors who satisfy the income and net worth standards to qualify as an “accredited investor.” This new opportunity is different from platforms like Kickstarter because with Kickstarter campaigns you cannot offer stock in exchange for the donations. Instead, you give individuals “swag” (e.g. promotional merchandise) in exchange for their donations.

Crowdfunding is not yet available nationwide despite a section in the JOBS Act directing the SEC to enact crowdfunding rules…

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I hear clients often discuss raising money from friends and family to finance their business. There is a common misunderstanding that you can take on investment from friends and family without having to comply with securities laws. This type of misunderstanding regarding securities laws can lead to serious consequences for the owners of the business. And I wanted to set the record straight so you can avoid unnecessary liabilities when raising money for your business.

What is a security?

To begin, it is important to understand what a security is to understand why this all matters at all. There’s a lengthy definition for what a security is, and boiled down to its essence a security is any contract, transaction or scheme…

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Kyle Hulten wrote recently on the iVLG blog about new developments to the JOBS Act. For those of you not familiar with the JOBS Act, here’s a summary of Title II (equity crowdfunding) and Title III (crowdfunding) of the act. In a nutshell, the Jumpstart Our Business Startups Act was passed to provide businesses easier access to a wider pool (the public, or “crowd”) of investors. As part of the JOBS Act, the SEC lifted the 80+ year old ban on general solicitation (i.e. public advertising) of securities offerings–private companies had not been able to advertise that they were seeking to raise capital from investors.

It has been a long road since the act was signed by President Obama in April…

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