![Page 1: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/1.jpg)
Securities Law 101
![Page 2: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/2.jpg)
Kansas Adopted the First
Securities Law in 1911
![Page 3: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/3.jpg)
Federal securities laws were
adopted in 1933 and 1934
![Page 4: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/4.jpg)
Accredited Investor
• At least $1 million in net worth excluding primary residence or
• $200,000 in annual income
• $5 million for entities
Rule 501(a)
![Page 5: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/5.jpg)
The 100%
![Page 6: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/6.jpg)
Types of Investors
Professional
investors
0.3%
Non-
professional investors
99.7%
![Page 7: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/7.jpg)
1.Do you want to be able to publicly
advertise?
2.Accredited investors only or everyone?
If everyone, how many unaccredited?
3.How much do you want to raise?
4. In what states are your potential
investors located? (just one? A few? All
of them?
![Page 8: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/8.jpg)
Three categories of securities
offerings:
1.Private offering
a. to both accredited and
unaccredited
b. to accredited only
2.Public offering to accredited only
3.Public offering to both accredited and
unaccredited (aka Direct Public
Offering or Investment Crowdfunding)
![Page 9: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/9.jpg)
1. Private Offerings
• No public advertising – mass emails, press
releases, social media, announcement on
web site, publicly advertised events . . .
• One-on-one conversations – doesn’t
necessarily mean you have to know
people
• Many lawyers will say accredited only,
but . . .
![Page 10: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/10.jpg)
Recompose (Seattle) – Raised about
$500,000 so far – nonvoting preferred stock
Business is currently illegal!
![Page 11: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/11.jpg)
2. Public Offering for Accredited
Investors – Rule 506(c)
• Unlimited public advertising
• You must do due diligence to ensure all
investors are accredited
• File Form D
• Created by Title II of the JOBS Act
•Platforms available e.g. Circle Up
![Page 12: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/12.jpg)
3. Direct Public Offering aka
Investment Crowdfunding
![Page 13: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/13.jpg)
Option 1: State Level Registration
• This has been available for
decades
![Page 14: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/14.jpg)
Raised about $800,000
Nonvoting preferred stock
Based in Berkeley, CA
![Page 15: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/15.jpg)
State Crowdfunding Laws
![Page 16: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/16.jpg)
Option 2: Regulation A/A+
• Tier 1: up to $20 million state by state
registration; no audit required
• Tier 2: up to $50 million; no state
registration; audit required; state notice
filings may be required
• For both: “mini registration”
• Made possible by Title IV of the JOBS Act
![Page 17: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/17.jpg)
Option 3: Crowdfunding Exemption
(Title III of the JOBS Act)
• No state level filings required
• Max raise: up to $1,070,000 per year (amount
increased regularly to keep up with inflation)
• Offerings must be conducted through a
registered intermediary
![Page 18: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/18.jpg)
Crowdfunding Exemption
(Title III of the JOBS Act)
• Per Investor Cap:
• The greater of $2,200 or 5% of the lesser of the
investor’s annual income or net worth if either the
investor’s annual income or net worth is less than
$107,000; or
• 10% of the lesser of the investor’s annual income or
net worth, not to exceed an amount sold of $107,000, if both the investor’s annual income and net worth
are equal to or more than $107,000
• You can rely on the efforts of the platform
![Page 19: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/19.jpg)
Crowdfunding Exemption
(Title III of the JOBS Act)
• More than $107k – reviewed financials
• Financials are public
• Annual reporting requirements – only one
report required if fewer than 300 holders of
record of the class of securities offered
• Investors can back out at the last minute
![Page 20: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/20.jpg)
Crowdfunding Exemption
(Title III of the JOBS Act)
• File Form C
• There are limitations on what you can say
outside of the platform
![Page 21: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/21.jpg)
Title III Platforms
![Page 22: Securities Law 101 - acsbdc.org Kassan - Crowdfunding (Fremont).pdfCrowdfunding Exemption (Title III of the JOBS Act) •Per Investor Cap: • The greater of $2,200 or 5% of the lesser](https://reader034.vdocuments.mx/reader034/viewer/2022052500/5f225ad3f3481a63905612f4/html5/thumbnails/22.jpg)
Spotlight: Girls, Oakland, CA
Raised about $500,000 – equity and debt