The Black Tax — Investment Crowdfunding Edition

7 min readJul 4, 2021


The Black Tax — Investment Crowdfunding Edition

Dear Black People, no investment crowdfunding platform cares that you’re Black or female or a Black female or even LGBTQ, or whatever BIPOC is supposed to be but let me not get started on that lazy acronym. The reason that no FINRA regulated platform cares that you’re some minority or from some historically marginalized group is for 3 simple reasons:

  1. Legally they can’t. See page 13 of the 685 page JOBS Act about what portals (aka platforms) can and cannot do for Founders. Platforms technically have to be impartial, as such they legally can’t care that you’re whatever you identify as.
  2. Why would “sophisticated” investors care that you’re from a marginalized group? Nothing has ever prevented accredited investors, VCs and so called ‘Angels’ from writing checks directly to Black and Brown Founders before RegCF came into existence. In fact, nothing prevents VCs or “Angels” from writing checks to Black and Brown Founders with the new limits that allow startups to raise up to $5M using RegCF. Is there some mad rush of “sophisticated” investors who all of a sudden want to write Minority Founders $3M to $5M checks…on the Founder’s terms? I didn’t think so.
  3. Also DYK — One of the other rules that went into effect on March 15, 2021 (in addition to raising the limits for RegCF to $5M) is that accredited investors (the terms accredited and sophisticated investors are synonymous) can invest as much as they want into RegCF deals. Before they were limited to $100k. Now they’re just limited to their purse size.
  4. A platform’s business is to make money, not hand out participation awards. DYK — the majority of platforms require that YOU get commitments for the first 20%-30% of your raise before they’ll even allow you on their platform, muchless lift a finger to highlight your deal?

Disclaimer — Hi, my name is Samson Williams. I’m President of the Crowdfunding Professional Association (The CfPA helped write The JOBS Act and many of the recent rule changes that went into effect March 15 among other things) and I am an investor into and two investment crowdfunding platforms. In short, I believe in investment crowdfunding so much, I put my money, time and efforts where my mouth is.


Whatever platform you pick it is up to YOU to establish your terms, present your offering and bring the eye balls to the platform and then to your deal. You’ll find that for your Reg CF campaign you have to bring the traffic to the platform so they can see the terms of your offer, engage with the community YOU build on it and then determine if they want to invest. Some platforms have preferred partners and vendors who will help you organize your campaign, work with you to make videos, create and execute your marketing campaigns but those will all cost YOU (~$30k — $150k) and those are things that the platform legally can’t do. Again, it’s up to YOU to bring your friends, family, fans, customers and community to the platform so they can vet your deal and then make the decision to invest on the platform, in your deal. The platform though should make your user experience, on boarding and complying to the regs as painless as possible, but they will not under any circumstances let you or encourage you to cut regulatory corners. Why? Legally they can’t and the SEC/FINRA is always watching. However, man, do platforms love to jump on a winner’s bandwagon.

Have you successfully created your offering? Organized it to become platform ready, so that it can go live on the platform? Created a marketing plan and strategy that gets you commitments on 20% of your funding goal before you go live? (e.g.: Your goal is $500k, you have 20% ($100k) of that goal lined up ready to fund your deal.) Then yes, any platform would love to have your deal on their platform. If you’re Black or a woman or Black Woman, and you’ve put in all that hard work to get your deal “investor ready” sheeeeed. The platforms would absolutely love to jump on your bandwagon and ride your community’s coat tail while collecting a 5% — 14% fee, maybe $10k in deferred compensation and say, 2%-4% equity in the raise.

The Black Tax

Black Founders pay the Black tax every time we go to start a business. The vast majority of Black business owners never even qualify for a Small Business Loan. Why is that? We’ll get back to the SBA Black Tax on another article. The Black Tax for Investment Crowdfunding is that it takes money to make money:

  1. $3k — incorporate your business
  2. $0 — get a tax ID
  3. $2k — draft company bylaws
  4. $5k — business plan and valuation
  5. $1k — $50k — certified financials
  6. $5k — marketing plan
  7. $50k — $150k — marketing budget
  8. $3k — $5k — Form C completion
  9. 5% — 14% Platform success fee

You really need about $64K to TRY to use investment crowdfunding to raise any amount of money. And I assure you that’s on the low end. Yes, you can bootstrap it yourself, pay the iron price to learn how to do it, but at the end of the day the STICKER PRICE to TRY and launch a successful RegCF campaign is between $16k and $250k. How much it cost you to TRY to raise money is completely different than how much it cost you to start a business. The sticker price for a startup is between $5k and $2B. Really depending on what you’re trying to do it can be relatively cheap or you can be like Quibi who raised $2B and went out of business in 6 month. Hence why such the dramatic range for the Sticker Price for starting a startup/business. To put it in a different light, it’s cheaper to have a $1k dollar a day cocaine habit (that’s only $365k per year) than it is to try to be an entrepreneur.

It Takes Money To Raise Money

The Black Tax of Investment Crowdfunding is really just the recognition that it takes money to try to raise money. It’s hard to raise a “Friends & Family’’ round when all your friends and family are just trying to make ends meet. Your “rich Auntie” is rich in the sense that she lives comfortably but can’t safely write a check for $10k, $20k or $50k to help you launch your business. In overcoming this….Inequity Desert….the first $50k required to start your business (even before you get around to trying to raise money for that business) investment crowdfunding platforms can’t help you even if you truly are a deserving Black, Brown, LGBTQ or some other marginalized minority.

To be clear, the Inequity Desert (also called the Missing Middle) is caused by institutional racism and historical legacies of slavery that America has never come to terms with. Crowdfunding Platforms don’t really help you address those either. But! And this is a big BUT. If you can overcome the odds, put in the first 10 years to your overnight success and sacrifice to get to the point where you can get your paperwork PLATFORM READY so investors can determine if your deal is INVESTOR READY and worthy, then yeah, any platform would love to have you pursue your American Dream on their funding portal.

The Solution

I actually don’t have one. I’m just tired of being asked, “What crowdfunding platform is best for BIPOC Founders?” To be clear the answer is “None”. It’s always up to the Founder (aka Issuer) to get themselves Platform Ready so that their community can determine if they’re Investor Ready and worthy of their investment. Yes, after you’ve dragged yourself past the Desert of Inequity any platform would be happy to have you be the Black, Brown, Woman, LGBTQ founder who successfully rasied money on their platform. After all, it’s easier to pick a winner in the 4th Quarter when the score has been run up.

That said, there are some platforms that cater to specific types of deals, regardless of who the Founders are:

Good luck as you pursue your business dreams. As a serial entrepreneur I know entrepreneurship is hard, hence why I only recommend entrepreneurship to my enemies. Too, I am quick to be honest and let you know if you can live up to your full human potential doing anything else other than be an entrepreneur, then you should do that. Because while the ocean may look nice and the waters be warm, they’re literally filled with Sharks who want to put you on the menu…not to mention your global competitors who are out to put you out of business.

Til next time a final note. Raising money isn’t your job. Running your business is your job. At all times, mind your business and remind yourself that raised money isn’t earned, you’ve got to pay it back.

About the Author

Samson Williams is a serial entrepreneur and accidental investor. When not starting business with his enemies (“Entrepreneurship is hard. I only recommend it to my enemies.”), Samson is an Adjunct Professor at Columbia University in NYC and University of New Hampshire School of Law where he teaches on blockchain, cryptocurrencies, FinTech and the Space Economy. Samson is also President of the Crowdfunding Professional Association and investor into two investment crowdfunding platforms — CrowdInvesting Done Brite and For more information on Samson visit and follow him on social @HustleFundBaby.




Cheerleader of all things startup and entrepreneur. Life's a hustle, invest in something worthy of you. @AxesAndEggs @UNHLaw #Blockchain #Cryptocurrencies