David Drake

David Drake is an early-stage equity expert and the founder and chairman of LDJ Capital, a New York City private equity firm, and The Soho Loft, a global event-driven financial media company helping firms advertise for investors. He writes regularly for Forbes and Thomson Reuters. You can reach him directly at David@LDJCapital.com or make connect on linkedin.com/in/ldjcapital

SEC says YES to Equity Crowdfunding!

After over three years in regulatory limbo, the Securities and Exchange Commission (SEC) has finally voted the adoption of the Title III of the Jumpstart Our Business Startups (JOBS) Act at a public meeting, Friday 30 October 2015. SEC is led by Chair Mary Jo White with Commissioners Luis A. Aguilar, Kara M. Stein, and Michael S. Piwowar. Three Commissioners – White, Stein and Aguilar – voted yes to equity crowdfunding law.

President Obama signed the JOBS Act on 5 April 2012. While Title II (Regulation D) and Title IV (Regulation A+) have been given the green light on 23 Sept 2013 and 25 March 2015 respectively, there has been much hesitation where Title III (Equity Crowdfunding) was concerned. This present decision will shake up the crowdfunding world as non-accredited investors will no longer be barred from equity investing.

Press Release: http://www.sec.gov/news/pressrelease/2015-249.html

Final Rules: http://www.sec.gov/rules/final/2015/33-9974.pdf

1Although the SEC had allowed private firms to make general solicitations to the public, only accredited investors, those with net worth over $1M excluding their private residence, were able to participate in investments. It was believed that the general population was not educated enough to be able to understand how the market works and to make smart investment decisions.

There are many individuals who had amassed small fortunes over the years, as well as pensioners, who had the ability to make large investments but were unable to do so because legally they were not qualified by virtue of SEC standards. This is one of the reasons the SEC has been under pressure to adopt Title III, dubbed the real crowdfunding law. Six members of Congress wrote a letter to SEC Chair Mary Jo White on 5 October 2015 urging her to come to a positive decision where this rule was concerned. This may have been what spurred the decision to come to a vote once and for all.

Under Title III of the JOBS Act, entrepreneurs will have a wider pool of funds to tap as they dip into the pockets of the average citizen. More small business ventures will be funded, creating more jobs. Investors will be able to meet their funding needs faster since there is a wider network.

2The process has been a long and trying one as I recall being a part of the team that lobbied for the JOBS Act in Congress. One month before President Obama signed the JOBS Act into law, on Sunday 18 March 2012, I founded the Crowdfunding Intermediary Regulatory Advocates (CFIRA) with Startup Exemption and Gate Tech, a branch of it being the Crowdfunding Professional Association (CfPA). I made efforts to not only educate individuals on crowdfunding, but also to track the growth of the platforms as they emerged. The 2015 Times Realty News Real Estate Crowdfunding Report gives insight into the top and emerging firms in the real estate crowdfunding industry. It has been remarkable to see how taken the market has been with the concept as the real estate sector, more than any other, grew significantly after Regulation A+. Now with Title III being adopted, and everyone given the right to invest according to their funding capabilities, the market is expected to catapult even further.

Crowdfunding platforms will be expected to comply with “funding portal rules” as well as the newly established rule 4518 which will help FINRA to accurately keep record of entities subscribing to Title III. The funding capability has been increased dramatically and as such, so will the potential for fraud. There is the fear among some as they remember the great depression of the 1930s that initiated the creation of the SEC to govern securities. Blue Sky state laws had left many loopholes that were manipulated, leaving the market open and vulnerable to the beating it took. While this fear is reasonable, the market has evolved since that time and sufficient rules have been established to allow for a smoother transition. FINRA implementation of the law will delay its effectivity date, and we may have to wait till late spring 2016 before transactions can be done.

Just after JOBS Act was enacted, in December 2012 I wrote that this equity crowdfunding law will take more than 3 years before it is approved. Now that this law has been passed, no one can reasonably tell the natural outcome of this law but the market is ripe for it. Many expect that the full implementation of equity crowdfunding will be the turning point for alternative financing. The United States of America finally follows Italy to be the only two countries in the world with a specific crowdfunding law.

Image

Credits

Image 1: First meeting of Crowdfunding Intermediary Regulatory Advocates (CFIRA) with Securities and Exchange Commission (SEC) on 20 April 2012. From left to right: Vince Molinari (Gate Tech), Brian Meece (RocketHub), Douglass Ellenoff, hidden (Ellenoff Grossman & Schole LLP), D.J. Paul (Crowdfunder), Candace Klein (SoMoLend), Jason Best (Startup Exemption), David Drake (LDJ Capital and The Soho Loft), Chance Barnett (Crowdfunder), and Alon Hillel-Tuch (RocketHub). Photo credit: The Soho Loft

Image 2: The Crowdfunding Intermediary Regulatory Advocates (CFIRA) founders first met with Financial Industry Regulatory Authority (FINRA) on 20 April 2012. From left to right: Vincent Molinari (Gate Tech), David Drake (LDJ Capital and The Soho Loft), Jason Best (Startup Exemption) and Sherwood Neiss (Startup Exemption). Photo credit: The Soho Loft

David Drake is an early-stage equity expert and the founder and chairman of Victoria Global, LDJ Capital, a New York City-based family office, and The Soho Loft Media Group, a global financial media company with three divisions: Corporate Communications, Publications, and Conferences with 200+ annual global summits and talks on finance and investments. Mr. Drake has been involved in technology, media, telecommunications and impact investments for more than 20 years. He is an advocate of the US JOBS Act and was invited to the White House Champions of Change and represented the US Commerce Department to the European Union in Rome and Brussels as a Small and Medium-sized Enterprise expert.

 

GROUNDFLOOR launches peer to peer Real Estate Crowdfunding platform

By David Drake

GroundFloor, a peer-to-peer real estate lending platform, is launching a landmark securities offering that enables crowdfunding of real estate transactions. This innovative move will allow approximately 43 million Americans in six states to invest in real estate in a way that wasn’t possible until now.

Lending money to a real-estate developer used to be something reserved for banks and other accredited investors. GroundFloor is changing the rules of the game, allowing individuals to become lenders in real-estate projects. The developers of such projects will pay investors interest on the loan just as they would a bank. This new initiative provides the general public with the opportunity to diversify their investments, without being limited by their income or wealth. Also, real estate developers will have access to a new way of financing their projects and ideas, which will stimulate new real estate developments.

Federal regulations generally define an accredited investor as someone with an annual income of over $200,000 or liquid net worth of $1 million. These regulations are keeping the vast majority of Americans out of real estate investing. GroundFloor came up with an interesting and novel strategy. Instead of waiting for new crowdfunding regulations promised by the Securities and Exchange Commission (SEC) that will supposedly allow non-accredited investors to participate in real-estate crowdfunding, the company decided to work within existing state laws. So far, regulators in six states (Pennsylvania, Georgia, Arizona, Illinois, Virginia and Massachusetts) authorized the company’s initiative to solicit residents’ participation in its deals.

GroundFloor’s initiative is granting access to virtually any person interested in real estate investing, regardless of their income or net worth. Anyone can become an investor and the minimum investment is $100. Loan terms vary from six months to five years. As for safety measures, the company has a thorough pre-screening process for developers before they are able to list their projects. Most importantly, the loans are secured by the properties themselves, which is not a feature of other platforms that provide equity in real estate.

GroundFloor concentrates on smaller, residential projects. The pilot project for this whole new real-estate investment philosophy was the renovation of a historical single family home in Atlanta by John Mangham, a successful independent developer. The project was listed in February, and 39 Georgia residents lent the developer $40,000 to complete the restoration. The cash was raised in just five days and the developer will pay to investors 8% interest on the loan.

After the success of the pilot project, GroundFloor has now expanded to five more states (Virginia, Arizona, Illinois, Pennsylvania, and Massachusetts). The long-term goal of the company is to make this type of investment accessible to all Americans.

Other real-estate crowdfunding platforms are relying on wealthy accredited investors to raise money for their projects. GroundFloor, on the other hand, is building a platform for the rest of us, where any investor can access quality real estate investment opportunities. GroundFloor investors will invest anywhere from a few hundred to a few thousand dollars, making a safe investment that will bring nice returns on short to medium terms (from six months to five years). In other words, the company is focusing on a new market, tens of millions of potential investors, and it might just be the boost that the real estate industry and construction industry really need to make a recovery from the recession.

This type of real estate investing comes with a series of advantages for both developers and investors. Developers gain access to funds more rapidly: let’s remember that the funds for the pilot project in Atlanta were raised in just five days! Also, the developers are no longer dependent on financial institutions or accredited investors, which allows them more flexibility and creativity in their projects. Investors, on the other hand, have access to a form of investing that is safer than stock market investing and more profitable than depositing money in a bank.

One more thing worth mentioning: this form of financing is a way of bringing ethics back to real estate. Communities are offered the opportunity to back up projects that bring them something valuable, instead of dealing with real estate projects drawn by huge corporate developers who are far removed from the needs of the community.

GroundFloor makes investing in real estate projects accessible to anyone, building the path to a new way of financing the real estate industry – more flexible, more transparent, more dynamic, and more importantly: open to all.

David Drake is an early-stage equity expert and the founder and chairman of LDJ Capital, a New York City private equity advisory firm, and The Soho Loft – The Voice of Capital Formation – a global financial media company with divisions in Corporate Communications, Publishing and Expos & Events. You can reach him directly at David@LDJCapital.com.

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Regulation A+ opens the Floodgates of Real Estate Investing

by David Drake

Regulation A+, which is also known as Direct Public Offering, will significantly bring down the cost of raising capital for businesses. Such incidences like paying $250,000 legal fees when you raise $5,000,000 will no longer exist. Regulation A+ is expected to greatly influence direct public funding and give people an opportunity to raise capital more affordably.

Many people have been unable to start businesses in the States due to the strict regulations that have been in existence especially as far as raising capital is concerned. People have been paying thousands of dollars as legal fees on every capital they raise. This has always been the biggest discouragement especially for startup businesses. Business experts have argued that this has been a big obstacle especially to people who wanted to do business but did not have access to sufficient capital on their own.As a result, operating business in the States has been left to the few lucky ones who can easily raise money and  pay the legal fees.

With the new laws contained in Regulation A+, startups will be able to raise up to $50 million in capital per year. Unlike the previous years, startups can now sell securities to the public and raise capital even from more non-accredited financiers. Basically, this is aimed at giving equal opportunities to those interested in doing business, regardless of their capability to raise capital. As a matter of fact, more people will now be able to raise capital, start businesses and generate additional jobs.
One of the sectors that will benefit greatly from Regulation A+ is the real estate industry. The demand for real estate properties has always been strong in the States.  Many people have showed interest in investing in this industry. With the Regulation A+ in place, startups will now be able to raise sufficient capital and develop real estate properties hassle free.

Experts have been making comparisons between Regulation A+ and Regulation D. Definitely, both Regulations have their advantages and disadvantages. But the fact that Regulation A+ enables businesses to raise capital from non-accredited investors makes it far better than Regulation D. In addition, the scrapped off legal fees and reduced compliance costs in Regulation A+ also make it affordable for startup businesses to raise capital and start operations immediately.

In general, the Jumpstart Our Business Startups Act, or  JOBS Act, brings a different business climate in the States. From the time JOBS Act was signed into law by President Barack Obama in April 2012, there are great steps that have been made already. Currently, a lot of capital is being raised by startups through crowdfunding.

Regulation A+ is more advantageous than Regulation D, because with Regulation A+ startups can raise money from non-accredited investors.

There is high anticipation that Regulation A+ will be approved. This is because it is believed that the law will enable more people to participate in building wealth in the country. Before Regulation A+, only the rich investors have been dominating the real estate industry and giving no room for startups to get established.

But with Regulation A+, the many startups that have not been able to operationalize their business ideas for lack of funds can now do so. The business platform will be made neutral as every business will easily access the funds it requires. This means that there will be more competition, especially in the real estate sector, and this will lead to high quality products and services. Many people are also expected to shift from leasing to owning properties because nearly everybody will now be able to invest.

Regulation A+ gives the public an opportunity to participate in active business and thus, in building wealth. Previously, this was left to privately owned companies and individuals who were able to pay for the high costs of operating business in the States. Regulation A+ will connect the public directly with investors and their investments. Most importantly, transaction costs and fees will be sliced making it affordable for startups to get established and operate efficiently.

If you have been thinking and reflecting on making an investment, especially in the real estate sector, this is the best opportunity for you to explore. Regulation A+ provides a conducive environment to crowdfund capital from non-accredited investors and fund your startups, and  for investors to gain wealth as well. Businesses are expected to be more competitive and manageable even by startups. Just make sure that you understand comprehensively Regulation A+ and then make the necessary steps to start your business.

David Drake is an early-stage equity expert and the founder and chairman of LDJ Capital, a New York City private equity advisory firm, and The Soho Loft – The Voice of Capital Formation – a global financial media company with divisions in Corporate Communications, Publishing and Expos. You can reach him directly atDavid@LDJCapital.com.

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Trump, Mondrian Hotels, Abu Dhabi and Brunei Peninsula Hotel Representatives join “Global Real Estate Crowdfunding Conference II” in New York #CrowdFundRealty

New York, April 22, 2014 (GLOBE NEWSWIRE) — It’s a #CrowdFundRealty day this Thursday, April 24, in New York!

What better way to usher that day than to gather the top honchos of the real estate industry and realty-focused family offices from all over the globe in a VIP cocktail party at the Big Apple.

Nobody would want to miss out on this swanky cocktail happening on Wednesday night, 23 April 2014 at The Soho Loft penthouse in NYC. Grab a last minute ticket and hobnob with no less than the representatives of Trump Properties, the owners of the Hudson Hotel, the Morgans Hotel Group and largest minority owner of the Empire State Building, just to name a few.

Think about the success stories churning right off the bat from the leading realty crowdfunding players as they discuss about their remarkable progress in the industry. Chances are there will be an explosion of ideas among the guests.

To pump up more excitement in the real estate arena, these companies will be joining the “Global Real Estate Crowdfunding Conference II” the next day, Thursday, 24 April 2014 at The Players Club in 16 Gramercy Park South. The conference gathers the new class of crowd investors as well as traditional and institutional investors in one big platform. Once again, this conference will serve as a vehicle to share the opportunities and new approaches that will energize and sustain the burgeoning and promising real estate market and industry.

Register now. For details, check:

http://thesoholoft.com/conferences/global-real-estate-crowdfunding-conference-ii-new-york-city/

David Drake, chairman and founder of The Soho Loft says, “Crowdfunding is rapidly changing the real-estate investment market, offering developers new ways to finance projects, giving small investors a way in, and the socially-conscious an avenue to support their local communities.”

Count Erik Wachtmeister, CEO and founder of BestofAllWorlds.com, a by-invitation-only social navigator, located in Stockholm, Sweden is giving its full support to the conference, being an ardent believer of crowdfunding himself. The Best of All Worlds is setting its  sights to become the ultimate discovery and matching platform for people as well as products and services online. It is also  providing an intimate web environment to  link global influencers and relevant connections who have the same interests, passions and backgrounds. Wachtmeister says, “So much of social media is about focusing on other people’s past. Best of all Worlds is about paying more attention to our own future.”

The conference is also proud to have the Stock & Fund Managers on board as one of its sponsors. S & F Managers has its roots in investment banking and asset management. It is the vanguard in structuring, developing and managing upscale hotel and real estate projects in the Galapagos Islands and Mar de Indias in Colombia. S & F will make its entry as the main developer of Delano Cartagena and Galapagos Villas  & Resort in South America. This amazing project features an 18-hole golf course, residential units and many other up-to-the-minute amenities operated by the Morgans Hotel Group. Alexander Oppenheimer of S & F  Managers, is excited to unveil these amazing projects and spectacular opportunities to the public during the conference. For the past years, S & F only had private exposure to investors.

The Carlton Group Real Estate Private Equity Bankers is also fully supporting the conference and its ideals. The Carlton Group specializes in raising equity and debt on big complex transactions. It also provides investment sales services for large commercial real estate assets and loans held by banks. Recently, this international real estate investment-banking firm entered the space of accredited equity crowdfunding.  It offers accredited investors the opportunity to invest in large commercial real estate assets.

Patch of Land‘s support to the conference is noteworthy. It is  establishing strategic partnerships with the leading players in the real estate, Right now, they are working with Wealthforge, the foremost crowdfunding broker-dealer network, and Kingdom Trust, the leading provider of alternative assets. AdaPia d’Errico, Chief Marketing Officer of Patch of Land says, “We embrace the opportunities for building wealth and growing communities by working together to promote crowdfunded and crowdfinanced investments.”

Other conference sponsors are Times Realty News, the only online news and publishing site that focuses mainly on real estate crowdfunding firms, projects and happenings; Global Crowd News, another media news and publishing outfit that redefines capital formation; and LDJ Capital, a New York-based private equity advisory firm that offers consultation services on fund management and business development for the energy, infrastructure and real estate industry, and strategic access to capital markets.

Just like the first conference last November 2013, the Global Real Estate Crowdfunding Conference II on 24 April 24 2014 will present tremendous opportunities to its participants. Up for discussions are the trends and growth of real estate crowdfunding, real estate investments by family offices, crowdfunding strategies for real estate, and global platforms and international crowdfunding investors. There will be plenty of time to network with the speakers during the networking lunch and the after-event cocktails.

Big and small players in the industry are sharing, tweeting, writing about this highly exciting event of the year. Use the hashtag #CrowdFundRealty to join the conversation among the real estate people and our media partners:

Equities.com, CrowdsUnite, Crowdfund Beat, Real Estate Investors Beat, Inman News, Bankless Times, and CoAssets

To register and for more details on the conference:

http://thesoholoft.com/conferences/global-real-estate-crowdfunding-conference-ii-new-york-city/

Watch for more conferences happening across the country and around the world by The Soho Loft. The next one may be in your city.

Visit www.thesoholoft.com/upcoming-conferences for more information.

About The Soho Loft  (www.thesoholoft.com)

The Soho Loft – The Voice of Capital Formation – is a global financial media company with three divisions in Corporate Communications, Publishing and Expos  & Events.

TSL Corporate Communications division handles Public Relations, Investor Relations and Social Media Marketing for its clients. TSL Expos & Events division organizes up to 200+ investor-focused events annually and TSL Publishing division produces financial and entrepreneurial content that is published and syndicated in  100+ leading online publications and growing.

As The Voice of Capital Formation, The Soho Loft Media Group  is your global communications partner for your equity and investment strategies.

MEDIA CONTACT:

Victoria Global (www.victoriaglobal.co)

Victoria Global is your leading content and communications marketing partner with expertise and network in both institutional investing and crowd financing. With a history deeply intertwined with financial innovation, Victoria Global offers an integrated approach to cutting edge public and investor relations using balanced and multi-tiered systems and strategies.

The Victoria Global integrated approach is a balanced approach: Combining thought leadership and  targeted engagement to drive a positive, sustainable and long-term impact to building brand awareness and loyalty.

The Victoria Global integrated approach is a multi-tiered approach: Linking traditional media channels and strategic optimization of new media like  blogger outreach, social networks, platforms and technologies to propel a creative, organic and solid growth to customer and audience engagement.

As your leading content and communications marketing partner, Victoria Global is all about knowing and connecting with your crowd.

David Drake + 1 917 578 9069

+1 212 845 9652

The article originally appears at: http://globenewswire.com/news-release/2014/04/22/628547/10077649/en/Trump-Mondrian-Hotels-Abu-Dhabi-and-Brunei-Peninsula-Hotel-Representatives-join-Global-Real-Estate-Crowdfunding-Conference-II-in-New-York-CrowdFundRealty.html#sthash.qiSdn3uv.dpuf

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Syndicated Equity Crowdfunding for Startups takes off in UK & Europe

David-Drake-CEO-LDJ-CapitalThe following guest post is by David Drake, founder and chairman of LDJ Capital, a New York City private equity firm, and The Soho Loft, a financial media company.

How does one become an angel investor?

There is no university where one can learn angel investing. However, crowdfunding is creating a unique path for learning through a system calledsyndicate funding. A growing trend in the U.K. and other parts of Europe, such as Belgium and Italy, this system allows professional business angels and crowd investors to participate on the same deals.

Syndicate Room (SR) and the Cambridge Capital Group (CCG) joined together third quarter of this year to leverage crowdfunding for the first time. CCG, an ultra-exclusive by-invitation business angel group of around 50 investors and private venture funds that annually invest £1-2 million each to its current portfolio of more than 30 high-tech start-up companies, became lead investors to Syndicate Room’s member investors.

Cambridge Capital Group

Cambridge Capital Group

“Membership in Syndicate Room is free,” says its founder and CEO Goncalo de Vasconcelos. As an SR investor, the member can invest as little as £500 ($800) directly into real business angel investments.

The site launched its online presence last August and recently closed its first deal with a £590,000 ($960,000) investment in Eagle Genomics. The lead investor, requesting anonymity, led the round with £300,000 ($480,000). Syndicate Room’s requirement is that a lead investor, or investors, puts in a minimum £50,000 ($80,000), or 25% of the company value, whichever is lower. Ideally, its focus are on firms in need of £500,000 to £1,000,000 ($800,000-$1,600,000).

While Syndicate Room investors will not be able to influence a startup company’s direction and strategy, they will get exactly the same economic deal, as well as make the same profit pound for pound, as the experienced and larger business angels of CCG.

Knowing that these angel investors only invest their own money into businesses they believe will give them a great return, it’s only smart for the crowd to follow where the angels lead. With their professional guidance, due diligence is done and deal quality is increased with proper valuations in place.

Angel networks benefit from this setup as this allows them to invest comfortably in a single deal while having a crowd of small investors to fill up the rest of the amount needed for seed funding.

The platform also allows the angel networks to find and train new angels from the crowd. Investors from the crowd will eventually learn the ropes, become angel investors themselves, and join the angel networks.

When angels get involved with crowdfunding platforms and in systems like syndicate funding, they take a proactive step in growing the angel network globally.
Are you joining to become one?

You can reach Drake directly at David@LDJCapital.com.

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US Crowdfunding expands into Real Estate – Community rallies to save old San Francisco book store

Community participation will help stabilize the neighborhood an insure the future of this landmark renowned for hosting many jazz and literary greats.

Crowdfunding is one of the latest methods of raising capital to start businesses, finance projects or fund causes.  Ushered in by Internet technology and powered by online social networks, this new source of capital is significantly transforming the business landscape of the United States.

Marcus-Bookstores-SanFransicso-Crowdfunding - Credit http://iconoclastproductions.wordpress.com/

Marcus-Bookstores-SanFransicso-Crowdfunding – Credit http://iconoclastproductions.wordpress.com/

One such project is Marcus Books, the oldest family-owned African-American bookstore in the United States. Established in 1960 in the Jimbo’s Bop City Building at 1712 Fillmore Street in San Francisco’s Fillmore District, Marcus Books is a historic landmark renowned for hosting many jazz and literary greats.  Above the commercial bookstore are two large Victorian-era flats.Unfortunately, one of the family members who had a majority ownership in the building went bankrupt and decided to sell.  The present owner of the building is offering Marcus Books the chance to purchase the property or to vacate the premises.

Marcus Books is seeking help from the community offering the opportunity to purchase a stake in the property at its present market value of $2,600,000. This will make it a community-owned property, and therefore everybody is expected to benefit from it in it one way or the other.

According to the plan, Marcus Books is expanding into a 501(c) 3 non-profit cultural institution.  This expansion is aimed at maintaining the legacy of Marcus Books in the community.

Community participation is needed to ensure that Marcus Books is maintained in the building and that the two residential flats upstairs are properly renovated so as to offer affordable housing to lower-income families.

Several community-based non-profit organizations have shown interest in purchasing the bookstore.  A primary loan of $1,650,000 has already been approved by Westside Community Services, which is a local community-based non-profit organization. The shortfall of approximately $1,000,000 will be raised through Fundrise.com, a leading real estate crowdfunding platform, and should be in before the 28th February 2014, the deadline by which San Francisco Community Land Trust must have completed the purchase of the property.

Tracy Parent, the organization director of San Francisco Community Land Trust, said that this investment is going to yield a 4% annual return in the next two years. This is definitely something that is worth the community’s investment. Tracy, however, emphasized that there are still many things to be done for this project to be successful. The ultimate goal is to ensure that this highly valued cultural institution maintains its presence and popularity at the centre of Fillmore community.

The main effort behind the purchase of the old Marcus Books and the residential flats is to try to stabilize lower-income households within Fillmore Commercial District, where rising rents and rate of evictions are causing displacement of people. This has a general impact on the social, cultural and economic cohesion of the society. By stabilizing the housing industry, more lives will be impacted positively, and people’s lives will improve regardless of their income class.

Daniel Miller, the co-founder of Fundrise.com, said that this investment will stabilize a community property by providing affordable housing to tenants and also continue to host the historic Marcus Books, which is the oldest African American bookstore in the nation.  Although the investment return is below the current rates in the real estate industry, he said that its great and lasting social impact to the community as a whole more than makes up for it.

When the project is completed, housing will become permanently affordable for families at a monthly rent of $2,400 per unit. Marcus Books stays for good, remaining an icon, an avenue for children and families to learn together, socialize and strengthen community life.

To learn how to participate in this campaign, please visit www.fundrise.com for more details.

David Drake - CEO - LDJ Capital - Credit Linkedin.com

David Drake – CEO – LDJ Capital – Credit Linkedin.com

David Drake is an early-stage equity expert and the founder and chairman of LDJ Capital, a New York City private equity advisory firm, and The Soho Loft – The Voice of Capital Formation – a global financial media company with divisions in Corporate Communications, Publishing and Expos. Contact David at David@LDJCapital.com.

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The Economics of Immigration – US has a similar problem to Australia

David-Drake-CEO-LDJ-Capital

David-Drake-CEO LDJ Capital

David Drake is founder of LDJ Capital and The Soho Loft and a fervent Jobs Act Advocate. Opinions expressed here are entirely his own (but I happen to agree with them) Ed: The problem stated by David is in my opinion one of the major problems Australia faces in creating new enterprises and innovation, we have experienced a net migration loss of both inventors and entrepreneurs for much of the last decade, see the article I wrote on Australia’s Net Inventor Loss – a must read for both sides of politics . If Australia wants to be competitive they should look to Singapore who will give you a visa if you have a valid business plan, we should also be stapling a permanent residency visa to every Masters and PhD that our foreign students receive and provide a fast track entry for anyone in the world who has Masters or PhD and anyone in the world who can present a valid business plan. Singapore and others are going to wipe the floor with Australia in attracting the best talent to start new businesses.    We need to retain brain capital in the U.S. as the foreign nationals who exit our universities with graduate degrees are currently not allowed to stay. Entrepreneurs return home and end up competing with American companies – removing potential jobs that should be kept in the U.S. Foreign Harvard graduates who partner with peer entrepreneurs are 21% more likely to see their startups exit versus 15% of graduates without a graduate school partner.

Ellis Island

Ellis Island – Credit Ellisisland.org

This statistic suggests something of the value of both collaboration and of the intellectual capital and drive international postgraduate students bring to our economy. Encouraging foreign postgraduate entrepreneurs to stay in the U.S. and build businesses here is a hot topic at the moment because we are facing the start of negotiations in both houses in January around a comprehensive immigration bill that President Barack Obama is seeking. Several reforms to immigration law have been proposed in the last four years. The Startup Visa proposal by Senator John Kerry looked to allow investments of $250,000 by VCs to allow foreign nationals temporary green card visas to stay and build startups in the U.S. These were intended to turn into permanent visas after the startups show at least five full time employed U.S. jobs were created within two years. However, since Senators Kerry and Lugar are both out of the Senate for next term, there’s no stand alone startup visa bill — it is the view of key immigration reform leader, Craig Montuori, that “the Kerry-Lugar Startup Visa Act will almost certainly not be reintroduced in the Senate in 2013.” Another bill proposed by Sen. Jerry Moran (R-KS) and Sen. Mark Warner (D-VA) is the Startup Act 2.0 and it may yet form the final blueprint for change (see summary at end of article). Indeed, Craig Montuori terms the Moran/Warner plan, “the primary bill for startup visa supporters.” The STEM green card program is another program getting a lot of attention. It allows Ph.D. level foreign nationals studying engineering in the U.S. to get temporary visas to stay. The message is clear – immigrants are eager to contribute to our economy. Foreigners and the brightest of those abroad want our opportunities and these bills to be discussed this winter will allow the investor and VC community to gain access to these highly motivated entrepreneurs who want to stay in the U.S. after their postgraduate work is finished. The Commerce Department’s goal is also to attract startups and brain capital from abroad to the U.S. as well as foreign investments into the U.S. The Startup Visa would accomplish both. In his Ph.D. on entrepreneurial success, Hoan Lee at Harvard Business School found that graduate level entrepreneurs that partner up with peer colleagues from graduate school have a 21% likelihood of an IPO exit compared with those that do not (15%). Lee also found that, “Being socially connected to peer venture capital firms and private equity seeking startups leads to more deal flow, larger asset under management and better performance in the inaugural funds of HBS-executive run venture capital firms.” This study was not exclusive to foreign students, but it does make clear the centrality of pairing up potential entrepreneurs with other entrepreneurs and venture capital sources – of social networks – to achieve business success. Stories of bright and brilliant startups that created U.S. jobs (or have the potential to create U.S. employment) but which are lead by foreign nationals who cannot enter the U.S. or who are facing deportation were frequent last year. Ankush Aggarwal is one example of an entrepreneur the U.S. has not retained – even though he is open to holding a U.S. visa to accelerate the growth of his businesses. Aggarwal received his MBA in International Business from Pepperdine University in Malibu, California, lives in Chandigarh, India and regularly visits the U.S. on a business visa. His two internet sites, www.spicylegs.com and www.partybell.com, feature products sourced from the U.S., and almost all his customers are in the US (95%). His company, Northern Planet LLC, has 25 employees in India and one part-time worker in the U.S. Another excluded entrepreneur is Asaf Darash, an Israeli whose U.S. software company, Regpack, is growing rapidly. Regpack employs 19 Americans and raised $1.5 million in financing. Born in Israel, raised in Australia and now seeking to live in San Francisco, Darash used his Fulbright scholarship to spend three years at the University of California, Berkeley while working on his thesis. Even though he attempted to meet the federal government’s requirements when applying for his H1-B visa, a minor error meant that he had to return to Israel last October. As Inc.com’s Eric Markowitz’s article on the case began, “Wait, Don’t We Want This Guy?” The EB5 program has been in place since 1990 and has allocated approximately 10,000 visas annually. The program remains inefficient. The recent EB6 proposal would allow unused EB5 visas to be utilized by creating new criteria otherwise not obtainable through the EB5 program. Significantly, in the last year there were almost 8,000 applicants for an EB5, so that potential reallocation pool is currently quite small, even if the EB6 visa gets off the ground. Mathew Charnay, Managing Director of the International Development Expansion Organization, has led a trend of innovative EB5 visas. He has described the EB5 program as one of a few creative measures implemented by legislation that are at the forefront of redeveloping the economic infrastructure in the U.S. My personal investments continue to develop creative measures within legislation, sophisticated finance and integrated global marketing which are all focused on capital growth and improving job creation within the U.S. economy. With the fiscal cliff having been resolved, the EB5 program continues to be the most viable solution to remaining fiscal uncertainty in the U.S. EB5 application numbers have recently doubled this year and have not reached such heights since 2006, and 2008. With most surges in the EB5 program occurring towards Q2 and Q3 of each year, EB5 analysts like Charnay must continue to implement significant research towards filling voids in far reaching programs like the EB5 as well as continued efforts within legislature. Significant marketing ingenuity of the EB5 program and other fiscally forward legislature is required in order to fill the gaps within the economic infrastructure of the U.S. marketplace. Chart: Rising support in both Houses of Congress for Startup Visa. Source: Craig Montuori President Obama wants a complete overhaul of the immigration program and we are seeing drafting of immigration policies occurring ahead of the opening of the Senate and House of Representatives Jan. 16, 2013. In Congress, immigration discussion occurs within the House and Senate Judiciary Committees. The former will be led by Rep. Bob Goodlatte (R-VA, Roanoke), who is the father of a Facebook employee, while the latter continues to be led by Sen. Patrick Leahy (D-VT), who was the sponsor of the EB-5 provision in the 1990 immigration reform bill. The immigration subcommittee on the House side is not clear at this point, but on the Senate side, it will almost certainly be lead by Sen. Schumer again. Sen. Schumer is also the lead Democrat on messaging and has replaced Sen. Bob Menendez (D-NJ) as the Senate Democrats’ point person on immigration. Craig Montuori maintains, “Comprehensive Immigration Reform is the President’s top priority for 2013, so the White House wants us to contribute to the overall push for Comprehensive Reform. The Startup Act signals support for high-skilled reform within the larger comprehensive package.” He is critical of Senator Menendez for not including high-skilled reform as part of the comprehensive immigration reform bills he introduced, even after President Obama supported high-skilled reform in his speeches and blueprint. “So we need a guarantee from Schumer, as the new architect of comprehensive immigration reform, that we’ll be part of the proposed package,” Montuori says. “Remember that a key talking point for the President on the campaign was that high-skilled immigration reform is an important component that will contribute to American economic growth, towards a 21st century economy that’s built to last.” In a speech on the floor of the Senate, Senator Moran, one of the proposers of Startup Act 2.0, summed up the urgency of the need for the bill – “The future of our country’s economic competitiveness depends on America winning the global battle for talent. The Department of Commerce projects STEM jobs to grow by 17 percent in the years ahead. We have to retain more of the highly-skilled and talented individuals we educate in America to remain competitive in the global economy. Doing so will fuel American economic growth and result in the creation of jobs for more Americans.” David Drake is founder of LDJ Capital and The Soho Loft and a fervent Jobs Act Advocate. Opinions expressed here are entirely his own.

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The Emerging Trend in Entertainment: Crowdfunding

Adam & Zack Braff - Credit Kickstarter.com

Adam & Zack Braff – Credit Kickstarter.com

Look at Scrubs star Zach Braff who, after appealing to his fans to support his indie film “Wish I Was Here,” raised more than $2 million in less than 30 days on crowdfunding site Kickstarter.

When its TV network canceled the show “Veronica Mars,” creator Rob Thomas wrote a film script to continue the series. Warner Bros. passed on the project—so Thomas and star Kristen Bell took to crowdfunding and raised $5.7 million in 30 days.
Crowdfunding in Entertainment

Online crowdfunding can be traced back to 1997, when UK band Marillion asked fans to donate $60,000 for its US tour over the internet—in effect pioneering crowdfunding.

 

“Wish I Was Here” Wins

The passionate support of Zach Braff’s fans is what actually enabled him to raise the bar, getting about $8 million in additional funding, not just domestically but also from international sources like Cannes financiers. Although the inclusion of international investors brought criticisms from his fans, Braff explained that the funds they brought will enable him to fulfill his plans for the movie.

While Braff is engaging and funny on his Kickstarter video campaign, he gets serious with one of his posts on his Kickstarter page.

“I’m sorry for the hoopla,” he wrote. “I’m sorry if your friends think you’ve been duped. But you haven’t been. This is real. Crowdsourcing films is here to stay.”

Veronica Mars - Credit Kickstarter.com

Veronica Mars – Credit Kickstarter.com

Victory for “Veronica Mars”

The Veronica Mars Movie Project ran from March 13 to April 12, 2013, with a goal of $2 million. It was such a smashing success that it set Kickstarter records for:

All-time highest-funded project in the film category.

Fastest project to reach its goal ($2 million in 12 hours)

All-time highest number of backers (91,585, who raised $5,702,153).

Picture Courtesy of Digital Spy

Jennifer Lawrence – Picture Courtesy of Digital Spy

Silver Linings Playbook, released in 2012, was also financed through crowdfunding—and proved to be both a critical and commercial success. It received nominations from the Academy and Golden Globe Awards, among others, and star Jennifer Lawrence won Best Actress. It was also a blockbuster hit, taking in more than $235 million—11 times its budget.

No Guarantees

Not every crowdfunding project is a winner, though, as former Sabrina the Teenage Witch, Melissa Joan Hart, found out the hard way last week. After asking her fans to “help prove to people that I’m more than just Clarissa or Sabrina,” she had to cancel her month-old Kickstarter campaign to raise $2 million when she came up $1.95 million short.

The Future of Crowdfunding

The power of the fan base has never been tapped with “the ask,” as musician Amanda Palmer succinctly notes in her Ted talks. So on April 30, 2012, she launched a campaign on Kickstarter where fans can download her music for as little as $1. In a month, she raised $1.1 million from 24,000 backers.

Crowdfunding is just that: It’s extending the ask, subtly or not so subtly, and having fans respond. It’s all done online; the asking is free, and the reach is global. The sites take their cut (5%-15%) only after you get your money.

Where historically fans have only been asked to buy a ticket for a show, now they can play a creative role themselves, financing and marketing the films and the stars they believe in. This is the ask at work, empowering your fan base.

But you must build a very strong connection with your fans (like Braff did), or your ask will not be noted (like what happened to Hart).

Producers and directors this year will be resurrecting failed TV shows for the large screen, and crowdfunding is one powerful tool when you need to ask for help. And best of all, you don’t have to give up one single share of stock or profit.

What do you think your “ask” could be, or should be?

About the Author:

David Drake - CEO - LDJ Capital - Credit Linkedin.com

David Drake – CEO – LDJ Capital – Credit Linkedin.com

David Drake is an early-stage equity expert and the founder and chairman of LDJ Capital, a New York City private equity firm, and The Soho Loft, a global event-driven financial media company helping firms and funds advertise for investors. He is running the Real Estate Investing and Leading Crowdfunding Conference in NYC on Nov 14, 2013. Listen to him speak together with Keynotes Dennis Irvin of Rockefeller Group and Barry Sternlicht of Starwood Capital. Check out: https://thesoholoft-real-estate-investing-newyork.eventbrite.com/. You can reach him directly at David@LDJCapital.com

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