FUNDING POTENTIAL – PART 4 – LAWS AND REGULATIONS

QUICK CALENDAR

In addition to this Instant Funding newsletter, I host the Successful Funding show, appear as a guest on various podcasts and television shows, speak at differen events and present my own educational programs. Presented here is a quick listing of upcoming opportunities to share information, to learn or to meet in person or via video conferencing. More info below.

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Founded in Foco – Funding Potential - today Friday, March 8, 11 am MST, Fort Collins

Successful Funding – Donor Advised Funds – Tuesday, March 12, 8 am MDT – LinkedIn Live

Successful Funding – Financial Record Preparations – Tuesday, March 19, 8 am MDT – LinkedIn Live

Successful Funding – Reg CF Crowdfunding – Thursday, March 21, 8 am MDT – LinkedIn Live

Successful Funding – Business Acquisitions – Tuesday, April 2, MDT – LinkedIn Live

SuperCrowd 2024 – Impact Crowdfunding – Wednesday/Thursday – April 17/18 - Online

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FUNDING POTENTIAL – PART 4 – LAWS AND REGULATIONS

?Every funding campaign appears to be boxed in by a law or regulation. For one reason or another, a government has limited how much money may be raised, how many investors may participate, who may invest, when they may invest, when an investment opportunity may be communicated, and who may present the funding opportunity. This labyrinth of laws and regulations often contradicts itself in purpose, policy, or application.

?I have participated in the legislative process by championing three bills that became law. One of these was the Colorado Crowdfunding Act, passed in 2015 in response to the SEC’s failure to develop regulations promptly to implement the federal JOBS Act. With good hearts and an interest in looking good to their constituents, the Colorado Crowdfunding Act passed out of the Small Business Committees in both houses to the floor, where, in a very rare event, it was unanimously passed.

?The Act was flawed so severely that it failed in its primary purpose to enable all businesses to have access to the capital market by extending that market to include non-wealthy people. Every year for four years, I joined with others in trying to fix the Act to make it practically workable. In the fourth year, most relatively expensive barriers were set aside with a commitment to consider exceptions and waivers when needed. By and large, this now permits a small business in Colorado to raise money from Colorado residents in a dollar amount up to $500,000 without the requirement of a crowdfunding intermediary platform or a third-party escrow agent upon completing and filing three forms and payment of a $50 filing fee. The filing and conduct of the intrastate crowdfunding campaign is monitored by the Colorado Divisions of Securities.

?The Act limits investments by non-wealthy people to $5,000 per small business per year. Wealthy people are not limited by the dollar amount they may invest. People residing outside of the State of Colorado cannot invest. With reviewed financials, a small business may raise up to $2 million. Investors may be adults, businesses, or other organizations representing the broadest possible combination of investor candidates subject to the dollar and residency limitations.

?Anyone seeking funding must get to this level of understanding and detail to comply with all applicable laws and regulations.

?As one might expect, with dozens of ways of raising funding, there are dozens of different laws and regulations. In many instances, if funding is raised from investors in more than one state, each state has a different set of laws and regulations. The situation becomes overwhelming when considering the impact of taxes on property and income and associated tax credits. To crack down on money laundering and terrorism funding, the government is passing laws requiring the identification of small business owners and disclosures of cash and cryptocurrency transactions that impose an additional cost to raising capital. It is complex, confusing, and difficult to consider all possible types, sources, and deal structures for funding, yet this is where a funding seeker finds themselves.

?It has been my experience that this challenge causes most small businesses to choose between a few funding options, often missing a less well-known option that may best suit their situation.

?A number of people are pushing new types of funding structures involving cooperatives, decentralized autonomous organizations (DAOs), cryptocurrency, non-fungible tokens (NFTs), and other vehicles that promise alternative paths to wealth building. With the FTX scam, more laws and regulations are sure to follow.

?In developing a capital strategy, the small business should consider all funding options. As a practical matter, a small business needs more time and has no desire to become an expert in all funding options. Small businesses tend to implement an option they know without considering alternatives that may not be the best and which may not work. Small businesses must invest time in considering alternatives by talking to other small businesses and working with advisors and business support organizations to determine which option is best for them.

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NEW BOOK ON INVESTING THROUGH CROWDFUNDING

?Devin Thorpe is now pre-selling his new book How to Make Money with Impact Crowdfunding through a rewards crowdfunding campaign. For only $5, you can get a copy that shows how to build wealth by investing in a series of small businesses.

?https://tlc.thelocalcrowd.coop/campaign/book-launch-how-to-make-money-with-impact-crowdfunding/

?SUCCESSFUL FUNDING

?Chris Miller was my guest on Tuesday at the seventh Successful Funding show. Chris is Chair of the Board of the National Center for Community Capital (NC3). NC3 is advocating for establishing Diversified Community Investment Funds – locally owned and operated funds to address the capital needs of a community, including its small businesses and community projects. Many communities are looking to add local funding to their toolbox for housing, preserving existing businesses, and supporting new businesses and those other projects that never seem to get to the top of anyone’s list.

Next week, on Tuesday, March 12, my guest will be Wayne McDaniel with the SaT Catalyst Fund which is a donor advised funding making investments in impact businesses. Donor advised funds represent a source of funding that matches individuals benefiting charities with their donations while obtaining tax deductions with the needs of businesses for investment.

You may register to attend this free Event on LinkedIn at:

https://www.dhirubhai.net/events/successfulfunding-donoradvisedf7168692254201565184/theater/

?You may view all of the Successful Funding shows in my Posts on my LinkedIn profile at: https://www.dhirubhai.net/in/karldakin/

?The Successful Funding show on my LinkedIn profile will repeat weekly at 8 am MST on Tuesdays. You may register to attend by going on LinkedIn, searching for Events, clicking on the Events button, searching for Successful Funding, and then clicking on the Attend button. You should receive an email with a link to save to your calendar. You can also click the Share button and obtain the URL link to the show to put it in your calendar.

DON COHEN

?I was a guest on Don Cohen’s show Wednesday, where we discussed Successful Capital Funding. The conversation centered on investments made from high-quality relationships that are mutually beneficial to both the seeker of funding and the investor.

You can view a recording of the show at:

https://www.dhirubhai.net/events/7169021864604786688/about/?originTrackingId=m%2BMKoTO%2BR1q83lrSSIuL%2BA%3D%3D

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SUPERCROWD 2024

?I will co-host and present at SuperCrowd 2024 , "The Impact Crowdfunding Event of the Year,” held online on April 17th and 18th.

?https://thesupercrowd.com/supercrowd24

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Karl Dakin, the Capital Coach

Dakin Capital LLC

[email protected]

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