CTHE POWER OF

CROWDFUNDINGDar’shun Kendrick, Esq./M.B.A.

Prepared for: Bronner Business Institute Kingdom Connections Networking EventDecember 13, 2016

About Me• Born and raised in

DeKalb County• 2 BAs from Oglethorpe

University (‘04)• JD from Univ. of GA

(‘07)• M.B.A. from Kennesaw

State (‘11)• Barred in 2010• KLP since 2011• Business Law >

Corporate securities law

• Husband, John Jackson and a dog, Dezzy

DISCLAIMER• Any information given during this

presentation is for general advice only. Please consult a knowledgeable securities attorney before undertaking ANY of these options for raising capital to make sure it is right for you and to advise you of ALL the legal steps and processes needed to complete a successful and legal campaign.

• I am only authorized to practice law in the State of Georgia and therefore any state law discussed will only apply to Georgia based businesses (I can practice federal law anywhere).

What is Crowdfunding?

Raising Money From a Crowd…

ExampleBefore CF After CF

So really the difference is….Before CF After CF

2 Types of Crowdfunding Federal CF (Regulation CF)

• 2012 JOBS Act• 3 parts to Act- This is Title III• Took S.E.C. 3 years to come up with

rules (see intrastate CF)• October 2015 rules adopted; waiting

period from publication in Federal Register to become effective finally in May of 2016

• ACROSS STATE LINES

Intrastate CF

• 33 states have “intrastate” crowdfunding• GA was 2nd behind KS to adopt exemption

through SOS office• GA’s program is called “Invest Georgia

Exemption” or “IGE”• Notable users: Groundfloor did first $1MM

raise; now doing a Reg. A+ offering• WITHIN A STATE ONLY * Adopted rules but

not effective.

Federal CF (Regulation CF)1. Unlimited number of investors *2. Notice postings are allowed

(“solicitations”* are not)3. Must use a CF portal to raise money- Last

checked there were 5 and 1st one for real estate

4. Can raise up to $1MM in 12 months5. There are investor qualifications based on

annual income AND/OR net worth6. There are on-going reporting requirements

based on the amount of money you want to raise

7. Some companies will not qualify

Intrastate CF (“IGE”)1. Must be a GA based, “for profit” business

registered to do business in Georgia*2. Can raise up to $5MM in 12 months (was

$1MM)3. All funds must be deposited into a bank

authorized to do business in Georgia4. There is a triggering event or deadline to

file Notice* with the Secretary of State5. Can only sell to residents within the State

of GA and 9 month “holding period”6. Income less than $200k= invest up to

$10k; those over $200k = unlimited

BIG Differences in Federal and Intrastate CF (non-exclusive list)• Max. amount can raise:• Federal- $1MM in 12 months ($2MM cap)• Intrastate- $5MM in 12 months

• Reporting Requirements:• Federal- Ongoing based on amount raised• Intrastate- None after Notice filing

• Investor pool• Federal- Anywhere in the U.S. and abroad (if certain requirements met)• Intrastate- Residents of the state of Georgia

• Investor Limits• Federal- based on income and/or net worth• Intrastate- Based on annual income

• CF portal required?• Federal- Yes.• Intrastate- No but if CF portal used it must be registered with SOS

NEWS & TRENDS• Indiegogo will now start allowing

equity crowdfunding to be raised on its site

• Rule 147 will now allow intrastate crowdfunding to go beyond the borders of a state (with certain limitations)

• There was the first ever real estate CF portal registered a month ago with FINRA and the SEC

• More: www.crowdfundinsider.com or www.jdsupra.com

Top 5 BUSINESS PITFALLS OF RAISING CAPITAL1. Being cheap (Pay professionals)2. Accepting ALL money (Not all

money is good)3. Not having a long term financing

strategy (each raise must be strategic)

4. Thinking its easy (Nope!)5. Not focusing on the BUSINESS and

how it will make money

Top 5 LEGAL PITFALLS OF RAISING CAPITAL

1) Integration2) Doing compliance and NOT doing

due diligence and investor documents

3) “Record holder” qualification4) General solicitation5) Company qualification6) Long term legal problems for future

investors7) And about 1,000 other things….

About Kendrick Law Practice• Capital Raising Consultations• Is CF your best option vs. other options?• What does the process look like?

• (1) Legal compliance• 3 packages ($15k-up)• Start to finish

• (2) Investor Documents• 3 packages ($15k-up)• Advice about particular investors

Minority Access to Capital, Inc.

www.minorityatc.org

SPECIAL

OFFER!

Minority Access to Capital, Inc.- Sign up for our enewsletter by the end of the week and enter drawing to win 1 hour consultation from me. *Card drop.

Kendrick Law Practice- 1- Sign up for 1 hour BLC by end of year (just sign up) and receive $50.00 credit towards other services for 1 year OR 2- Sign up for my enewsletter by the end of the week and receive my CF guide. *Card drop

Expires: December 31, 2016

Q & A (one more slide)

RULES1. To protect the attorney-client privilege, I

will only answer GENERAL questions NOT specific questions about your business. (We have consultations for specifics.)

2. I am only authorized to practice law in Georgia so can only speak to Georgia law for intrastate CF offerings.

3. No..I cannot find you money. I am not a broker-dealer, which you need a license for. However we do work with paying clients for those introductions to B-Ds.

Contact Us TODAY!