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Calling All Social Entrepreneurs: Urgent Reminder
COVID Relief Easing Certain Crowdfunding Rules Ends on August 28!
This week, I’m traveling to Puerto Rico to cover the Bluetide Caribbean Investment Summit for Impact Entrepreneur Magazine. (See a related story here.) As a result, I didn’t have time to produce a podcast for today’s newsletter. I’ll also be sharing the podcast I would typically share on Thursday on Friday—it’s a special one.
Big News! I’ve confirmed with the smartest people I know that an important bit of COVID relief expires on August 28, 2022. If you are a social entrepreneur looking to change the world for good, read on!
One of the biggest barriers to investment crowdfunding is the requirement for financial disclosure. Under the rules that return to full effect on August 28, you must provide financial statements reviewed by an auditor if you hope to raise more than $107,000. An auditor must complete a review before the offering can begin. And it is pricy. A review can easily cost $10,000.
If you raise more than $535,000 (who picks these numbers?), a full audit may be required, easily costing $20,000. You always need an audit for offerings over $1,070,000.
Here’s the key bit of news!
COVID relief raised the limit from $107,000 to $250,000 for an offering without a review. This is a big deal, but time is quickly running out!
If $250,000 would make a big difference for you, but $107,000 wouldn’t make such a big difference, you need to hop on this immediately.
Remember, the most successful offerings tend to be consumer products or products that benefit consumers even if sold to other businesses. This includes most social enterprises. If you hope to solve a problem from climate change to public health or social justice that benefits people, they may be willing to back you.
These rules relate to investment crowdfunding, the type that happens on FINRA-registered and regulated portals like Wefunder, Republic and StartEngine—and more than 50 others (here’s FINRA’s official list). You’re selling securities, debt or equity—or at least a promise of debt or equity to investors.
But, under these new crowdfunding rules, basically, everyone is an investor. If you’re an adult, you can invest. So, even entrepreneurs are investors. What better way to learn what investors want than to look at other people’s pitches to invest!
If you are raising $250,000 or less, you must still have tight financial statements. You have to personally certify that they are accurate. Many practitioners suggest getting help from an audit firm to present good numbers. But that will be cheaper than a review!
The clock is ticking! Hop on this!
On a related note, let’s talk about SuperCrowd22 for a minute. Applications to pitch to the hundreds of people attending the event on September 15 and 16 are now open. Apply now!
The application should take less than five minutes to complete. It’s easy!
Here’s the fine print: to apply, you must have a crowdfunding campaign live on a FINRA-registered portal with your Form C filed with the SEC. You should also expect that your offering will be live on September 16. The application deadline is August 31. If you’re racing to get your offering live by August 28, you’ll have a few days afterward to get your application in, but don’t forget!
I’m confident no one will get 100 percent of their funding at SuperCrowd22, but with hundreds of people in attendance, this could be a great way to build momentum for your offering.
If you apply to pitch, you’ll receive two tickets to attend the entire event, whether or not you’re selected to pitch.
What’s more, you—and everyone else who attends the event—are invited to host a discussion table during either of two open hours on September 15. As an entrepreneur, you’re encouraged to use that session to ask for mentoring help. Practice your pitch with on-the-spot volunteer mentors who can give you advice and encouragement. This is open to any entrepreneur, whether or not you apply to pitch or ultimately get chosen.
SuperCrowd22 will be a great event. If you attend the entire conference, you’ll learn a ton and find a long list of valuable new contacts. Don’t miss it!
If you’re not going to apply to pitch, be sure to register now at SuperCrowd22.com to get half-price tickets. If you’re a paid subscriber, you can register for free! Subscribe today!