New Business Book Summary Available for The Crowdfunding Handbook

IPSWICH, Mass. - Feb. 3, 2017 - PRLog -- Crowdfunding is a novel way for small businesses and start-ups to raise funds for new ventures. It broadens the pool of investors for entrepreneurs beyond the typical group of "friends and family." However, such crowdfunding initiatives are highly regulated, and before raising money in this way, companies need to understand all the rules and requirements. In The Crowdfunding Handbook, Cliff Ennico provides a comprehensive guide to the regulations and best practices related to social media or equity crowdfunding.

Entrepreneurs often find fundraising challenging. In late 2015, however, crowdfunding (raising money for something from a large and undefined group of people) became a legal means for small companies and start-up ventures to find investors. Of the three types of crowdfunding--project crowdfunding, accredited investor crowdfunding, and social media or equity crowdfunding--The CrowdfundingHandbook focuses on social media crowdfunding. Best practices for companies considering this type of highly regulated fundraising include the following:

• When selecting the right form of incorporation, companies should consider legal issues like franchise taxes on authorized shares, shareholder rights, the types of security to be offered, and LLC membership interests.

• Companies developing their first crowdfunded offering should enlist help from an accountant, lawyer, business mentor, and social media marketing expert.

• Offering documents for a crowdfunded venture reside on a funding portal. This is the only place online where they are accessible to potential investors.

• After a crowdfunded offer is successfully completed, the funding portal must direct a qualified third party to transmit the funds to the issuer.

• Clear communication with new investors can help avoid misunderstandings, confrontations, and revolt. A company should publish a monthly email newsletter for investors and create a separate email address to which investors can send • Anyone who is over 21 can invest in crowdfunded securities, as can corporations, trusts, and other legal entities. Such investment, however, tends to be high risk.

• Although the Jumpstart Our Business Start-up (JOBS) Act and Regulation Crowdfunding encourage companies to start funding portals, it may be too late to become a large player. Opportunities may exist, however, for creating funding portals focused on specific industries or types of offerings.

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