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Michigan Entrepreneurs and Small Businesses: Crowdfunding Law Update.

Last year  Representative Tom Barrett introduced House resolution2015-11-26-13-04-02 235 (HR 235)

“to support the (SEC)’s recent adoption of rules…to facilitate small and start-up companies’ access to capital raised through crowdfunding.”

The resolution supports crowdfunding as viable tools for start-up businesses.

The resolution acknowledges:

Businesses in Michigan have greatly benefited from the opportunities created by the…Michigan Invests Locally Exemption (MILE) program. MILE has allowed everyday Michiganders, referred to as unaccredited investors, the ability to play a larger role in growing Michigan’s creative business ventures through Michigan-based crowdfunding platforms while still enjoying investor protections and security in their investments” (Emphasis added.)

 

Is Crowdfunding a Viable Option in Michigan?

Fast forward to today,  MIBiz recently reported that Michigan’s crowdfunding law hasn’t gained much traction

However, it may remain a viable tool for cash-strapped startups and the Michigan legislature has not given up on it.

 

Yesterday the Michigan House passed HB 4035 that amended the Michigan Invests Locally Exemption to Intrastate Crowdfunding.

 

According to yesterday’s announcement from the Michigan House Republican Website:

The amendments contained in HB 4035 “will expand the program so people can also invest in small businesses primarily doing business in the state and allows Michigan’s law to remain active under new Federal regulations

You can check out the House Fiscal Agency’s Analysis Here

The HB now moves to the Senate Commerce Committee for consideration.

 

Entrepreneurs and Start-ups:

 

Proponents of Crowdfunding: access to capital.

A while back Candace Klein Chief Strategy Officer at DealStruck was Interviewed by CrowdfundInsider and talked about how small business might benefit from crowdfunding. She had this to say, in part:

“Most businesses are community-based, and have an immediate impact for those in their community, whether geographic or industry-based.  Crowdfunding brings these companies together with the everyday investors in their communities.”

 

Crowdfunding for Social Enterprise?

I agree. As I’ve previously written about, crowdfunding appears to be a viable tool for community based businesses.

People are willing to invest in projects that will enhance their local community.

This is what makes local equity-based crowdfunding attractive for social entrepreneurs.

This is what makes local equity-based crowdfunding attractive for social entrepreneurs.

 

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

Twitter: @JeshuaTLauka

www.dwlawpc.com

Update on Fintech, Social Entrepreneurship and Special Purpose National Bank Charters for Fintech Companies.

January 19, 2017 1 comment

Last month, Thomas J. Curry, Comptroller of the Currency gave remarks about Special Purpose National Bank Charters for Fintech Companies. You can read Mr. Curry’s remarks here.

Mr. Curry announced that the Comptroller of the Currency (OCC) would move forward with considering applications from financial technology (fintech) companies to become special purpose national banks.

Mr. Curry had this to say, in part:2015-11-26-13-04-02

“Over the past year, no topic in banking and finance has drawn more interest than innovative financial technology, and for good reason. The number of fintech companies in the United States and United Kingdom has ballooned to more than 4,000, and in just five years investment in this sector has grown from $1.8 billion to $24 billion worldwide.

“The OCC published a paper discussing the issues and conditions that
the agency will consider in granting special purpose national bank charters.” You can check that paper out here

Support for Special Purpose National Banks from the Fintech Community.

Today I read an article from CrowdFund Insider: Financial Innovation Now supports the OCC’s charter.

Financial Innovation Now is “a public policy coalition comprised of Amazon, Apple, Google, Intuit and PayPal”

Some heavy hitters.

As reported by Crowdfund Insider, Brian Peters, Executive Director of Financial Innovation Now, stated;

“FIN believes that payments and lending regulation needs streamlining for the modern era. We commend the
OCC’s leadership and vision in driving this regulatory discussion. The OCC has rightly concluded that its approach must evolve to ensure that all American consumers and small businesses are empowered with better access to the benefits of financial technology.”

According to Crowdfund Insider  “Fintech Charter could benefit innovative financial firms that can provide superior services at a lower cost for both consumers and businesses.”

Why Fintech Intrigues me – Purpose Driven.

I’ve previously talked about why fintech is so intriguing.

a. taking a risk doing something different;

b. disrupting business as usual;

c. for the good of others.

That’s social entrepreneurship at its finest.

Given the hot water that big banks continue to find themselves in, it isn’t surprising that a consumer friendly alternative is attractive.

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

Update on Community Development and Affordable Housing: Is an Answer Found in Social Enterprise?

October 31, 2016 3 comments

Today the Community Development Financial Institutions Fund released its five year Strategic Plan

If you are not familiar with the CDFI, the CDFI “works to spur economic growth and opportunity in many of our nation’s most distressed communities.2015-11-26-13-04-02

“The CDFI Fund’s mission is to expand economic opportunity for underserved people and communities by supporting the growth and capacity of a national network of community development lenders, investors, and financial service providers.”

Included in the overarching goal for the CDFI’s strategic plan is promoting community development. If you have a few minutes, take a look at the strategic plan.

The Affordable Housing Problem in Grand Rapids

As many of you may know, a few weeks back the Grand Rapids Chamber hosted an Issue Summit on the Housing Crisis in Grand Rapids.

The Summit brought speakers representing many community stakeholders, including representatives from 616 DevelopmentGrand Rapids Urban League,Rockford ConstructionICCFMSHDA, and many local non-profits, including Mel Trotter MinistriesHQHeartside Ministries, on this lack of affordable housing, what is as Mayor Bliss emphasized, admittedly, “a complex issue”.

I have previously offered my own perspective, both as a lawyer representing real estate developers/investors, and as Board Chairman at Mel Trotter Ministries.Is there an answer found in Social Enterprise?

Last week Jim Harger with MLive posted a thorough article on the affordable housing crisis.

One community partner highlighted was Pastor Jim Davis and his company “Purpose Properties

“The mission of Purpose Properties is to “raise enough money from local foundations and philanthropists to buy market-rate and affordable rental properties in the city.”

According to Jim Harger’s article:

Purpose Properties plans to charge market rates for its properties to those who can afford them and use their profits to subsidize the rents of those who cannot afford market rates.”

My thoughts:

This is social entrepreneurship at its finest. Social entrepreneurs engage their community by using the power of business to solve a social problem.

We need more businesses and community stakeholders to approach our community problems like Jim Davis and Purpose Properties.

The question we should all ask ourselves: Am I working to build a better community?

Jeshua@dwlawpc.com

 

Twitter: @JeshuaTLauka

Small Business, Social Entrepreneurs and Crowdfunding

Just a few days ago I posted on the Michigan House Resolution supporting Equity Crowdfunding.

This morning I read an article on CrowdfundInsider on the topic of financing for small businesses.

Access to Capital: What are the Options for Small Company Finance?

Candace Klein Chief Strategy Officer at DealStruck was Interviewed and talked about how small business might benefit from crowdfunding. She had this to say, in part:

“Most businesses are community-based, and have an immediate impact for those in their community, whether geographic or industry-based.  Crowdfunding brings these companies together with the everyday investors in their communities.”

 

I agree. As I’ve previously written about, crowdfunding appears to be a viable tool for community based businesses.

People are willing to invest in projects that will enhance their local community.

This is what makes local equity-based crowdfunding attractive for social entrepreneurs.

Comments? Questions?

e-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

Michigan Entrepreneurs and Start-ups: House Resolution Supports Crowdfunding for Start-up Businesses

March 8, 2016 1 comment

On March 3,  Representative Tom Barrett introduced House resolution 235 (HR 235).  Today HR 235 was on the agenda for the Commerce and Trade Committee Meeting.

HR 235 is a  “resolution to support the United States Securities and Exchange Commission’s recent adoption of rules pursuant to Title III of the JOBS Act which are designed to facilitate small and start-up companies’ access to capital raised through crowdfunding.”

The resolution supports crowdfunding as viable tools for start-up businesses.

The resolution acknowledges:

Businesses in Michigan have greatly benefited from the opportunities created by the…Michigan Invests Locally Exemption (MILE) program. MILE has allowed everyday Michiganders, referred to as unaccredited investors, the ability to play a larger role in growing Michigan’s creative business ventures through Michigan-based crowdfunding platforms while still enjoying investor protections and security in their investments” (Emphasis added.)

HR 235 ends by stating that:

“we support the United States Securities and Exchange Commission’s recent adoption of final rules pursuant to Title III of the JOBS Act which are designed to facilitate small and start-up companies’ access to crowdfunding capital, fostering entrepreneurial growth and continued job creation in the state of Michigan and across the United States”

Entrepreneurs and Start-ups:

Although the resolution has no real significant legal effect, Michigan legislators want you to know that they are on your side.

A key point addressed in the resolution is the balance between allowing startups access to capital, all the while ensuring adequate “investor protections” for the unaccredited investor.

e-mail: Jeshua@dwlawpc.com

Twitter: @JeshuaTLauka

www.dwlawpc.com

Michigan Entrepreneurs: News and Info on Raising Capital and Crowdfunding

August 3, 2015 Leave a comment

Good morning and Happy Monday!

Entrepreneurs may want to take advantage of some free guidance provided by the State of Michigan.

The State of Michigan’s Department of Licensing and Regulatory Affairs (LARA) announced today that it is hosting a workshop – “Understanding Your Options for Raising Capital in Michigan”. You can Register here  The seminar will be held in Lansing and other locations all across Michigan.

According to the press release, the Seminar will discuss

  • legal and structural basics;
  • key formation and other often overlooked issues;
  • private offerings using regulation D or intrastate exemptions (504/SCOR, 504/202(1)(n) and 201(g));
  • Michigan intrastate crowdfunding;
  • crafting a winning investor pitch; venture capital; long-term planning for a potential IPO;
  • protecting yourself from arbitration, civil litigation and potential criminal liability.

Its good to hear that one of LARA’s topics will be crowdfunding under the MILE Act.

As I’ve previously written about, Michigan’s intrastate crowdfunding exemption could be a useful tool for entrepreneurs, but it hasn’t gained much traction. There are many “unknowns” that are detracting entrepreneurs from pursuing local crowdfunding (and many lawyers who are educating their clients about the risk of these “unknowns”).

Still, more and more states are enacting intrastate crowdfunding laws in order to provide another tool for local entrepreneurs in funding their ventures.

In Michigan, a house bill was proposed back in February to amend the MILE Act to permit issuers to open escrow accounts with financial institutions outside of the State of Michigan. You can see the text of the bill here. It doesn’t appear that the Bill has gained much traction. However, it is a good sign that the legislature is still evaluating ways to make the MILE Act a useful tool for local entrepreneurs.

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Recent Crowdfunding Success a Good Sign for Social Entrepreneurs

Last week MIBiz reported a somewhat surprising result of the MEDC’s grant-matching initiative (Public Places Community Spaces Initiative).  I  wrote about this initiative in a prior post.

The MIBiz article headline:

State-backed crowdfunding initiative hits 97% success rate in first year

This is an amazing success rate by any calculation

As stated by Ebrahim Varachia, president and co-founder of Detroit-based Patronicity

“It is quite rare…[to see crowdfunding initiatives with that level of success]”

What Projects are being funded?

Its worth looking at the type of projects that were successfully pitched to the public and funded, per MIBiz:

“They range from a historic manufacturing building restoration in Calumet and a recreational sports complex in Sparta to an outdoor soccer field a few blocks from the Capitol Building in Lansing and a public art installation in downtown Grand Rapids. They also include a neighborhood opera house in Detroit and a new pavilion along the Kal-Haven trail in Southwest Michigan.”

What is the take away?

Although equity-based crowdfunding still carries with it a lot of open concerns and uncertainty, the latest success of the MEDC’s initiative at a minimum shows that

people are willing to invest in projects that will enhance their local community.

This is what makes local equity-based crowdfunding attractive for social entrepreneurs.

A Social entrepreneur whose business model is rooted in serving some facet of your local community – there is a place for you and your business.

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

www.dwlawpc.com