Stubbs Alderton & Markiles, LLP is one of the leading start-up law firms in Southern California. We pioneered a fixed fee start-up package making the formation and organization of your start-up as seamless as possible. Our Preccelerator Program is a platform offered to select start-up companies out of our Santa Monica office that provides interim office space and sophisticated legal services, with the objective of helping you grow your idea from business concept to funded startup. The Preccelerator Program provides free co-working space and other perks for 5-6 promising young startups.

The perks include:

• Free co-working space on a rolling basis, including free wireless access to the Internet and access to conference rooms for meetings and presentations
• Access to real-time legal advice and transactional legal services on site (under our standard engagement and/or fee arrangements)
• Access to in-house educational workshops and activities
• Potential introductions to our network of investors and other service providers

For more information about the Preccelerator Program, visit https://stubbsalderton.com/preccelerator or contact Heidi Hubbeling at (310) 746-9803 or

No-Fee Platform Connects Accredited Investors to
Innovative Startups Pursuant to the JOBS Act

SANTA MONICA, Calif.: Oct. 16, 2014 – FlashFunders today announced the launch of its no-fee, online equity funding platform at www.flashfunders.com.  FlashFunders (member FINRA/SIPC) was started by Europlay Capital Advisors, law firm Stubbs Alderton & Markiles, and co-founders Vincent Bradley and Brian Park, and was formed to help startups raise capital efficiently while also opening up access to startup investing for accredited investors.

FlashFunders’ platform helps entrepreneurs navigate complex SEC regulations and offsets costly legal fees, while giving accredited investors unprecedented access to startup investment opportunities. FlashFunders provides a turnkey solution for raising capital and a marketplace where entrepreneurs can connect directly with accredited investors across the globe.

FlashFunders ensures all investors are accredited and that all offerings are SEC-compliant and executed using FDIC-insured escrows — which are created and paid for by FlashFunders.

“We worked with FINRA over the past year to expand the scope of our broker-dealer license, allowing FlashFunders to operate an online equity funding platform in a regulated environment,” said Vincent Bradley, the co-founder of FlashFunders. “We felt it was critical to ensure our platform was compliant for both startups and investors. Online equity funding is in its infancy and seeing tremendous growth; by engaging with FINRA, we’re leading the way for how it should be done — creating an industry standard.”

“97% of the 8.5 million accredited investors in the United States currently don’t partake in startup investing,” said Mark Dyne, the chairman and founder of Europlay, a seed and early-stage investor in technology companies, as well as former Skype seed investor and board member and founder and CEO of Sega Ozisoft, Virgin Interactive Entertainment, and many others. “This is largely because they don’t have access to early stage companies. Leveraging technology and decades of combined experience in finance, venture investing, securities law and startup operations, FlashFunders provides entrepreneurs and investors a secure, SEC-compliant user experience, with e-Signature technology and document management capabilities backed by a team of FINRA-registered representatives to help ensure successful offerings on the platform.”

“FlashFunders is designed to fundamentally alter the capital-raising process,” said Brian Park, co-founder of FlashFunders. “We provide startups with a compliant, efficient and no-fee online equity funding platform to develop their business plans, publicly market their offerings and collect funding from accredited investors —saving startups thousands of dollars in legal fees. At the same time, investors on FlashFunders can purchase shares directly in startups with no transaction fees or carried interest charges.”

FlashFunders creates a safe and intuitive process that allows investors to view startup offerings and execute investments legally and properly in minutes using Flash Seed Preferred documents and e-Signature technology.

FlashFunders has created “Flash Seed Preferred,” a set of safe, balanced and transparent investment documents that have been customized to facilitate fundraising on the platform, further streamlining a process that would otherwise take months of road shows, multiple middlemen and tens of thousands of dollars in legal fees to execute.

“Unlike other equity funding portals, FlashFunders does not curate or try to pick winners, and investments are not made through LLCs or Special Purpose Vehicles,” said Scott Alderton, Managing Partner at Stubbs Alderton & Markiles, LLP. “FlashFunders provides a seamless end-to-end solution for startups raising capital with virtually no external cost, fees or investor carry. FlashFunders receives an ongoing right to invest a limited amount under the same terms as all other investors if a startup is successful in getting funded on the platform.” Stubbs Alderton & Markiles, LLP is southern California’s leading business law firm, with deep experience in providing legal services to companies including LinkedIn, Beats by Dre and Skype, among many others.

The announcement today is the first phase of FlashFunders’ rollout. Additional enhancements to the user experience will be added over time along with new tools and technologies to increase functionality and scale. Offerings from startups will be incrementally uploaded by the site’s concierge service, which assigns a live team to guide entrepreneurs through the process.

“We are educating a new generation of investors and building a more efficient roadshow for startups,” said Vincent Bradley.

About FlashFunders

A registered broker-dealer, member FINRA/SIPC, FlashFunders provides a no-fee online equity funding platform for entrepreneurs to publicly market their offerings, collect funding from accredited investors and gain access to SEC-compliant legal documents and escrow accounts to create their offerings.

For more information, visit: http://www.flashfunders.com

Media Contact:
Amy Morris                                                 Susan Guerra
FlashFunders                                              Thatcher+Co.
               
917.887.2725                                              973.650.6555

By:  Susan Wong

(May 16) The SEC’s Division of Trading and Markets has published Frequently Asked Questions guidance on its website regarding the implementation of the crowdfunding intermediary provisions of Title III of the JOBS Act. The crowdfunding exemption will require issuers to use intermediaries – either a broker or a “funding portal” registered with the SEC – to complete crowdfunded offerings. Funding portals will also be required to become members of a national securities association registered under Section 15A of the Exchange Act. Currently, FINRA is the only such association in existence.  Intermediaries will be subject to the duties and prohibitions prescribed by the JOBS Act, the rules and regulations the SEC will adopt thereunder, as well as the rules and regulations of their applicable association.

Please note that the FAQs (i) are subject to update and revision at any time, (ii) are not rules, regulations or statements of the SEC, and (iii) have been neither approved nor disapproved by the SEC.  The crowdfunding intermediary FAQs can be found at: http://www.sec.gov/divisions/marketreg/tmjobsact-crowdfundingintermediariesfaq.htm

Currently, the FAQs provide as follows:

Responses to Frequently Asked Questions

Question 1.

I would like to operate a crowdfunding intermediary. Am I required to register with the SEC before doing so?

Answer:

Yes. You must register with the SEC either as a broker or as a funding portal.

Please keep in mind that the SEC still has to write rules to implement the crowdfunding provisions of the JOBS Act. Until the SEC has completed this rulemaking, you cannot act as a crowdfunding intermediary, even if you are already a registered broker. The Division of Corporation Finance also has reminded issuers that any offers or sales of securities purporting to rely on the crowdfunding exemption would be unlawful under the federal securities laws until the SEC’s rulemaking is complete.

Question 2.

How do I register with the SEC as a funding portal?

Answer:

The SEC must adopt rules governing funding portals before permitting anyone to register with the SEC as a funding portal. These rules will address the form and process needed to register with the SEC as a funding portal.

Funding portals also must become members of a national securities association that is registered under Section 15A of the Exchange Act. Today, FINRA is the only national securities association in existence that is registered under Section 15A of the Exchange Act.

Question 3.

I would like to operate as a funding portal. Do I need to register with the Financial Industry Regulatory Authority (FINRA)?

Answer:

All funding portals must become members of a national securities association that is registered under Section 15A of the Exchange Act, in addition to registering with the SEC. Today, FINRA is the only national securities association in existence that is registered under Section 15A of the Exchange Act.

Question 4.

Are there are any limitations on what a funding portal can do?

Answer:

Among other things, the JOBS Act imposes several restrictions on the activities of a registered funding portal. A funding portal is not permitted to:

• provide investment advice or make recommendations;
• solicit purchases, sales, or offers to buy the securities offered or displayed on its website or portal;
• compensate employees, agents, or other persons for such solicitation or based on the sale of securities displayed or referenced on its website or portal;
• hold, manage, possess, or otherwise handle investor funds or securities; or
• engage in any other activities the SEC determines to prohibit in its crowdfunding rulemaking.

In addition, each funding portal and each crowdfunding broker is prohibited from:

• compensating promoters, finders, or lead generators for providing the intermediary with the personal identifying information of any potential investor; or
• allowing its directors, officers, or partners (or any person occupying a similar status or performing a similar function) to have a financial interest in any issuer using the services of the intermediary.

Question 5.

I would like to operate a crowdfunding intermediary. In addition to registering with the SEC and a national securities association, what should I know?

Answer:

There are many considerations in determining whether to operate a crowdfunding intermediary. At a minimum, you should understand the legal obligations that the JOBS Act assigned to crowdfunding intermediaries. For example, crowdfunding brokers and funding portals have significant duties under the JOBS Act to provide information to investors, reduce the risk of fraud and, where required under the Act, ensure that investors and issuers satisfy the requirements outlined in Title III of the JOBS Act.

The JOBS Act requires these intermediaries to, among other things:

• provide disclosures that the SEC determines appropriate by rule, including regarding the risks of the transaction and investor education materials
• ensure that each investor: (1) reviews investor education materials; (2) positively affirms that the investor understands that the investor is risking the loss of the entire investment, and that the investor could bear such a loss; and (3) answers questions that demonstrate that the investor understands the level of risk generally applicable to investments in startups, emerging businesses, and small issuers and the risk of illiquidity;
• take steps to protect the privacy of information collected from investors;
• take such measures to reduce the risk of fraud with respect to such transactions, as established by the SEC, by rule, including obtaining a background and securities enforcement regulatory history check on each officer, director, and person holding more than 20 percent of the outstanding equity of every issuer whose securities are offered by such person;
• make available to investors and the SEC, at least 21 days before any sale, any disclosures provided by the issuer;
• ensure that all offering proceeds are only provided to the issuer when the aggregate capital raised from all investors is equal to or greater than a target offering amount, and allow all investors to cancel their commitments to invest;
• make efforts to ensure that no investor in a 12-month period has purchased crowdfunded securities that, in the aggregate, from all issuers, exceed the investment limits set forth in section Title III of the JOBS Act; and
• any other requirements that the SEC determines are appropriate.

In addition, under the JOBS Act, an intermediary should be aware of the prohibited activities listed in response to Question 4.

For more information regarding this Alert, other provisions of the JOBS Act or crowdfunding initiatives, contact John McIlvery, Group Chair of SAM’s Public Securities practice area at (818) 444-4502.