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Is raising money from non accredited investors worth the costs and risks? We take a look at the options for the friends and family financing round.

Is the family and friends round worth the costs and risks? After discussing the pros and cons with us, entrepreneurs often decide against raising money from family and friends. In today’s post we’ll talk about six different ways you could raise money from family and friends. …

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Friends and family round


In this news roundup we discuss the FCC's "broadband" definition update (more interesting than it sounds), startup fundraising, securities laws, and more...

FCC Updates Broadband Definition

The FCC voted to raise the minimum thresholds needed to meet the definition of broadband. Internet service providers now must provide download speeds of at least 25Mbs and upload speeds of at least 3Mbps to call their services “broadband.” The previous standard was 4Mbps for download speed and 1Mbps for upload speed.

While this sounds pretty innocuous, the new definition may have some interesting consequences.

A little background: In 1996 Congress mandated that the FCC report on whether broadband is being deployed to all Americans in a reasonable and timely fashion, and Congress defined broadband as high-quality capability that allows users to originate and receive high-quality voice, data, graphics, and video.

The first and most obvious consequence of the…

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In this news roundup we look at startups' fundraising, mergers and acquisitions, a commercial lease horror story, ride sharing regulations, and more

Here’s a collection of the most interesting legal and business news we found this week:

Ride Sharing

One of the big issues facing Uber has to do with the fact that auto insurance policies for individual drivers generally don’t cover damages from commercial activity, including ride-sharing through applications like Uber and Lyft. In Colorado, USAA and Farmers are now offering ridesharing insurance. Colorado is a natural testing ground for these new types of policies, as Colorado became one of the first states to explicitly authorize ridesharing services in 2014.

Startups & Funding

The big news of the day is Box’s IPO. After a shaky ride through the IPO process, Box’s IPO appears to be an initial success. It is a home run for its…

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A blog post discussing how businesses in Seattle and around the state of Washington can now use crowdfunding to raise capital for their startups.

As of this month, you can officially utilize crowdfunding to raise money in Washington for your startup. This new opportunity allows companies to advertise their securities offering and raise money from all investors. Traditional securities offerings restrict advertising and limit offerings to those who satisfy the income and net worth standards to qualify as an accredited investor. This new opportunity is different from platforms like Kickstarter, because with Kickstarter campaigns you can’t offer stock in exchange for the donations; instead the donations are usually straight gifts or made in exchange for a product or promotional item. Crowdfunding is not yet available on a national scale despite a section in the JOBS Act directing the SEC to enact crowdfunding rules (Congress…

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It is important to understand when an entity is an accredited investor, as the analysis has benefits for both the company and the investor.

It is common for investors to invest in startups and other offerings using some form of limited liability entity rather than investing as an individual. When you invest as an entity, e.g. XYZ LLC, it is important to understand the SEC’s definition of accredited investors in order to determine whether your entity is considered an accredited investor under Rule 501. Many investors prefer to invest behind the limited liability shield of an entity rather than investing individually, and many investment opportunities are only available to accredited investors. Knowing when an entity is considered an accredited investor can benefit both the investor and the company raising capital.

SEC Rule 501

Under SEC Rule 501 under Regulation D of the Securities Act of 1933,…

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Cliff jumping - Accredited Investor Entity


This post explains the concept of general solicitation in the context of 506(c) crowdfunding offerings, and why they matter to your startup.

There has been a lot of buzz within the investment community about equity crowdfunding for both accredited investors under 506(c) and for non-accredited investors under Title III of the JOBs Act and recently enacted state law exemptions, including the crowdfunding bill recently passed (but not yet enacted) in Washington.

The main feature of both types of crowdfunding is the company’s ability to spread the news about the investment through the community, by advertisement and public broadcast.

Historically, or rather from the early 1930s until last year, you could not spread the news about such a “private placement” generally, as doing so by default made the offering “public,” triggering onerous securities regulations that can be incredibly expensive to comply with. Instead, investors learned…

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General Solicitation


This inVigor Law Group blog post discusses proposed bills, which would overhaul federal crowdfunding, regulation A offerings, and Form D filing requirements.

The United States House Financial Services Committee held hearings last week on bills that would rewrite legislation from the 2012 JOBS Act. At this preliminary stage the bills, which relate to crowdfunding, Reg A, and other securities laws, are only “discussion drafts of legislation.” For these bills to actually be finalized, they would have to get out of the committee, be passed by the House of Representatives, be passed by the Senate, and be signed into law by the President. Here’s a quick update on what those bills would do if enacted into law:

The Equity Crowdfunding Improvement Act of 2014

Rep. Patrick McHenry (R., N.C.) put together the draft of this bill, which would totally overhaul the crowdfunding portion of the…

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SEC Logo


The week 14 news roundup discusses the IPO market so far in 2014, Imgur raising capital from Andreessen and Reddit, and the debate over crowdfunding rules.

IPO Market Heats Up

The market for initial public offerings seems to be heating up announced the NY Times this week after Grubhub began selling stock publicly. Grubhub’s IPO price raised 40% in the first day of trading but has since waned.  The Grubhub deal, which followed the earlier merger of Grubhub and its one time rival Seamless, was among other notable IPOs this year. Overall, the first quarter of 2014 has been very strong for IPOs and has some talking of a repeat of the dot com bubble era.

Imgur Doesn’t Need Money But Takes $40 million Anyway

Image sharing site Imgur received $40 million in funding from VC firm Andreessen Horowitz despite only 2 months ago saying they didn’t need the…

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Crowdfunding Rules Debate


This week's news roundup discusses Facebook's purchase of Oculus VR and the stakeholders' harsh reaction, Bitcoin taxation, and WA's crowdfunding bill.

Facebook Buys Oculus VR; Non-equity Stakeholders Feel Slighted

After raising $2.4 million through a Kickstarter campaign that helped bring their virtual reality headset to real reality, Oculus VR sold to Facebook in a cash and stock deal worth $1.99 billion. The company announced it was joining Facebook because “[t]his partnership is one of the most important moments for virtual reality: it gives us the best shot at truly changing the world. It opens doors to new opportunities and partnerships, reduces risk on the manufacturing and work capital side, allows us to publish more made-for-VR content, and lets us focus on what we do best: solving hard engineering challenges and delivering the future of VR.”

The trajectory the company took to a $2…

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This week's news roundup discusses Fundable's acquisition of LaunchRock, the Candy Crush game maker's IPO, and Seattle being #4 for startups.

Fundable Acquires LaunchRock; Candy Crush Goes Public

Equity crowdfunding platform Fundable acquired crowdfunding user engagement company LaunchRock in a deal that seeks to create “one of the largest, if not the largest, footprints in business crowdfunding.” The acquisition price, which was paid in cash and Fundable stock, was not disclosed.

Fundable reportedly used LaunchRock to help launch its business only 18 months ago, and Fundable CEO Will Schroter “love[d] the company so much [he] bought it.” With more than 10 million combined users and 500,000 combined registered startups, the deal highlights the potential size of a growing equity crowdfunding market.

Candy Crush game maker King Digital Entertainment, profiled in earlier news roundups for their aggressive trademark registration and “defense” tactics, filed this week to go…

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Seattle #4 for Startups