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Which state leads crowdfunding efforts? Texas, duh

Texas crowdfunding efforts have generated $1.8 million in investments over the course of about a year and a half.

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Leading the pack

Back in February of this year, John Morgan, the Texas State Securities Board Commissioner, predicted that Texas would become a national leader in US crowd-funding investment. New crowd-funding regulations, explained Morgan, would allow Texas-based companies to generate up to $1 million per year.

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We’re also warned to be “careful what we wish for”, but in this case it’s a good thing: Fast-forward to May 2016 and a recent article in the online journal Austininno seems to bear out that “Texas crowd funding efforts have generated $1.8 million in investments over the course of about a year and a half, and all that activity makes the state a national leader for this new type of funding businesses and projects.”

Commented Morgan, “We believe equity crowd-funding will catalyze new and wider prosperity, entrepreneurship and job growth in Texas.”

Do the math: With a population of more than 26 million, Texas is a massive market for companies wishing to raise capital through crowd-funding, [which serves] as a great gateway for all Texans to participate in funding growth in their communities and the state at large.

Playing by the rules

The key to Texas’ success is that intrastate crowd-funding allows non-accredited investors to invest up to $5,000 a year into one or more businesses and potentially get equity-based returns or interest from their investments. Businesses can generate up to $1 million from the crowd.

So far, 35 such offerings have been made in Texas, including six from Austin. In Austin, those include a group living development for tech workers, a kava bar, three tech startups working with Diversity Fund, and a restaurant.

Slow but sure

Despite all the activity, questions remain about how successful the efforts will be for both the businesses and their investors: Only 14 of the 35 fundraising efforts have reached their minimum investment marks. Only about 16 percent (roughly $1.8 million) of the $10.8 million that Texas businesses hope to collectively raise has been secured.

The website Altfi explains that Equity crowdfunding legislation in the US has been slow to develop. The industry as a whole is waiting for Title III of the JOBS Act, which will open up the industry to non-accredited investors.

When this act is passed it should release a huge amount of capital to small and medium sized businesses and provide a boost to the US economy.

A successful model

The most financially successful crowd-funding effort in Texas, so far, is the Chapman & Kirby gastrolounge that is planned as an event space and restaurant in downtown Houston. It has raised $440,800 from 134 investors. It seems to be a growth model that has worked: The offering is open to accredited investors, too, which means it may have generated investments of more than $5,000 from wealthier individuals.

#YeehawFunding

Nearly three decades living and working all over the world as a radio and television broadcast journalist in the United States Air Force, Staff Writer, Gary Picariello is now retired from the military and is focused on his writing career.

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4 Comments

4 Comments

  1. L.W. Dusty Brogdon

    May 31, 2016 at 2:09 pm

    See details here
    https://www.texasintrastatecrowdfunding.com/Texas-Results.html

    The truth is Texas Intrastate System is FAR behind where it should (Could) be!
    Of the 10 registered Texas Crowdfunding Portals (TCPs) with approved applications with our Texas State Securities Board (TSSB) , one has failed to fund ANY of the portals 7 Offers (Trucrowd(
    … One, Crudefunders has $1,050,000.00 of the $1.8 M total.
    Note;
    Equityeats has no offers and has never … CROWDBOARDERS has one offer and is in violation of The Texas Escrow Agent Rule …
    EquityBrick is new , Texas Crowdfunding has Zero offers and Zero funded.
    Business Funding is a No Show …

    DIYVERSIFY, LLC, New not active currently.

    BUSINESS FUNDING LLC
    2100 WYCHWOOD DRIVE
    AUSTIN TX 78746

    CROWDBOARDERS LLC
    4100 MIDWAY ROAD SUITE 2120
    CARROLLTON TX 75007

    CRUDEFUNDERS PORTAL TEXAS, LLC
    4550 POST OAK PLACE DRIVE SUITE 119
    HOUSTON TX 77027

    DIVERSITY FUND, LLC
    1108 LAVACA STREET # 110-309
    AUSTIN TX 78701

    DIYVERSIFY, LLC
    1127 ELDRIDGE PARKWAY SUITE 300 – 339
    HOUSTON TX 77077

    EQUITY BRICK LLC
    7703 NORTH LAMAR BLVD SUITE 510G
    AUSTIN TX 78752

    HIVE EQUITY INC. dba MASSVENTURE
    110 E. HOUSTON STREET 7TH FLOOR
    SAN ANTONIO TX 78205

    NEXTSEED TX LLC
    4101 GREENBRIAR DRIVE SUITE 122K
    HOUSTON TX 77098

    TEXAS CROWDFUNDING LLC
    20214 LAKE SHERWOOD DRIVE
    KATY TX 77450

    TRUCROWD TEXAS, INC
    10333 HARWIN DRIVE SUITE 460G
    HOUSTON TX 77036

  2. Pingback: Austin vs. Silicon Valley: Why is only one of the two terrified of the tech downturn? - The American Genius

  3. Pingback: Crowdfunding's first report card - good enough for the fridge? - The American Genius

  4. Pingback: Are Intrastate Crowdfunding Laws Still Relevant?

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Business News

You should apply to be on a board – why and how

(BUSINESS NEWS) What do you need to think about and explore if you want to apply for a Board of Directors? Here’s a quick rundown of what, why, and when.

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board of directors

What?
What does a Board of Directors do? Investopedia explains “A board of directors (B of D) is an elected group of individuals that represent shareholders. The board is a governing body that typically meets at regular intervals to set policies for corporate management and oversight. Every public company must have a board of directors. Some private and nonprofit organizations also have a board of directors.”

Why?
It is time to have a diverse representation of thoughts, values and insights from intelligently minded people that can give you the intel you need to move forward – as they don’t have quite the same vested interests as you.

We have become the nation that works like a machine. Day in and day out we are consumed by our work (and have easy access to it with our smartphones). We do volunteer and participate in extra-curricular activities, but it’s possible that many of us have never understood or considered joining a Board of Directors. There’s a new wave of Gen Xers and Millennials that have plenty of years of life and work experience + insights that this might be the time to resurrect (or invigorate) interest.

Harvard Business Review shared a great article about identifying the FIVE key areas you would want to consider growing your knowledge if you want to join a board:

1. Financial – You need to be able to speak in numbers.
2. Strategic – You want to be able to speak to how to be strategic even if you know the numbers.
3. Relational – This is where communication is key – understanding what you want to share with others and what they are sharing with you. This is very different than being on the Operational side of things.
4. Role – You must be able to be clear and add value in your time allotted – and know where you especially add value from your skills, experiences and strengths.
5. Cultural – You must contribute the feeling that Executives can come forward to seek advice even if things aren’t going well and create that culture of collaboration.

As Charlotte Valeur, a Danish-born former investment banker who has chaired three international companies and now leads the UK’s Institute of Directors, says, “We need to help new participants from under-represented groups to develop the confidence of working on boards and to come to know that” – while boardroom capital does take effort to build – “this is not rocket science.

When?
NOW! The time is now for all of us to get involved in helping to create a brighter future for organizations and businesses that we care about (including if they are our own business – you may want to create a Board of Directors).

The Harvard Business Review gave great explanations of the need to diversify those that have been on the Boards to continue to strive to better represent our population as a whole. Are you ready to take on this challenge? We need you.

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Business News

Everyone should have an interview escape plan

(BUSINESS NEWS) A job interview should be a place to ask about qualifications but sometimes things can go south – here’s how to escape when they do.

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interview from hell

“So, why did you move from Utah to Austin?” the interviewer asked over the phone.

The question felt a little out of place in the job interview, but I gave my standard answer about wanting a fresh scene. I’d just graduated college and was looking to break into the Austin market. But the interviewer wasn’t done.

“But why Austin?” he insisted, “There can’t be that many Mormons here.”

My stomach curled. This was a job interview – I’d expected to discuss my qualifications for the position and express my interest in the company. Instead, I began to answer more and more invasive questions about my personal life and religion. The whole ordeal left me very uncomfortable, but because I was young and desperate, I put up with it. In fact, I even went back for a second interview!

At the time, I thought I had to put up with that sort of treatment. Only recently have I realized that the interview was extremely unprofessional and it wasn’t something I should have felt obligated to endure.

And I’m not the only one with a bad interview story. Slate ran an article sharing others’ terrible experiences, which ranged from having their purse inspected to being trapped in a 45 minute presentation! No doubt, this is just the tip of the iceberg when it comes to mistreatment by potential employers.

So, why do we put up with it?

Well, sometimes people just don’t know better. Maybe, like I was, they’re young or inexperienced. In these cases, these sorts of situations seem like they could just be the norm. There’s also the obvious power dynamic: you might need a job, but the potential employers probably don’t need you.

While there might be times you have to grit your teeth and bear it, it’s also worth remembering that a bad interview scenario often means bad working conditions later on down the line. After all, if your employers don’t respect you during the interview stage, it’s likely the disrespect will continue when you’re hired.

Once you’ve identified an interview is bad news, though, how do you walk out? Politely. As tempting as it is to make a scene, you probably don’t want to go burning bridges. Instead, excuse yourself by thanking your interviewers, wishing them well and asserting that you have realized the business wouldn’t be a good fit.

Your time, as well as your comfort, are important! If your gut is telling you something is wrong, it probably is. It isn’t easy, but if a job interview is crossing the line, you’re well within your rights to leave. Better to cut your losses early.

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Business News

Australia vs Facebook: A conflict of news distribution

(BUSINESS NEWS) Following a contentious battle for news aggregation, Australia works to find agreement with Facebook.

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News open on laptop, which Australia argues Facebook is taking away from.

Australia has been locked in a legal war against technology giants Google and Facebook with regard to how news content can be consumed by either entity’s platforms.

At its core, the law states that news content being posted on social media is – in effect – stealing away the ability for news outlets to monetize their delivery and aggregate systems. A news organization may see their content shared on Facebook, which means users no longer have to visit their site to access that information. This harms the ability for news production companies – especially smaller ones – from being able to maintain revenue and profit, while also giving power to corporations such as Facebook by allowing them to capitalize on their substantial infrastructure.

This is a complex subject that can be viewed from a number of angles, but it essentially asks the question of who should be in control of information on a potentially global scale, and how the ability to share such data should be handled when it passes through a variety of mediums and avenues. Put shortly: Australia thinks royalties should be paid to those who supply the news.

Australia has maintained that under the proposed laws, corporations must reach content distribution deals in order to allow news to be spread through – as one example – posts on Facebook. In retaliation, Facebook completely removed the ability for users to post news articles and stories. This in turn led to a proliferation of false and misleading information to fill the void, magnifying the considerable confusion that Australian citizens were confronted with once the change had been made.

“In just a few days, we saw the damage that taking news out can cause,” said Sree Sreenivasan, a professor at the Stony Brook School of Communication and Journalism. “Misinformation and disinformation, already a problem on the platform, rushed to fill the vacuum.”

Facebook’s stance is that it provides value to the publishers because shared news content will drive users to their sites, thereby allowing them to provide advertising and thus leading to revenue.

Australia has been working on this bill since last year, and has said that it is meant to equalize the potential imbalance of content and who can display and benefit from it. This is meant to try and create conditions between publishers and the large technology platforms so that there is a clearer understanding of how payment should be done in exchange for news and information.

Google was initially defiant (threatening to go as far as to shut off their service entirely), but began to make deals recently in order to restore its own access. Facebook has been the strongest holdout, and has shown that it can leverage its considerable audience and reach to force a more amenable deal. Australia has since provided some amendments to give Facebook time to seek similar deals obtained by Google.

One large portion of the law is that Australia is reserving the right to allow final arbitration, which it says would allow a mediator to set prices if no deal could be reached. This might be considered the strongest piece of the law, as it means that Facebook cannot freely exercise its considerable weight with impunity. Facebook’s position is that this allows government interference between private companies.

In the last week – with the new agreements on the table – it’s difficult to say who blinked first. There is also the question of how this might have a ripple effect through the tech industry and between governments who might try to follow suit.

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