The Prospects for Crowdfunding

About the Course:

There is definitely a great deal of excitement surrounding crowdfunding. Some 400 crowdfunding platforms are in various stages of launching.

Some say crowdfunding will democratize investment and spur economic activity. Others are concerned that crowdfunding will foster a casino mentality among an unwitting public.

The promise is that small companies may be able to tap the public's desire to own a piece of promising businesses. Millions of individual investors may be able to purchase small stakes of intriguing companies with the ease of a few mouseclicks.

Companies may be able to tap into sidelined capital at less expense than traditional capital raises often demand. In addition, shareholders may become cheerleaders for the companies in which they invest, further increasing the odds of success for companies that list on crowdfunding platforms.

Crowdfunding is a burgeoning phenomenon. The regulations governing crowdfunding will be highly nuanced. To play in this space, you really should know the answers to questions such as:

  • What kinds of regulations will be put in place to ensure that investors don't lose more than they can afford?
  • Will any amounts of money raised from investors on portals be directed to listed companies or will minimum amounts of money have to be raised before the company receives any capital?
  • How will the expenses associated with listing on portals compare to those associated with raising capital via angels and venture capitalists?
  • To what extent should listed companies expect to be compelled to communicate with investors?
  • What will companies that list on portals have to provide in terms of financial reporting? In terms of registration with regulators?
  • Who will have the obligation--the portals or the listed companies--to qualify investors? To conduct background checks on key people at the listed companies?
  • What kinds of investor education materials will crowdfunding platforms make available?
  • To what extent will listed companies be required to disclose "related party" transactions?
  • What obligations will portals have relative to disclosing their intended "use of proceeds"?
  • Will crowdfunding portals be permitted to take equity interests in listed companies?
  • How will investors achieve liquidity?

Course Leader: Douglas S. Ellenoff, Member, Ellenoff Grossman & Schole LLP

Douglas S. Ellenoff, a member of the Firm since its founding in 1992, is a corporate and securities attorney with a specialty in business transactions and corporate financings. Mr. Ellenoff has represented public companies in connection with their initial public offerings, secondary public offerings, regulatory compliance as well as general corporate governance matters. During his career, he has represented numerous broker-dealers, venture capital investor groups and many corporations involved in the capital formation process.

In the last several years, he has been involved at various stages in numerous registered public offerings, including 100 financings and, with other members of his firm, over 400 private placements into public companies (see PIPEs and Venture Capital), representing either the issuers of those securities or the registered broker-dealers acting as placement agent. Along with other members of his Firm, Mr. Ellenoff has been involved at various stages with over 70 registered blind pool offerings (commonly referred to as "SPACs"; 27 of which have consummated their IPO's raising over $1.5 billion). In addition to our IPO experience with SPACs, he has been involved with 20 SPAC M&A assignments. He also provides counsel with regard to their respective ongoing (SEC, AMEX and NASD) regulatory compliance.

Course Length: Approx. 1.5 hours


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