Ohio Venture - OVA Review Newsletter
News from the Ohio Venture Association meeting on April 8, 2016

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Equity Crowdfunding

Imminent changes in federal regulations will soon open the door even wider to selling equity securities through online platforms, forever changing the way new and perhaps even established companies can attract investors.

"As I researched this, two key things jumped out: private equity is a trillion-dollar business, and they're not allowed to advertise," Charles Stack told the OVA at its April event, held at Stack's StartMart incubator space. "The new way of selling stocks is online. Once the fear, uncertainty and doubt are passed, I think you'll all be where I am now—why would you not advertise that you're selling stock?"

While online equity crowdfunding has been around since at least 2011, only accredited investors—those who could demonstrate a net worth of at least $1 million—could take part. But under provisions of the Jobs Act of 2012, beginning next month companies can sell securities to up to 35 non-accredited investors per offering, or a total of up to $1 million in a 12-month period.

Stack said his Flashstarts fund has been experimenting with crowdfunding for a few years, and that he was initially surprised to learn how many millionaires lived in the region. "There are about 11 million accredited investors in the United States. And just in Northeast Ohio, there are 24,000 accredited investors, millionaires... It's staggering the opportunities that presents." He added that this feels as potentially transformative as the Internet itself did.

Skoda Minotti's Marilea Campomizzi explained that there is often confusion about crowdfunding. Many are familiar with rewards-based crowdfunding sites such as Indiegogo and Kickstarter, as well as debt-based platforms like Lending Club. But equity crowdfunding is an entirely different animal, accomplished through such platforms as MicroVentures, Crowdfunder and SeedInvest.

While raising money through a Kickstarter campaign is quite different than selling ownership in the venture, Campomizzi said startups may still find value in these campaigns. "Rewards-based crowdfunding can get investors interested in your company because it shows there's a market for your product."

More information:

Webcast from the Meeting:

Click on the image below to view the video.

Video Webcast from Recent Meeting

Webcasts produced by Tom Kondilas.

OVA's Video Archive is Online:

OVA is pleased to offer an archive of program videos to its website. You'll find the full video record of most OVA formal programs since 2008 at www.ohioventure.org/events/video-archives/.

Upcoming Meeting Dates:

  • May 13, 2016
    OVA Luncheon
    The Union Club
  • June 28, 2016
    2016 Venture of the Year Award

See complete details and registration for these events.

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Newsletter Sponsor:

Ciuni & Panichi

Copy by John Ettorre

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