Cambrian House
Yes, there probably would be some ownership issues surrounding this. Perhaps the approach is not that you are buying a portion of the business but extending a line of credit.
The interest would need to be more than than a "safe investment" (money market, bonds) and less than a credit card rate (otherwise the idea owner could just use a credit card)
I am thinking a 6-10% return on investment agreement would be enough for me to consider investing in an idea.
You have the lead on this one
lol Yes, I do have a thirst for execution on ideas... I tried to contribute by doing the work my self... but then I got slammed with some over time.
So might as well put that extra money to good use
Whew! Thought we lost you for a minute
Yes that goes also for the angels. They need to be just as dedicated and willing to help.
Yes, I have almost finished my business plan of a new business, initially in Spain, but I will like to open to more markets as soon as possible.
The idea is to let very small investors, not big angels, invest in projects adn then share the profits.
Not everybody wants to be a businessmen, but a lot of people would like to earn money from businesses while doing their usual job.
You are saying that you wouldn't personally be an angel without a solid team that is ready to execute the idea. That's ok. But what if the idea has been studied, or if you are investing only a little money you can afford to lose?
Don't worry about what anybody else is going to do. The best way to predict the future is to invent it.Alan Kay
Cambrian House began as a crowdsourcing community using a wisdom of crowds based approach to discover new business and technology ideas. These pages are being kept online as a technology demo to showcase Chaordix™.
Looking to harness the power of your crowd? Find out about Chaordix™ - technology that enables enterprises to get the most out of crowdsourcing.
People
Angel Investment Club. Interested?
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ccozad
    Member since: Jul 31, 2007 Rank: Viking King (918 Posts) |
[Quote Member] |
I would be interested, though I can only invest "peanuts" right now. (A few hundred dollars)
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Emesee
Member since: Apr 16, 2007 Rank: Warrior (156 Posts) |
[Quote Member] |
Interested yes. How much? Not sure.
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ooper
Member since: Nov 27, 2007 Rank: Warrior (119 Posts) |
[Quote Member] |
I'm with ccozad. I think a few hundred dollars from members should suffice. Imagine what $300-1000 per member could bring to the table in terms of helping get a project off the ground...
Would CH, the company, be willing to manage something like this?...we're talking angel-type investment from very motivated --and capable members.
It just needs to be enough to take an idea to the first level, say Beta. It may not be necessary, but I bet venture capitalists would find a project like this solid enough for a round of capital...
I can forsee challenges, but before we start saying "already done," we need to find out whether there is enough mindset and guts right here in this site.
So, voice your opinion...
Would CH, the company, be willing to manage something like this?...we're talking angel-type investment from very motivated --and capable members.
It just needs to be enough to take an idea to the first level, say Beta. It may not be necessary, but I bet venture capitalists would find a project like this solid enough for a round of capital...
I can forsee challenges, but before we start saying "already done," we need to find out whether there is enough mindset and guts right here in this site.
So, voice your opinion...
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techguy
Member since: Aug 3, 2006 Rank: God of Thunder (1231 Posts) |
[Quote Member] |
This has been discussed pretty extensively. I'll try to find some old threads if I have time later. Usually it was referred to as CrowdFunding. As I recall the biggest challenge was getting around "ownership" of the ideas for investors. I seem to remember some legal problems with it.
Of course, I'm interested if things can be brought together.
Of course, I'm interested if things can be brought together.
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ccozad
Member since: Jul 31, 2007 Rank: Viking King (918 Posts) |
[Quote Member] |
On March 13, 2008, 11:44 am techguy said:
This has been discussed pretty extensively. I'll try to find some old threads if I have time later. Usually it was referred to as CrowdFunding. As I recall the biggest challenge was getting around "ownership" of the ideas for investors. I seem to remember some legal problems with it.
Of course, I'm interested if things can be brought together.
Yes, there probably would be some ownership issues surrounding this. Perhaps the approach is not that you are buying a portion of the business but extending a line of credit.
The interest would need to be more than than a "safe investment" (money market, bonds) and less than a credit card rate (otherwise the idea owner could just use a credit card)
I am thinking a 6-10% return on investment agreement would be enough for me to consider investing in an idea.
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Kevin_Cox
Member since: Oct 14, 2006 Rank: Viking King (557 Posts) |
[Quote Member] |
I think this is an interesting proposal.
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ooper
Member since: Nov 27, 2007 Rank: Warrior (119 Posts) |
[Quote Member] |
I just retitled the Post.
I was thinking more in terms of an Angel Investment club. So, Higher risk, yes --not really a loan, but returns are based on private equity. I'll do some more research on the legal implications, though anyone with more experience in the subject can cut right in
I was thinking more in terms of an Angel Investment club. So, Higher risk, yes --not really a loan, but returns are based on private equity. I'll do some more research on the legal implications, though anyone with more experience in the subject can cut right in
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ccozad
Member since: Jul 31, 2007 Rank: Viking King (918 Posts) |
[Quote Member] |
On March 13, 2008, 2:52 pm ooper said:
I just retitled the Post.
I was thinking more in terms of an Angel Investment club. So, Higher risk, yes --not really a loan, but returns are based on private equity. I'll do some more research on the legal implications, though anyone with more experience in the subject can cut right in
You have the lead on this one
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CharonV
Member since: Sep 3, 2007 Rank: Noble (56 Posts) |
[Quote Member] |
Hi Ooper,
I totally agree with financing this project using Angel Investors.
The main reason is that the funding requirements in most cases appear to be quite small, and SEC regulations must always be diligently observed.
Basically, so long as you: (a) Keep each deal seperate and (b)
you must only offer "each" deal to "No More Than 15 possible Angels" You will not have to incur the costs of writing a Prospectus. I can explain in detail how it works later; should you require assistance.
I funded (Angeled)my first three shows on Broadway and London in 1972/73. I have been getting my "Knuckles rapped" by various regulatory agencies since then on a fairly regular basis, so I pretty much know; what not to do.
Dblin is trying to something similar for Writers, perhaps you should read my comments to his IDEA " Authors Honors"
There are also other avenues of finance available to some of the community which perhaps we can discuss later."
I totally agree with financing this project using Angel Investors.
The main reason is that the funding requirements in most cases appear to be quite small, and SEC regulations must always be diligently observed.
Basically, so long as you: (a) Keep each deal seperate and (b)
you must only offer "each" deal to "No More Than 15 possible Angels" You will not have to incur the costs of writing a Prospectus. I can explain in detail how it works later; should you require assistance.
I funded (Angeled)my first three shows on Broadway and London in 1972/73. I have been getting my "Knuckles rapped" by various regulatory agencies since then on a fairly regular basis, so I pretty much know; what not to do.
Dblin is trying to something similar for Writers, perhaps you should read my comments to his IDEA " Authors Honors"
There are also other avenues of finance available to some of the community which perhaps we can discuss later."
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ooper
Member since: Nov 27, 2007 Rank: Warrior (119 Posts) |
[Quote Member] |
ccozad, I was hoping to steer us into a scenario that best suits our thirst for execution and entrepreuneurial thirst. I think you fit this profile
I am an idiot, particularly when it comes to legal stuff, so and I'm hoping that this is an inspiration call first and foremost. I can certainly do my best to get the ball rolling...
In the early days of modern technology, many companies started from this concept of investment. Apple and AOL come to mind, but I'm sure I can easily dig up at least a dozen more.
Here is a in interesting exert from wikipedia, which best describes the general idea:
I guess I am signing up to be the first "fool" on the list
/ooper
I am an idiot, particularly when it comes to legal stuff, so and I'm hoping that this is an inspiration call first and foremost. I can certainly do my best to get the ball rolling...
In the early days of modern technology, many companies started from this concept of investment. Apple and AOL come to mind, but I'm sure I can easily dig up at least a dozen more.
Here is a in interesting exert from wikipedia, which best describes the general idea:
Angel capital fills the gap in start-up financing between "friends and family" (sometimes humorously called "friends, family, and fools"
http://en.wikipedia..../wiki/Angel_investor
I guess I am signing up to be the first "fool" on the list
/ooper
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ccozad
Member since: Jul 31, 2007 Rank: Viking King (918 Posts) |
[Quote Member] |
ccozad, I was hoping to steer us into a scenario that best suits our thirst for execution and entrepreuneurial thirst. I think you fit this profile
lol
Yes, I do have a thirst for execution on ideas... I tried to contribute by doing the work my self... but then I got slammed with some over time. So might as well put that extra money to good use
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ooper
Member since: Nov 27, 2007 Rank: Warrior (119 Posts) |
[Quote Member] |
CharonV,
I guess you punched in as I was writing. And so did you, ccozad! LOL
I am very pleased to hear from you, CharonV because you bring so much insight in this arena.
In my industry, I value the "what not to do" more than the "what to do." Simply because the latter can more easily be obtained from mundane information --and charlatans too
Moreover, from reading other posts, particularly GroudLoad's excellent suggestive seeds, it looks like some (if not most) are ready for some action...
How many "deals" can a club have?
How many deals can ONE "angel" be part of?
What is the min. and maximum amount one angel can invest?
Does an angel have to be ONE human individual? In other words, can a married couple invest together as one angel?
/ooper
I guess you punched in as I was writing. And so did you, ccozad! LOL
I am very pleased to hear from you, CharonV because you bring so much insight in this arena.
so I pretty much know; what not to do.
In my industry, I value the "what not to do" more than the "what to do." Simply because the latter can more easily be obtained from mundane information --and charlatans too
Moreover, from reading other posts, particularly GroudLoad's excellent suggestive seeds, it looks like some (if not most) are ready for some action...
How many "deals" can a club have?
How many deals can ONE "angel" be part of?
What is the min. and maximum amount one angel can invest?
Does an angel have to be ONE human individual? In other words, can a married couple invest together as one angel?
/ooper
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ooper
Member since: Nov 27, 2007 Rank: Warrior (119 Posts) |
[Quote Member] |
lol Yes, I do have a thirst for execution on ideas... I tried to contribute by doing the work my self... but then I got slammed with some over time.
So might as well put that extra money to good use
Whew! Thought we lost you for a minute
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ooper
Member since: Nov 27, 2007 Rank: Warrior (119 Posts) |
[Quote Member] |
TechGuy,
Thanks for tip on crowdfunding!! Especially for those of us who missed the original discussions.
Here is an interesting article that describes CH as being a recipient of the concept at hand:
http://crowdsourcing.../crowdfunding-a.html
How is CrowdFunding different than Angel Investment?
I guess for a relatively low individual investment (and higher risk) I'm for the path of least resistance.
/ooper
Thanks for tip on crowdfunding!! Especially for those of us who missed the original discussions.
Here is an interesting article that describes CH as being a recipient of the concept at hand:
http://crowdsourcing.../crowdfunding-a.html
How is CrowdFunding different than Angel Investment?
I guess for a relatively low individual investment (and higher risk) I'm for the path of least resistance.
/ooper
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CharonV
Member since: Sep 3, 2007 Rank: Noble (56 Posts) |
[Quote Member] |
Hi Ooper,
Thanks for the response. I shall endeavour to answer your queries; as best I can. Please remember that I am only discussing US Securities Regulations, many other countries do not have the same regulations nor retrictions. Non compliance with US Regulations would prohibit the Club from having US Residents as Angels.
Quote: "How many "deals" can a club have?
Response: As I understand it, a Club may have as many deals as it wishes, however it is very important that each deal be offered to no more than 15 members intitially. If for example 10 out of the 15 put up money, the club can then offer to no more than 5 others and so on until they obtain a maximum of 15 Investors. (The 15 Investor bit is very very important)
Let me give an actual example from my past. In the early seventies I was funding a Broadway show. We invited 150 potential Angels to a Coctail/Fund raising event in the 21 Club in New York City.
Basis the prevailing odds we expected to get between 10 and 15 Investors, we got 9.
Someone informed the SEC. The SEC took the view that since we had invited 150 punters, that all 150 could theoritiacally invested and that we should have prepared a Full Prospectus which in those days cost around $250,000. We only required around $500,000 for the play. The rest of the story is painful Lol.
How many deals can ONE "angel" be part of?
Response: An Angel can participate in as many deals as he wishes.
What is the min. and maximum amount one angel can invest?
Response: There are no restrictions on the amount an Angel can invest.
Example: If the deal requires $100,000, it can come from one Angel and or from a maximum of 15 Angels. Its the number of Angels which is "Legally" important (think 15)and not how much each one contributes.
Does an angel have to be ONE human individual? In other words, can a married couple invest together as one angel?
Response: Normally if a married couple are registered as " Tenants In Common" they are considered to be one investment entity. I would however clear this point with a Securities Lawyer, especially if the "Tenants In Common" brought the number of Investors over 15.
Again please remember that these same regulations DO NOT Apply in most non US Jurisdictions.
I hope that this makes sense
Thanks for the response. I shall endeavour to answer your queries; as best I can. Please remember that I am only discussing US Securities Regulations, many other countries do not have the same regulations nor retrictions. Non compliance with US Regulations would prohibit the Club from having US Residents as Angels.
Quote: "How many "deals" can a club have?
Response: As I understand it, a Club may have as many deals as it wishes, however it is very important that each deal be offered to no more than 15 members intitially. If for example 10 out of the 15 put up money, the club can then offer to no more than 5 others and so on until they obtain a maximum of 15 Investors. (The 15 Investor bit is very very important)
Let me give an actual example from my past. In the early seventies I was funding a Broadway show. We invited 150 potential Angels to a Coctail/Fund raising event in the 21 Club in New York City.
Basis the prevailing odds we expected to get between 10 and 15 Investors, we got 9.
Someone informed the SEC. The SEC took the view that since we had invited 150 punters, that all 150 could theoritiacally invested and that we should have prepared a Full Prospectus which in those days cost around $250,000. We only required around $500,000 for the play. The rest of the story is painful Lol.
How many deals can ONE "angel" be part of?
Response: An Angel can participate in as many deals as he wishes.
What is the min. and maximum amount one angel can invest?
Response: There are no restrictions on the amount an Angel can invest.
Example: If the deal requires $100,000, it can come from one Angel and or from a maximum of 15 Angels. Its the number of Angels which is "Legally" important (think 15)and not how much each one contributes.
Does an angel have to be ONE human individual? In other words, can a married couple invest together as one angel?
Response: Normally if a married couple are registered as " Tenants In Common" they are considered to be one investment entity. I would however clear this point with a Securities Lawyer, especially if the "Tenants In Common" brought the number of Investors over 15.
Again please remember that these same regulations DO NOT Apply in most non US Jurisdictions.
I hope that this makes sense
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ooper
Member since: Nov 27, 2007 Rank: Warrior (119 Posts) |
[Quote Member] |
CharonV, thank you so much for the great insight!
It makes perfect sense and I totally understand the magic number. If we can keep the US as the reference point...it's definately inclusive and I would "Guess" (big g) that the US is more conservative than the average participating country (say GB and Canada for the most part). I know we are with pharmaceuticals...
As far as I can see, we can start as many projects as need funding --check. The 15-Angels limit and the "few hundred dollar" investment that ccozad and I were referring does constraints it to say, $7500 for an avg. of $500 apiece.
Everyone, is $7500 enough? I think it might actually be, if members participate in a project. I suppose CH can complement the contributions with its model here.
Can you clarify "intitially?" Does it mean that more than the 15 can join at a latter time?
Another question: If you can offer multiple rounds, how often can you do so?
How does this translate to a website like this?
I asked it before, but crowdFunding seems to have some traction. How are these cousins different from each other in the context of what we want to do?
Thanks. Now, THAT's what I call participation. Five stars!
/ooper
I hope that this makes sense
It makes perfect sense and I totally understand the magic number. If we can keep the US as the reference point...it's definately inclusive and I would "Guess" (big g) that the US is more conservative than the average participating country (say GB and Canada for the most part). I know we are with pharmaceuticals...
Quote: "How many "deals" can a club have?
Response: As I understand it, a Club may have as many deals as it wishes, however it is very important that each deal be offered to no more than 15 members intitially. If for example 10 out of the 15 put up money, the club can then offer to no more than 5 others and so on until they obtain a maximum of 15 Investors. (The 15 Investor bit is very very important)
As far as I can see, we can start as many projects as need funding --check. The 15-Angels limit and the "few hundred dollar" investment that ccozad and I were referring does constraints it to say, $7500 for an avg. of $500 apiece.
Everyone, is $7500 enough? I think it might actually be, if members participate in a project. I suppose CH can complement the contributions with its model here.
it is very important that each deal be offered to no more than 15 members intitially.
Can you clarify "intitially?" Does it mean that more than the 15 can join at a latter time?
Another question: If you can offer multiple rounds, how often can you do so?
...since we had invited 150 punters, that all 150 could theoritiacally invested and that we should have prepared a Full Prospectus which in those days cost around $250,000.
How does this translate to a website like this?
I asked it before, but crowdFunding seems to have some traction. How are these cousins different from each other in the context of what we want to do?
Thanks. Now, THAT's what I call participation. Five stars!
/ooper
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noelius
Member since: Dec 6, 2007 Rank: Merchant (37 Posts) |
[Quote Member] |
I'm working trying to fund something like you are proposing, and I would like to launch it next July, so I will take atention to all the comments you are saying
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ooper
Member since: Nov 27, 2007 Rank: Warrior (119 Posts) |
[Quote Member] |
Noelius,
Can you clarify? Are you trying to fund a project (as one a club would fund), or are you building anabling infrastructure around investment clubs?
/ooper
Can you clarify? Are you trying to fund a project (as one a club would fund), or are you building anabling infrastructure around investment clubs?
/ooper
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techguy
Member since: Aug 3, 2006 Rank: God of Thunder (1231 Posts) |
[Quote Member] |
There is certainly a lot of interest in this area. Who wouldn't want to be given some cash to help build their idea?
I think the biggest challenge will be to find people who are committed to their idea and have created at least a core set of people that will drive the idea to profitability. I know that I wouldn't personally be an angel without a solid team that is ready to execute the idea.
I think the biggest challenge will be to find people who are committed to their idea and have created at least a core set of people that will drive the idea to profitability. I know that I wouldn't personally be an angel without a solid team that is ready to execute the idea.
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techguy
Member since: Aug 3, 2006 Rank: God of Thunder (1231 Posts) |
[Quote Member] |
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vanhees
Member since: May 30, 2007 Rank: Viking King (599 Posts) |
[Quote Member] |
On March 14, 2008, 1:03 am techguy said:
I know that I wouldn't personally be an angel without a solid team that is ready to execute the idea.
Yes that goes also for the angels. They need to be just as dedicated and willing to help.
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noelius
Member since: Dec 6, 2007 Rank: Merchant (37 Posts) |
[Quote Member] |
On March 13, 2008, 7:56 pm ooper said:
Noelius,
Can you clarify? Are you trying to fund a project (as one a club would fund), or are you building anabling infrastructure around investment clubs?
/ooper
Yes, I have almost finished my business plan of a new business, initially in Spain, but I will like to open to more markets as soon as possible.
The idea is to let very small investors, not big angels, invest in projects adn then share the profits.
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noelius
Member since: Dec 6, 2007 Rank: Merchant (37 Posts) |
[Quote Member] |
On March 14, 2008, 1:03 am techguy said:
There is certainly a lot of interest in this area. Who wouldn't want to be given some cash to help build their idea?
I think the biggest challenge will be to find people who are committed to their idea and have created at least a core set of people that will drive the idea to profitability. I know that I wouldn't personally be an angel without a solid team that is ready to execute the idea.
Not everybody wants to be a businessmen, but a lot of people would like to earn money from businesses while doing their usual job.
You are saying that you wouldn't personally be an angel without a solid team that is ready to execute the idea. That's ok. But what if the idea has been studied, or if you are investing only a little money you can afford to lose?
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noelius
Member since: Dec 6, 2007 Rank: Merchant (37 Posts) |
[Quote Member] |
After writing my last post, I was called by a business contest, and they have told me that I've been preselected into the contest, for the business plan I was saying I'm writing.
Next weeks, I plan to sahre with you more details of the idea, in order to get as many omments as possible, and also to get more investors from all over the world.
I'm very happy!
(My idea was launched when I found out that I couldn't afford to fund my business while studying Medicine, so I thought in this idea to raise funds for it).
Next weeks, I plan to sahre with you more details of the idea, in order to get as many omments as possible, and also to get more investors from all over the world.
I'm very happy!
(My idea was launched when I found out that I couldn't afford to fund my business while studying Medicine, so I thought in this idea to raise funds for it).
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CharonV
Member since: Sep 3, 2007 Rank: Noble (56 Posts) |
[Quote Member] |
In Response to Ooper’s Queries:
it is very important that each deal be offered to no more than 15 members intitially.
Can you clarify "intitially?" Does it mean that more than the 15 can join at a latter time?
Please note that this 15 limit only applies to deals which have been offered to American residents. For example if this deal were offered to Canadian residents exclusively, then only Canadian Law would apply.
Now let me try to explain what I mean by Initially.
Under SEC regulations, if an Investment Deal is offered to more than 15 people it is considered to be a Public Offering, and requires the writing of a Prospectus together with registration with the SEC. This is a very expensive exercise, however for larger transactions, this would be the way to go.
For example: Lets assume that you have a list of 30 possible Angels, and a deal is presented to you.
a) You Must only offer this deal to 15 out of the total of 30 Angels initially.
b) Lets assume that on the first round 10 Angels agree to invest. You now require
another 5 investors in order to stay within the 15 limit.
c) Since you are not allowed to have more than 15 investors, you must now only offer the deal to a maximum of 5 possible Investors. Lets assume that 3 out of the 5 agree to invest.
d) You can now only offer the deal to 2 possible investors. Etc etc
It is very important that you get this bit right, and you keep a very good paper trail.
The first time a disgruntled investor sues you, it will be the first thing his Lawyer looks for.
Another question: If you can offer multiple rounds, how often can you do so?
In the USA, until you have 15 investors.
...since we had invited 150 punters, that all 150 could theoretically invested and that we should have prepared a Full Prospectus which in those days cost around $250,000.
How does this translate to a website like this? Please see explanation above.
I asked it before, but crowdFunding seems to have some traction. How are these cousins different from each other in the context of what we want to do.
Crowd funding companies such as “Sellaband” are domiciled in Germany or other friendly jurisdictions. German Law is rather unique, since ventures such as crowd funding come under their Gaming Laws. It’s looked upon, just as a roll of the Dice. You will notice from the excerpts below that they refer to their investors as “believers”
I particularly like the bit “SellaBand’s head office shall be the exclusive place of jurisdiction for all claims arising from this agreement” I feel that it takes Chutzpah to nominate yourself, Promoter, Judge and Jury Lol.
Then again it’s a lot easier to negotiate with the guy in the mirror than the SEC.
If done in the USA, and not registered with the SEC, I really can’t see Crowd Funding for Investment Purposes being legal. A solution may be to look into forming a Charitable Trust. There must be some Tax Lawyers/Accountants in the CH Portfolio ?
Another Choice is to Domicile the business outside the USA.
Excerpts from Sellaband’s website:
2. “• .2 When the Believer is an entrepreneur, the provisions of this agreement are subject to material German law excluding UN purchasing law. When the believer is a consumer, agreements including this agreement are subject to German law as far as this does not conflict with binding legal provisions, and notably provisions of the law on consumers’ protection.
3. 9.3 When the Believer is a merchant in the sense of the Commercial Code, a legal person of public right, or a Federal Special Fund, SellaBand’s head office shall be the exclusive place of jurisdiction for all claims arising from this agreement. The same applies to persons who do not have a general place of jurisdiction in Germany or persons who, after conclusion of the agreement, have moved their habitual residence or abode to outside of Germany or whose habitual residence or abode is not known when legal proceedings are instituted. “
Angels are considered by the SEC to be Investors, and are governed by Securities Regulations.
Hope this helps.
it is very important that each deal be offered to no more than 15 members intitially.
Can you clarify "intitially?" Does it mean that more than the 15 can join at a latter time?
Please note that this 15 limit only applies to deals which have been offered to American residents. For example if this deal were offered to Canadian residents exclusively, then only Canadian Law would apply.
Now let me try to explain what I mean by Initially.
Under SEC regulations, if an Investment Deal is offered to more than 15 people it is considered to be a Public Offering, and requires the writing of a Prospectus together with registration with the SEC. This is a very expensive exercise, however for larger transactions, this would be the way to go.
For example: Lets assume that you have a list of 30 possible Angels, and a deal is presented to you.
a) You Must only offer this deal to 15 out of the total of 30 Angels initially.
b) Lets assume that on the first round 10 Angels agree to invest. You now require
another 5 investors in order to stay within the 15 limit.
c) Since you are not allowed to have more than 15 investors, you must now only offer the deal to a maximum of 5 possible Investors. Lets assume that 3 out of the 5 agree to invest.
d) You can now only offer the deal to 2 possible investors. Etc etc
It is very important that you get this bit right, and you keep a very good paper trail.
The first time a disgruntled investor sues you, it will be the first thing his Lawyer looks for.
Another question: If you can offer multiple rounds, how often can you do so?
In the USA, until you have 15 investors.
...since we had invited 150 punters, that all 150 could theoretically invested and that we should have prepared a Full Prospectus which in those days cost around $250,000.
How does this translate to a website like this? Please see explanation above.
I asked it before, but crowdFunding seems to have some traction. How are these cousins different from each other in the context of what we want to do.
Crowd funding companies such as “Sellaband” are domiciled in Germany or other friendly jurisdictions. German Law is rather unique, since ventures such as crowd funding come under their Gaming Laws. It’s looked upon, just as a roll of the Dice. You will notice from the excerpts below that they refer to their investors as “believers”
I particularly like the bit “SellaBand’s head office shall be the exclusive place of jurisdiction for all claims arising from this agreement” I feel that it takes Chutzpah to nominate yourself, Promoter, Judge and Jury Lol.
Then again it’s a lot easier to negotiate with the guy in the mirror than the SEC.
If done in the USA, and not registered with the SEC, I really can’t see Crowd Funding for Investment Purposes being legal. A solution may be to look into forming a Charitable Trust. There must be some Tax Lawyers/Accountants in the CH Portfolio ?
Another Choice is to Domicile the business outside the USA.
Excerpts from Sellaband’s website:
2. “• .2 When the Believer is an entrepreneur, the provisions of this agreement are subject to material German law excluding UN purchasing law. When the believer is a consumer, agreements including this agreement are subject to German law as far as this does not conflict with binding legal provisions, and notably provisions of the law on consumers’ protection.
3. 9.3 When the Believer is a merchant in the sense of the Commercial Code, a legal person of public right, or a Federal Special Fund, SellaBand’s head office shall be the exclusive place of jurisdiction for all claims arising from this agreement. The same applies to persons who do not have a general place of jurisdiction in Germany or persons who, after conclusion of the agreement, have moved their habitual residence or abode to outside of Germany or whose habitual residence or abode is not known when legal proceedings are instituted. “
Angels are considered by the SEC to be Investors, and are governed by Securities Regulations.
Hope this helps.
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ooper
Member since: Nov 27, 2007 Rank: Warrior (119 Posts) |
[Quote Member] |
TechGuy,
Your reference is the workflow I proposed for turning a CH idea into a business. Is this really what you were referring to as a solid plan?
My argument has been all along that I don't believe the Idea author should necessarily be the driver of the business. The microPledge.com approach that was talked about in the discussion
that you linked seems like an interesting model along those lines.
Hitting more on my previous point, I think having a solid plan like this would make me more interested in investing in an idea
Your reference is the workflow I proposed for turning a CH idea into a business. Is this really what you were referring to as a solid plan?
I think the biggest challenge will be to find people who are committed to their idea and have created at least a core set of people that will drive the idea to profitability. I know that I wouldn't personally be an angel without a solid team that is ready to execute the idea.
My argument has been all along that I don't believe the Idea author should necessarily be the driver of the business. The microPledge.com approach that was talked about in the discussion
that you linked seems like an interesting model along those lines.
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ooper
Member since: Nov 27, 2007 Rank: Warrior (119 Posts) |
[Quote Member] |
CharonV,
Sounds like setting up shop outside the US, particularly in Germany may be the best non-compromising approach. Any takers? Noelius, are you familiar with Spain's rules?
Perhaps CH legal department can enlighten us, but this seems like a more feasible (and simpler) approach, except charity doesn't really entitle you to sharing profits, which means I just lost interest myself.
How about changing the roles a bit and removing "angel" out of the proposition? Let me refine my thoughts:
There is no limit that I am aware of that dictates how "I" can invest on myself in a business. Since I don't believe that the idea author should necessarily "drive" the business, can an arbitrary number of people (above 15) partner up to participate and drive a venture?
For example, let's say that Joe has a great idea and wants "participants" to help him develop it. These participants not only help with tasks, but also are willing to put up money to pay a third party to help. Joe and all of his associates (more than 15) can legally share the profits, well, after the-more-familiar legal Partnership is established, of course...my guess is that this is possible, but derails the concept somewhat.
Sounds like setting up shop outside the US, particularly in Germany may be the best non-compromising approach. Any takers? Noelius, are you familiar with Spain's rules?
If done in the USA, and not registered with the SEC, I really can’t see Crowd Funding for Investment Purposes being legal. A solution may be to look into forming a Charitable Trust. There must be some Tax Lawyers/Accountants in the CH Portfolio ?
Perhaps CH legal department can enlighten us, but this seems like a more feasible (and simpler) approach, except charity doesn't really entitle you to sharing profits, which means I just lost interest myself.
How about changing the roles a bit and removing "angel" out of the proposition? Let me refine my thoughts:
There is no limit that I am aware of that dictates how "I" can invest on myself in a business. Since I don't believe that the idea author should necessarily "drive" the business, can an arbitrary number of people (above 15) partner up to participate and drive a venture?
For example, let's say that Joe has a great idea and wants "participants" to help him develop it. These participants not only help with tasks, but also are willing to put up money to pay a third party to help. Joe and all of his associates (more than 15) can legally share the profits, well, after the-more-familiar legal Partnership is established, of course...my guess is that this is possible, but derails the concept somewhat.
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requiem4boredom
Member since: Mar 14, 2008 Rank: Peasant (2 Posts) |
[Quote Member] |
I don't know anything about the law myself, but from what I read in this thread I may have come up with a possible solution.
Let's say potential investors made it clear that they wanted to invest. They could have a set of requirements(minimum cash on hand, number of other investors, experience in field, contacts, business plan, etc.) and then groups who wanted to be invested in could send out invitations to them individually. If there was no response by a certain time or the invitee/potential investor declines investing then the group moves along to another investor. This allows for groups to send out less than the maximum 15 at any given time, and reach out to many possible investors. Groups could set up ways to woo potential investors/invitees into investing(videos, more in depth explanation of idea, talking with them 1 on 1).
I could make it into a flowchart or list of how to accomplish the same thing if the explanation was confusing. Not sure if it would work, but it's my two cents.
Let's say potential investors made it clear that they wanted to invest. They could have a set of requirements(minimum cash on hand, number of other investors, experience in field, contacts, business plan, etc.) and then groups who wanted to be invested in could send out invitations to them individually. If there was no response by a certain time or the invitee/potential investor declines investing then the group moves along to another investor. This allows for groups to send out less than the maximum 15 at any given time, and reach out to many possible investors. Groups could set up ways to woo potential investors/invitees into investing(videos, more in depth explanation of idea, talking with them 1 on 1).
I could make it into a flowchart or list of how to accomplish the same thing if the explanation was confusing. Not sure if it would work, but it's my two cents.
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ooper
Member since: Nov 27, 2007 Rank: Warrior (119 Posts) |
[Quote Member] |
requiem4boredom,
CharonV would have much more insight on the legal implications on your approach.
I like it.
The advantages I see in the scenario you present is that investors (let's call them crowd-investors), which could be an unlimited number,
a) can invest in as many projects as they want, CHECK.
b) projects can legally pitch investors within the 15 limit. CHECK.
Yet, c) "peanuts investors" (to borrow from ccozad's comments say $300-$1000/project, might NOT have a chance. This is because of the 15 limitation, only high-rollers would be pitched. FAIL.
I think enough-peanuts-converted-to-shares (that is also legal on both ends world-wide) is the crux of crowd investment that we seek. BTW, I considered micro-loans, but I doubt any project would legally qualify as a recipient.
if we could solve (c) then we've solved the puzzle.
CharonV would have much more insight on the legal implications on your approach.
I like it.
The advantages I see in the scenario you present is that investors (let's call them crowd-investors), which could be an unlimited number,
a) can invest in as many projects as they want, CHECK.
b) projects can legally pitch investors within the 15 limit. CHECK.
Yet, c) "peanuts investors" (to borrow from ccozad's comments
say $300-$1000/project, might NOT have a chance. This is because of the 15 limitation, only high-rollers would be pitched. FAIL. I think enough-peanuts-converted-to-shares (that is also legal on both ends world-wide) is the crux of crowd investment that we seek. BTW, I considered micro-loans, but I doubt any project would legally qualify as a recipient.
if we could solve (c) then we've solved the puzzle.
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CharonV
Member since: Sep 3, 2007 Rank: Noble (56 Posts) |
[Quote Member] |
Hi Ooper.
Please find my responses below:
“Sounds like setting up shop outside the US, particularly in Germany may be the best non-compromising approach. Any takers? Noelius, are you familiar with Spain's rules?”
Response: Germany is great for NON AMERICAN RESIDENTS. If you market a German deal to Americans, the SEC will still get on your case.
The real problem here is finding a legal way to invite oodles of American Investors into the club , without incurring huge costs and the wrath of the SEC.
If done in the USA, and not registered with the SEC, I really can’t see Crowd Funding for Investment Purposes being legal. A solution may be to look into forming a Charitable Trust. There must be some Tax Lawyers/Accountants in the CH Portfolio ?
“Perhaps CH legal department can enlighten us, but this seems like a more feasible (and simpler) approach, except charity doesn't really entitle you to sharing profits, which Rmeans I just lost interest myself. “
R
Response: My understanding of developing a business is, funding it from inception to full maturity. To me this means either to an IPO, or to a state where the cash flow is very positive and the business is successful.
From past experience this normally costs from $500,000 to $5 million. For example we are just now maturing a deal which has so far required $160+ million in financing.
I may be misunderstanding something, but I don’t think that you will get very far with $7,500. It is for this reason that I had suggested a Charitable trust. I assume that the $7,500 is to design a website and some basic structuring ?
Let me explain why.
a) Lets assume that we want to develop a business until it is very cash flow positive and in a position to compensate the investors.
b) My choice would be to fund it until it does an IPO. 1) This gives a good exit mechanism to the investors. 2) It will be easier to obtain finance in he early stages if the investors see a clear exit stratgedy.
c) Some deals may not be suitable for the public arena, I would try and build these deals as suitable takeover candidates. If most large investors don’t see an exit stratgedy, they will not play.
d) Most large investors will not be interested in investing $500 as it will have no relationship to the rest of their portfolio, and requires the same monitoring costs as $50 million. It should however be easy to get TAX deductible donations from them, especially if they were to get regular progress updates and perhaps had OPTIONS OF FIRST REFUSAL should the project be successful and develop to that stage.
e) Statistically, around 80+% of startups fail. Given those odds, I would much prefer
To make a DEDUCTIBLE Charitable donation than an investment at the beginning, since it would be deductible against income.
f) Large investors will not come into a deal in which the original funders have anti dilution clauses in place. Essentially this means that at the first large CASH CALL the original funders of $7,500 will be subject to dilution.
g) A Charitable Trust will allow Americans to participate legally, until if and when the venture is ready to go to the next step and register with the SEC.
My suggestion is (a) that the “inside team” Angel the initial startup costs., and divide 100% of the equity amongst themselves. (b) They then set up an “Educational Non profit Charitable Trust” whose purpose is basically to fund worthy projects from the CH community, and assist the students in developing the IDEA to a stage where it is a suitable candidate for large funding.
How about changing the roles a bit and removing "angel" out of the proposition? Let me refine my thoughts:
There is no limit that I am aware of that dictates how "I" can invest on myself in a business. Since I don't believe that the idea author should necessarily "drive" the business, can an arbitrary number of people (above 15) partner up to participate and drive a venture?
For example, let's say that Joe has a great idea and wants "participants" to help him develop it. These participants not only help with tasks, but also are willing to put up money to pay a third party to help. Joe and all of his associates (more than 15) can legally share the profits, well, after the-more-familiar legal Partnership is established, of course...my guess is that this is possible, but derails the concept somewhat.
Response:
A partnership may work? I will check current US Partnership regulations next week and revert.
Requeim4borebom: Thanks for your input, it is basically what I was trying to explain, the exception is that you do it better.
Please find my responses below:
“Sounds like setting up shop outside the US, particularly in Germany may be the best non-compromising approach. Any takers? Noelius, are you familiar with Spain's rules?”
Response: Germany is great for NON AMERICAN RESIDENTS. If you market a German deal to Americans, the SEC will still get on your case.
The real problem here is finding a legal way to invite oodles of American Investors into the club , without incurring huge costs and the wrath of the SEC.
If done in the USA, and not registered with the SEC, I really can’t see Crowd Funding for Investment Purposes being legal. A solution may be to look into forming a Charitable Trust. There must be some Tax Lawyers/Accountants in the CH Portfolio ?
“Perhaps CH legal department can enlighten us, but this seems like a more feasible (and simpler) approach, except charity doesn't really entitle you to sharing profits, which Rmeans I just lost interest myself. “
R
Response: My understanding of developing a business is, funding it from inception to full maturity. To me this means either to an IPO, or to a state where the cash flow is very positive and the business is successful.
From past experience this normally costs from $500,000 to $5 million. For example we are just now maturing a deal which has so far required $160+ million in financing.
I may be misunderstanding something, but I don’t think that you will get very far with $7,500. It is for this reason that I had suggested a Charitable trust. I assume that the $7,500 is to design a website and some basic structuring ?
Let me explain why.
a) Lets assume that we want to develop a business until it is very cash flow positive and in a position to compensate the investors.
b) My choice would be to fund it until it does an IPO. 1) This gives a good exit mechanism to the investors. 2) It will be easier to obtain finance in he early stages if the investors see a clear exit stratgedy.
c) Some deals may not be suitable for the public arena, I would try and build these deals as suitable takeover candidates. If most large investors don’t see an exit stratgedy, they will not play.
d) Most large investors will not be interested in investing $500 as it will have no relationship to the rest of their portfolio, and requires the same monitoring costs as $50 million. It should however be easy to get TAX deductible donations from them, especially if they were to get regular progress updates and perhaps had OPTIONS OF FIRST REFUSAL should the project be successful and develop to that stage.
e) Statistically, around 80+% of startups fail. Given those odds, I would much prefer
To make a DEDUCTIBLE Charitable donation than an investment at the beginning, since it would be deductible against income.
f) Large investors will not come into a deal in which the original funders have anti dilution clauses in place. Essentially this means that at the first large CASH CALL the original funders of $7,500 will be subject to dilution.
g) A Charitable Trust will allow Americans to participate legally, until if and when the venture is ready to go to the next step and register with the SEC.
My suggestion is (a) that the “inside team” Angel the initial startup costs., and divide 100% of the equity amongst themselves. (b) They then set up an “Educational Non profit Charitable Trust” whose purpose is basically to fund worthy projects from the CH community, and assist the students in developing the IDEA to a stage where it is a suitable candidate for large funding.
How about changing the roles a bit and removing "angel" out of the proposition? Let me refine my thoughts:
There is no limit that I am aware of that dictates how "I" can invest on myself in a business. Since I don't believe that the idea author should necessarily "drive" the business, can an arbitrary number of people (above 15) partner up to participate and drive a venture?
For example, let's say that Joe has a great idea and wants "participants" to help him develop it. These participants not only help with tasks, but also are willing to put up money to pay a third party to help. Joe and all of his associates (more than 15) can legally share the profits, well, after the-more-familiar legal Partnership is established, of course...my guess is that this is possible, but derails the concept somewhat.
Response:
A partnership may work? I will check current US Partnership regulations next week and revert.
Requeim4borebom: Thanks for your input, it is basically what I was trying to explain, the exception is that you do it better.
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ooper
Member since: Nov 27, 2007 Rank: Warrior (119 Posts) |
[Quote Member] |
CharonV,
I think you have articulated complicated issues quite eloquently. Our thread has grown tremendously, so may I suggest using the QUOTE buttons --just above the emoticons for future posts? --they don't look much like buttons, but make the contect much more cohesive if used appropriately.
I will cut through the chase and narrow our field of vision by quoting your proposal --meaning I consider everything else is out:
Brilliant. Another five stars.
How and when can we start it? CH, are you there?
/ooper
http://www.socialThumbs.com
I think you have articulated complicated issues quite eloquently. Our thread has grown tremendously, so may I suggest using the QUOTE buttons --just above the emoticons for future posts? --they don't look much like buttons, but make the contect much more cohesive if used appropriately.
I will cut through the chase and narrow our field of vision by quoting your proposal --meaning I consider everything else is out:
g) A Charitable Trust will allow Americans to participate legally, until if and when the venture is ready to go to the next step and register with the SEC.
My suggestion is (a) that the “inside team” Angel the initial startup costs., and divide 100% of the equity amongst themselves. (b) They then set up an “Educational Non profit Charitable Trust” whose purpose is basically to fund worthy projects from the CH community, and assist the students in developing the IDEA to a stage where it is a suitable candidate for large funding.
Brilliant. Another five stars.
How and when can we start it? CH, are you there?
/ooper
http://www.socialThumbs.com
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Omski
Member since: Mar 5, 2008 Rank: Peasant (1 Post) |
[Quote Member] |
Perhaps one look a bit closer to home first
If Rps correspond to future revenue streams and we have cambros in the sytem. What is required is to a mechanism to channel Cambros to projects which have the most potential. One way to do this is to be to create an over the counter market for the sale of Rps for Cams. So if the owner of a business could raise working capital Cambros by selling some RPs. This would create a secondary over the counter market for Rps. this could be done using the existing tools on the CH site nameley forums. These can be a transparent way of tracking the chain of ownership(proof of ownership of traded Rps) and would be able to determine a dynamic Market price for the Rps of a particular business.
How?
A very simplistic way Example A business owner places a new forum post offering to sell a specified number of RPs for x Cambros per Rp.
Buyers can negotiate by email. agree a price. Then the selling party posts the trade :price ,number of points ,and new owner.(this is equivqlent to a stock certificate, since it is in the public forum)and buyer transfers Cambros to seller.The process can then start again.
. As more buy and sell orders are posted. This will create opportunities for crowd arbitragers and market makers. which will bring the market into line. Does anyone think this is needed or could work?
If Rps correspond to future revenue streams and we have cambros in the sytem. What is required is to a mechanism to channel Cambros to projects which have the most potential. One way to do this is to be to create an over the counter market for the sale of Rps for Cams. So if the owner of a business could raise working capital Cambros by selling some RPs. This would create a secondary over the counter market for Rps. this could be done using the existing tools on the CH site nameley forums. These can be a transparent way of tracking the chain of ownership(proof of ownership of traded Rps) and would be able to determine a dynamic Market price for the Rps of a particular business.
How?
A very simplistic way Example A business owner places a new forum post offering to sell a specified number of RPs for x Cambros per Rp.
Buyers can negotiate by email. agree a price. Then the selling party posts the trade :price ,number of points ,and new owner.(this is equivqlent to a stock certificate, since it is in the public forum)and buyer transfers Cambros to seller.The process can then start again.
. As more buy and sell orders are posted. This will create opportunities for crowd arbitragers and market makers. which will bring the market into line. Does anyone think this is needed or could work?
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noelius
Member since: Dec 6, 2007 Rank: Merchant (37 Posts) |
[Quote Member] |
Well, my idea would be opened for everybody, not just for CH, and today I've been in the explanation for the 2nd part of the contest which I would like to win. So, the more I work on the idea, the beeter it wil be.
Today I was talking about this, because I want to see a lawyer to check if my business plan is correct and if everything is going to be legal. On the other side, I want to check if it's possible for non-spanish users to signup as investors/entrepreneurs.
My bigest problem is not SEC (in Spain CNMV) but how to make a legal contract with businesses, investors, and entrepreneurs, and how to give participation to investors (because of the Spanish types of society - limited, anonimous-)
If everything is correct, I will start next July. However, at first, I will have to accept only Spanish businesses and after a few projects launched I will allow global businesses to go in.
Spanish people here, which would like to get funded, please send me a private message (and start writin your whole business plan).
On March 14, 2008, 4:11 pm ooper said:
Noelius, are you familiar with Spain's rules?
Today I was talking about this, because I want to see a lawyer to check if my business plan is correct and if everything is going to be legal. On the other side, I want to check if it's possible for non-spanish users to signup as investors/entrepreneurs.
My bigest problem is not SEC (in Spain CNMV) but how to make a legal contract with businesses, investors, and entrepreneurs, and how to give participation to investors (because of the Spanish types of society - limited, anonimous-)
If everything is correct, I will start next July. However, at first, I will have to accept only Spanish businesses and after a few projects launched I will allow global businesses to go in.
Spanish people here, which would like to get funded, please send me a private message (and start writin your whole business plan).
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DTINGG
Member since: Feb 25, 2008 Rank: Peasant (8 Posts) |
[Quote Member] |
There are always loop holes in the SECs regulations and from what I know (limited) it is all how you structure the investment. Charon seems to have the most insight here (I would be curious if she is an attorney, because she sounds as knowledgable as my securities attorney friend) and we should think outside the box. So my question is since there are royalty points for each product and the product is considered a CH product, if we were to invest (would definitely not use that word) cambrios into a given product in exchange for royalty points and as the product was successful CH paid Cambrios back, would that be sufficient enough to bypass the limits of 15 people? I could also speak to my securities attorney friend and see if there is a way to structure it within the SECs loopholes (which as I understand it aren't very big).
What about my idea for author honors for a membership fee. Whereas there could be paid members and non-paid members to CH and depending on their membership fee would depend on how many products they could "participate in". Granted it won't get the $1000 single investments, but maybe it could allow for 30 100-200 type of investments. As we get a plan together I will discuss it with my friend, I just won't take it to her unless I have something tangible to discuss.
Let me know what you think!
What about my idea for author honors for a membership fee. Whereas there could be paid members and non-paid members to CH and depending on their membership fee would depend on how many products they could "participate in". Granted it won't get the $1000 single investments, but maybe it could allow for 30 100-200 type of investments. As we get a plan together I will discuss it with my friend, I just won't take it to her unless I have something tangible to discuss.
Let me know what you think!
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noelius
Member since: Dec 6, 2007 Rank: Merchant (37 Posts) |
[Quote Member] |
As long as my idea is slightly different (opened to everybody, not just CH members), I think I should move to another post.
Ooper, I'll send you a message to tell yo more about my idea.
Ooper, I'll send you a message to tell yo more about my idea.
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CharonV
Member since: Sep 3, 2007 Rank: Noble (56 Posts) |
[Quote Member] |
In reply to DTING,
If we really want to get this idea going, perhaps we should do as you say and "think out of the box"
Perhaps we are "Letting the tail, wag the Dog"?
Around 90%+ of the inhabitants of this planet are not American.
Why not structure this as two seperate deals (1) For American Investors, which deal is in total compliance with Sabins Oxley and SEC regulations. (2) A seperate offshore Investment Vehicle which is not open to American Investors. This will allow the other 90% of the Worlds Investors complete freedom.
If we really want to get this idea going, perhaps we should do as you say and "think out of the box"
Perhaps we are "Letting the tail, wag the Dog"?
Around 90%+ of the inhabitants of this planet are not American.
Why not structure this as two seperate deals (1) For American Investors, which deal is in total compliance with Sabins Oxley and SEC regulations. (2) A seperate offshore Investment Vehicle which is not open to American Investors. This will allow the other 90% of the Worlds Investors complete freedom.
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kkarank
Member since: Apr 7, 2008 Rank: Peasant (1 Post) |
[Quote Member] |
Sorry for arriving late to this fabulous idea party!
I am based in the UK(doing an MBA at Oxford) and would be more than happy to offer support for this idea in the UK. In fact, at our Business School there are scores of excellenct ideas that are waiting to be funded- also we get graded on these ideas which means that they are more than just blue sky thinking, most folks have spent a lot of time doing their research and have teams in place if they can get some funds..
I am based in the UK(doing an MBA at Oxford) and would be more than happy to offer support for this idea in the UK. In fact, at our Business School there are scores of excellenct ideas that are waiting to be funded- also we get graded on these ideas which means that they are more than just blue sky thinking, most folks have spent a lot of time doing their research and have teams in place if they can get some funds..
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daraddishman
Member since: Apr 8, 2008 Rank: Warrior (123 Posts) |
[Quote Member] |
WARNING!
Be very VERY careful with things like this. There are different laws in different countries as to what you can do in regards to taking in investment money.
I think that depending on how you post a call online for investment or sale of shares you can violate SEC laws on what is called an Open or General Solicitation.
Any time you are selling shares and equity you have to be very careful.
Be very VERY careful with things like this. There are different laws in different countries as to what you can do in regards to taking in investment money.
I think that depending on how you post a call online for investment or sale of shares you can violate SEC laws on what is called an Open or General Solicitation.
Any time you are selling shares and equity you have to be very careful.
I guess I'm describing something like FilmRiot, but instead of film, it's web projects based on CH ideas.
I for one wouldn't mind putting in some real money and contributions.
Would you participate? and how much would you be willing to contribute?
/ooper
http://www.socialthumbs.com
Posted: March 12, 2008, 8:48 pm