The Crowdfunding Handbook

Raise Money for Your Small Business or Start-Up with Equity Funding Portals

The Crowdfunding Handbook

Author: Cliff Ennico
Pub Date: May 2016
Print Edition: $19.95
Print ISBN: 9780814433607
Page Count: 288
Format: Paper or Softback
e-Book ISBN: 9780814433614

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Acknowledgments Introduction The Road Map: Where to Find Detailed Discussion of Regulation Crowdfunding Rules

Part I: The Basics of Crowdfunding

Chapter 1: What Is Crowdfunding?

Taking the Friends and Family Offering to the Next Level

The Different Types of Crowdfunding

Who Should Be Reading This Book?

Where This Book Will Take You

Chapter 2: The Evolution of Crowdfunding

The Friends and Family Offering

Intermediate Steps: Microlending and Peer-to-Peer Lending

The Social Media Revolution and Project Crowdfunding

“Angel Investor” Social Media Websites

“Intra-State” Crowdfunding Under State Law

Social Media Crowdfunding (Title III Crowdfunding)

A Brief Overview of Crowdfunding Under Title III of the JOBS Act and Regulation Crowdfunding

Part II: Launching a Successful Title III Crowdfunded Offering, Step by Step

Chapter 3: Is Crowdfunding Right for Your Company?

Crowdfunding Is Not for Everyone

Is Your Company Right for Crowdfunding?

Qualifying under the JOBS Act and Regulation Crowdfunding

Handling Your Crowd of Investors if the Offering Is Successful

Chapter 4: Preparing Your Company for a Crowdfunded Offering

Choose the Right Legal Entity

Decide Where to Incorporate, or Consider Reincorporating Somewhere Else

What Type of Security Will You Be Offering?

Amend Your Articles of Incorporation to Create a Separate Class of Shares for Your Crowdfunded Offering

Set Your Offering Amount and Determine the Dilution for Existing Investors

Prepare a Term Sheet for the Offering

Get Your Management Team and Initial Investors on Board

Chapter 5: Launching Your Crowdfunded Offering

Finding the Help You Need

Preparing Your Disclosure Documents

Finding the Right Funding Portal for Your Offering

Setting the Offering Schedule and the Min/Max Amounts

Chapter 6: Managing and Marketing Your Crowdfunded Offering

Your Offering Announcement: Where It Should Go, Where It Can’t Go

Advertising and Promoting Your Offering on the Funding Portal

Advertising and Promoting Your Offering Elsewhere

Can the Funding Portal Help You Advertise Your Offering?

Updating or Changing Your Offering Documents Mid-Offering

What If You Made a Mistake in Your Offering Documents?

Closing Your Offering Early, or Quitting While You’re Ahead

Filing Progress Reports with the SEC: Form C-U

Chapter 7: After Your Successful Crowdfunded Offering Is Completed

Getting Your Money from the Funding Portal

Issuing Your Securities to Investors

Complying with State “Blue Sky” Laws

Creating a Stock Transfer Ledger

Updating Your Capitalization Table

Filing Your Annual Reports and Holding Your Annual Shareholders Meeting

Making Sure Your Company Doesn’t Get “Too Big”

Part III: Communicating with Your Crowd

Chapter 8: Keeping Your Crowd under Control

Coping with Your New Partners

Developing a Shareholder Communication Program

Dealing with Time Vampires, Mata Haris, and Know-It-Alls

When You Have to Change Your Business Plan

When It’s Time to Throw in the Towel

When the Revolution Has Begun

Chapter 9: Going Back for Seconds: Launching Multiple Crowdfunded Offerings

Can You Launch Other Offerings at the Same Time as Your Crowdfunded Offering?

The “Upstairs-Downstairs” Offering

Can You Launch Another Crowdfunded Offering Right After You Complete Your First One?

Some Things to Consider When Launching a Follow-up Offering

Part IV: Considerations for Investing in a Crowdfunded Offering or Setting Up a Funding Portal

Chapter 10: Should You Invest in a Crowdfunded Offering?

Why Are You Investing in a Crowdfunded Company?

Can You Legally Invest in a Title III Crowdfunded Offering?

Are You an Accredited Investor?

What Is Your Tolerance for Risk?

Calculating Your Investment Limit under Title III

Can You Lie about Being Legally Able to Invest?

Participating in a Crowdfunded Offering

Bringing in Other Investors

Selling Your Crowdfunded Securities

Getting Involved in Your Crowdfunded Company

When Can You Write Off Your Investment in a Crowdfunded Company on Your Taxes?

Chapter 11: Should You Set Up a Funding Portal?

It May Be Too Late for the “Early Money”

Picking a Crowdfunding Niche

Setting Up a Funding Portal

The Portal’s Obligation to Vet Issuers

The Portal’s Obligations to Investors

The Portal’s Obligations to the SEC

The Portal’s Obligations to Market and Grow Its Business

The Portal’s Obligations in Managing Offerings

The Portal’s Liability for Mistakes

How a Funding Portal Makes Money

Using Crowdfunding to Raise Money for a Funding Portal

Part V: Background Essentials: Crowdfunding History, Law & Regulations

Chapter 12: Federal Regulation of Private Offerings of Securities prior to the JOBS Act

Early 1900s: The States Get the Ball Rolling with “Blue Sky” Laws

1933: The Federal Government Wades into the Securities Markets

1964: The SEC Adopts Regulation A

1970: The SEC Adopts Rule 146 for Private Placements

1982: The SEC Adopts Regulation D, Adding More Exemptions

1996: The National Securities Markets Improvement Act (NSMIA)

2012: The Jumpstart Our Business Startups (JOBS) Act

Chapter13: The JOBS Act and the New SEC Crowdfunding Rules

Title I: The “IPO On-Ramp”

Title II: Private Placements and New Rule 506(c)

Title III: Crowdfunded Offerings of Securities

Title IV: Expanded Availability of Regulation A

Title V: Changes to Definition of “Public Company” in the Securities and Exchange Act of 1934

Title VI: Special Provisions for Banks and Bank Holding Companies

Afterword: What the Author Really Thinks of Crowdfunding

Appendix 1: Text of SEC Form C

Appendix 2: Text of “Question and Answer Format” Version of SEC Form C

Appendix 3: Amended and Restated Certificate of Incorporation Creating Classes of Voting and Nonvoting Common Stock and Convertible Preferred Stock [Delaware form]

Appendix 4: Provision of LLC Operating Agreement Creating Classes of Voting and Nonvoting Membership Interest, with Nonvoting Preferred Interests

Appendix 5: Some Rights of Shareholders under State Corporation Laws

Appendix 6: Term Sheet for Crowdfunded Offering of Debt Securities

Appendix 7: Term Sheet for Crowdfunded Offering of Series B (Nonvoting) Preferred Shares in Corporation

Appendix 8: Term Sheet for Crowdfunded Offering of Class B (Nonvoting) Membership Interests in a Limited Liability Company

Appendix 9: Sample “Risk Factors” Section for a Crowdfunded Offering Statement

Appendix 10: Sample Accredited Investor Questionnaire

Suggestions for Further Reading


About the Author

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