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It’s Official: Crowdfunding Is Now In Effect

A Legal Structure for Crowdfunding
September 23, 2013 | Legal Alert
Markley Roderick
Cherry Hill, NJ

It’s official: Crowdfunding is now in effect and thousands of companies are about to start raising money under the new SEC regulations. If each company offers different deal terms for investors, it’s going to be that much more difficult for investors to make apples-to-apples investment decisions.

Meanwhile, some in the investment community are still concerned that a company raising money through Crowdfunding will be hobbled in raising more money afterward, e.g., from angel groups or venture capital funds.

The sooner the market adopts a standard investment structure, the better for all.

Here is a legal structure that would standardize the Crowdfunding market, satisfy SEC regulations, and ensure that the Crowdfunding round of financing does not preclude later rounds:

This structure should be acceptable to all of the constituents of the Crowdfunding market:  the entrepreneurs who started MyCo; the broad investing public that will make Crowdfunding a success; the angel groups that help so many startups succeed and currently anchor the early-stage market; and the venture capital funds that provide additional funds for companies that need and deserve them.

For more information on Crowdfudning, including news, updates and links to important information pertaining to the JOBS Act and how Crowdfunding may affect your business, follow Mr. Roderick’s blog, or twitter account: @CrowdfundAttny.

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