The Black Tax — Investment Crowdfunding Edition

  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?
  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

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Samson

Samson

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