4 ms·

Profounders's blithe disregard for American securities laws is very amusing. Probably will not be so amusing for those involved... Securities offerings have t

by rprasad 16y ago

Profounders's blithe disregard for American securities laws is very amusing. Probably will not be so amusing for those involved... Securities offerings have to be registered. There are exceptions, but one of the big requirements for taking advantange of most of these exceptions is that you not publicly solicit investors. And Profounder is all about publicly soliciting investors. (Kickstarter avoids those problems because your kick does not buy you an ownership interest in the company/project.)

prodigal_erik 16y ago
This appears to be not a bond security having an aftermarket but a simple loan, with no expectation of profit. Would that still need to be registered?
danaprofounder 16y ago
ProFounder offers two products: Private Investing and Public Investing. With Private Investing, entrepreneurs can raise capital from friends, family, and other community members who they already have a relationship with and these people can get unlimited financial upside based on a % of revenue. This is a security. Given that it's a security, we help entrepreneurs easily comply with all necessary federal and state regulations that apply. Compliance is not too challenging because all of the entrepreneurs are raising less than $1M from people they have a relationship with, so the security has exempt status. And you're right - there is no public solicitation. With Public Investing, anyone in the general public can invest. This is not a security as investors do not have financial upside -- through revenue share agreements, they are repaid their principal and if they are repaid before the investment term is up, their share of the revenues for the rest of the term goes to a non-profit. Given that this is not a security, entrepreneurs can market it as widely as they'd like. I hope that helps clear up some of the confusion. Glad to hear that you're also a securities law buff! Dana ProFounder Co-Founder
- rprasad 16y ago
  Good to know you've addressed that stuff. It wasn't clear from your site.

by rprasad 16y ago

prodigal_erik 16y ago

This appears to be not a bond security having an aftermarket but a simple loan, with no expectation of profit. Would that still need to be registered?

danaprofounder 16y ago

ProFounder offers two products: Private Investing and Public Investing. With Private Investing, entrepreneurs can raise capital from friends, family, and other community members who they already have a relationship with and these people can get unlimited financial upside based on a % of revenue. This is a security. Given that it's a security, we help entrepreneurs easily comply with all necessary federal and state regulations that apply. Compliance is not too challenging because all of the entrepreneurs are raising less than $1M from people they have a relationship with, so the security has exempt status. And you're right - there is no public solicitation. With Public Investing, anyone in the general public can invest. This is not a security as investors do not have financial upside -- through revenue share agreements, they are repaid their principal and if they are repaid before the investment term is up, their share of the revenues for the rest of the term goes to a non-profit. Given that this is not a security, entrepreneurs can market it as widely as they'd like. I hope that helps clear up some of the confusion. Glad to hear that you're also a securities law buff! Dana ProFounder Co-Founder

rprasad 16y ago
Good to know you've addressed that stuff. It wasn't clear from your site.