Guest post: Lucas Marquardt
Lucas Marquardt, MBA, is the finance lead of The A+ Team LLC, a Denver-based consultancy that helps qualified businesses utilize the profound change in U.S. Securities Law known as Regulation A+ – Title IV of the 2012 JOBS Act (Jumpstart Our Business Startups) – which scales back 80-year-old securities laws by allowing U.S. companies to raise up to $50 million every 12 months from both accredited and non-accredited investors. “We believe that this enables investment-based crowdfunding in its true form. The real power of this new law is that as a federal securities filing, it preempts the state laws and allows for general solicitation/advertising of the offering.”
A long-time crowdfunding proponent, Marquardt is also managing director and founder of Blue Jeans Capital, Inc., which helps Colorado businesses raise growth capital by tapping existing customer bases of both accredited and non-accredited investors to participate in equity crowdfunding campaigns.
In April, Marquardt was in the office of Colorado Governor John Hickenlooper, watching him sign the Colorado Crowdfunding Act into law, allowing the state’s residents to invest in Colorado companies without becoming accredited investors.
Colorado is one of a flurry of states, including recent adds Arizona and Florida, that have passed intrastate crowdfunding bills – all in the last six months. Kansas’ 2011 “Invest Kansas” law was the first in the nation to legalize equity crowdfunding on the state-level. Since then, nearly 40 states have stopped waiting on the Securities & Exchange Commission to adopt equity crowdfunding rules and enacted (24 states) intrastate crowdfunding exemptions or are considering (15 states) their own intrastate crowdfunding legislation. New Mexico is waiting on the governor’s signature, as is Illinois, which passed legislation in June. The governor is expected to sign the Illinois Intrastate Crowdfunding Bill, which is more friendly to small business than any other state so far, in January 2016.
Colorado Governor John Hickenlooper
signs the Colorado Crowdfunding Act
(TECH+ blog – The Denver Post)
In an excellent article published in the Colorado Springs Independent, CO State Representative Pete Lee says that he was inspired to draft House Bill 1246, The Colorado Crowdfund Act, by Michael Shuman‘s book, Local Dollars, Local Sense.
This struck a chord with me since I also drew my inspiration for Blue Jeans Capital from this book. My years of experience as the “finance guy” for small, growing businesses had left me frustrated at the lack of capital available to these companies, despite their success in gaining traction and customers. Shuman explains the concept of Local Investing to be one where, instead of sending our dollars to Wall Street where they are indiscriminately spent by large corporations, we invest our hard-earned money in our local businesses. This act provides much needed capital for businesses within our communities as well as more resiliency within the community as a whole.
Crowdfunding is only one aspect of this concept, but it is an important one. It is not a one-size-fits-all approach and it’s certainly not as simple as posting a video up on KickStarter. Raising capital is a process that requires experienced and knowledgeable resources to help assess, plan, develop and execute the campaign for raising capital. There are a number of options within the Crowdfunding option and each have their pros and cons to consider.
The Colorado Crowdfund Act is one of those options and we look forward to working with Colorado businesses to help them raise the capital that they need to grow. A key element in this process is to design campaigns that have the best interests of the investors in mind, especially as it relates to protecting them and mitigating risk. Professor Duening makes the point in the article that the risk to investors is “infinite.” While I personally might not have used that particular word, it is important to qualify and educate all investors on the nature of the investment that they are undertaking.
The Professor makes a great point that this new frontier is “kind of the Wild West.” Business owners that are seeking capital for their businesses should seek assistance from those with specific expertise and experience in the space. While there are exceptions, typically the company’s attorney, banker or CPA will only have the answers to one piece of the puzzle.
Contact Lucas Marquardt on LinkedIn: https://www.linkedin.com/in/lucasmm
reprinted with permission