31 posts categorized "July 2012"

More on taking the equity crowdfunding cause to individual states

That fellow who is making his rounds on the radio to promote his book on how bloggers manipulate big media and consequently public discourse - I think he is tied up in his own feedback loop.

PuzzlepiecesandtankAmong many other things, blogging is a way of engaging with others to put together pieces of puzzles you might not otherwise see.

Case in point #947 on this blog: an email over the weekend from Stanley Florek, CEO of Tangerine Power in Seattle, kindly informing me that the equity crowdfunding movement had a local front before I started covering the McHenry bill.

With the permission of both Stanley and Jenny Kassan (to whose work Paul Spinrad has also pointed us), I am reprinting Stanley's email in this post.

"Mr. Carleton & Mr. Wallin:

"My name is Stanley Florek. I am a Washington entrepreneur and a loyal daily reader of both of your blogs on startup law. Your thread this week proposing a state-level approach to regulation of crowdfunding is something I am pursuing in partnership with my counsel Jenny Kassan at K2 Legal and Cutting Edge Capital. Jenny is at the nexus of locally-based crowfunding in this country using currently available legal frameworks. I wanted to introduce you all directly, in hopes that Jenny’s work and ideas might get better visibility on the increasingly noisy crowdfunding scene. Jenny has been working on the ground-level realities of democratizing capital-raising for several years, and she’ll still be on the scene after the initial hype dissipates over the JOBS act dissipates.

"Among other accomplishments, Jenny’s team at her affiliated nonprofit Sustainable Economies Law Center started the Federal crowdfunding avalache by writing an unsolicited petition to the SEC in 2010 demanding a rulemaking to create a new federal crowdfuding exemption. The project’s modest fee was itself crowdfunded thru the IndieGoGo platform, which was a brilliant stroke of viral marketing. This example demonstrated the thunderous leverage crowdfunding can deliver to an unorthodox idea whose time has come.

"More directly related to your recent post, Jenny drafted a petition to the Washington Department of Financial Institutions with feedback from myself, proposing a variation on the crowdfunding framework Joe proposed. I am attaching the letter she drafted to DFI and the negative response they provided. Perhaps by working together we might address the objections DFI raised, and build momentum towards a crowdfunding framework here that is a model for other states.  

"Best regards, Stanley Florek"

Here's a link to that "negative response" from the Washington State securities agency (the DFI) that Stanley references. I think Joe is going to get into dissecting that response. And here's a link to Ms. Kassan's original letter to the DFI.

Photo: ion-bogdan dumitrescu / Flickr.

My brother the vegan, part two

Since my brother Mark left Seattle Monday last for Colorado, California, and who-knows-where-he-is-now, I have not become a vegan. But I have become more mindful of my food choices. And I find myself using the word "mindful."

My brother the vegan, part two

Choices I've made over the past week, that I would not have made prior to my brother's visit, include the following:

  • I sautéed the spinach, steamed the carrots, and sautéed the Portabella mushrooms my brother left behind in my fridge, and had them all for dinner.
  • I chose a tofu and bean sprouts baguette for lunch at the Jewelbox Café before a business meeting in the Northgate area. (Normally I would have gone for the pulled pork.)
  • I went to Chaco Canyon for breakfast on the weekend rather than Voula's (I am not dissing Voula's and I won't give Voula's up).
  • I had a cheeseburger at Li'l Woody's on Friday evening but shared my fries with my youngest son and skipped the Molly Moon milkshake for a pint of Manny's Pale Ale.

During last year's glorious Seattle summer, I developed and practiced a habit of eating well, by which I meant taking the trouble to seek out and enjoy splendid food, prepared well.

I'd like to think I am now trying to fuse the summer 2011 and summer 2012 philosophies.

A {well mixed video feed with ambient sound} is worth a thousand words

I like how NBC is serving up simultaneous webcasts of different events from the London Olympics.

What I've liked most so far was a feed of a beach volleyball match, which had ambient sound from the event - the crowd, announcements over the PA system, even the athletes talking to each other between sets - but no sportscasters!

Photo (10)

My youngest son suspects thriftiness on the part of the broadcaster but I think the choice was one of deliberate production style, not economy. The video "feed" was really not one feed but an excellent mix of camera angles, cut in real time, for all appearances of the same production quality one would see were Bob Costas himself pontificating over the pictures.

Photo (9)

It makes me wish I knew more about how live events are broadcast by major networks. One or two persons per camera, three or four more people with boom mics, some technicians managing the wires, an electrician to manage the power, three or four in the booth and a director choosing the shots (or is the "booth" offsite)?

Photo (9a)

I love and appreciate the excellent commentary you can get about Sounders soccer - no question I learn as much by that as by watching the games. But the video without comment sure is intimate and it's surprising how much more you see when you "turn off the radio," as it were.

Photo (8)

Two views of a possible Apple investment in Twitter

Two New York Times readers had contrasting comments this morning to a story by Evelyn Rusli and Nick Bilton about a rumored investment by Apple in Twitter.

Here's a screenshot that captures the two reactions.

Two views of a possible Apple investment in Twitter

Some context - figures from the NYT piece - for the "the money in the balance sheet is burning a hole in their pocket" and the "it is logical for Apple to spend a trivial amount of its cash horde" comments: Apple is said to be considering investing nine figures (below $1 billion) from its $117 billion in liquid investments.

Circling back to find the IPO on ramp

In the newsprint edition of the Seattle Times this morning (what a pleasure to get to flip copy in three dimensions, as well as to fold and to snap: paper papers are underrated), I read an article (detail pictured) about how Impinj has formally pulled its stale IPO filing, and has simultaneously announced the closing of a significant round of private financing.

Circling back to find the IPO on ramp

The article says that Impinj means to try again later to go public. But next time, it intends to use the IPO on-ramp provided by the JOBS Act.

I went to GeekWire to see what John or Todd have to say on the subject, and this piece by John reports the same. John says Trulia is doing the same thing, i.e., circling back so it can exit via the IPO on ramp.

One thing I find interesting is that Impinj relied on Rule 506 and so filed a Form D in connection with the recent private capital raise. Both the Times and GeekWire report that the round was subscribed by existing investors. John's piece names them, all institutional.

There's a trend among some VC-backed companies to skip Form D filings - or I should say, to rely on 4(2) or another exemption that does not require an SEC filing.

Not so here.

The Impinj Form D reports that $21,648,933 has been raised so far, and $6,110,942 remains available.

Localizing equity crowdfunding

If you are involved or interested in the equity crowdfunding movement and are starting to have misgivings about the viability of the federal exemption under the JOBS Act, I have a suggestion for you:

Go directly to Joe Wallin's new post about taking the cause to the state level.

Joe's post is ostensibly about seeking an equity crowdfunding exemption in Washington State, but there's nothing unique about Washington to keep you from trying Joe's approach in any other state.

LocalcornerstoreAs I said in a comment on Joe's blog, the idea blows my socks off. Of course going local is the correct next front. And with a nascent equity crowdfunding industry already practiced at meeting with regulators and internalizing their concerns, the people to make the case, state by state, are in place.

There's at at least one good reason to think NASAA won't get behind this: the draft equity crowdfunding exemption the organization circulated to member state securities agencies in an unsuccessful, 11th hour attempt to divert the US Congress from proceeding with legislation for a federal exemption. A state exemption modeled on that NASAA draft would be little better, or no better, than the one that passed as Title III of the JOBS Act.

But what if NASAA, eager to reclaim for its members the jurisdiction of states over offerings which NASAA so strongly feels by right and by nature belong under state purview, were to respond to the inevitable disappointment of the equity crowdfunding industry by saying, look, let's try again; if we can set the investment levels appropriately and have recourse to the bad actors, we'll exempt these seed deals from merit review.

Having NAASA's involvement could be useful to the extent willing states and advocates wanted to prioritize the ability to conduct offerings across state borders.

Joe's idea doesn't depend on NAASA's blessing however. It depends instead on the progressiveness of a single state agency.

And then a second. And a third . . .

Photo from Toronto Public Library Special Collections, via Flickr.

Gotham, Delaware

Some weeks back, the New York Times ran a half-hearted (half-baked) exposé of international criminals and domestic tax cheats who form business entities in the state of Delaware.

The broad implication was that Delaware makes it too easy to form a corporation. As though the Delaware Secretary of State were a DMV handing out licenses to new drivers without requiring a road test. Or an agency issuing a permit to carry a concealed weapon without doing a background check.

GothamkrakowI read the piece wide-eyed.

As a start up and emerging company lawyer, I appreciate the rare efficiency represented by how easy Delaware makes it to form a new corporation or LLC. It's fast, it's fairly priced, and it's one small but important expediter of launched ventures and consummated deals.

The reporter, Leslie Wayne, connected the wrong dots.

Broadly speaking, a corporation is a legal fiction, the essential purpose of which is to spur economic activity by shielding entrepreneurs and investors from many of the costs of the business (shift some "externalities," if I'm remembering the law-and-economics school vocabulary, to society at large). Delaware gets it right by understanding that there is no moral or ethical or criminal gatekeeper function to be performed at the time an entity is formed.

The dots to connect are the criminal actions with the criminal actors.

Photo: Maciej Zygmunt / Flickr.

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