Will Crowdfunding and General Solicitation Change How Companies Raise Capital? [e298‪]‬ Legally Sound Smart Business by Pasha Law PC

Nasir and Matt return to discuss the different options available to companies looking to raise funds through general solicitation and crowdfunding. They discuss the rules associated with the various offerings under SEC regulations and state laws, as well as more informal arrangements. The two also discuss the intriguing story about a couple who raised over $400,000 for a homeless man only to allegedly keep the funds for themselves.



Full Podcast Transcript

NASIR: Hi, and welcome to our podcast.My name is Nasir Pasha.



MATT: And I’m Matt Staub.We’re two attorneys here with Pasha Law, practicing in California, Texas, New York, and Illinois.



NASIR: And this is where we cover business in the news and add our legal twist to that news.Legally Sound Smart Business – we’ve been doing this podcast for now, I don’t know, I feel like it’s been like five, ten thousand years, something like that.



MATT: Well, I don’t know if those numbers are accurate, but there’s a recent story how the podcast industry is oversaturated which I would probably agree with because now everyone and their pets have a podcast.When we started doing it, I mean, we weren’t—



NASIR: It was novel at the time, but now it’s like everyone has a podcast.You know, we still get a lot of listeners, so why not?



MATT: Yeah, sure.That’s the thing. The market’s over-saturated, but there’s not a lot of podcasts – not in our category, I guess you could say. You know, not everyone is as charismatic as you and I are.



NASIR: Ah, yeah.Unlike other attorneys, we actually have lives and want to do something else other than write contracts and review contracts all day. Maybe that’s what it is. But we enjoy our work, so that’s why, I think.



MATT: Yeah, no complaints.



NASIR: Well, anyway, today is a tough topic because it’s a little kind of technical, so I don’t want to make it too dry. But, at the same time, it’s pretty relevant to so many of our clients in the sense that this is a pretty prominent issue, and that is raising capital for your company – whether you’re an early startup or really well into your road – what are your options out there and talking about what’s going on with crowdfunding and kind of give it a quick update in that regard as well.



MATT: Sure.Like you said, it can get pretty complex, pretty technical, so what we’re going to do – and I’ll start off with a recent story.



NASIR: Should we just start out by reading the statute? Regulation 506(b) says…



MATT: Now, I’m pretty sure, I’m going to say wit pretty strong confidence, there’s no podcast that does that, but I guess I could be wrong.



NASIR: We could be the first.



MATT: There’s a story – by the time this comes out, there might be an update, they’re just kind of waiting – there hasn’t been anything recent in at least about a month or so since we’re recording right now, but the story I’m talking about – and maybe the listeners saw it – I’ll try to summarize it here.It was a fairly young woman that was driving at night in Philadelphia. Car ran out of gas. She didn’t have any way to get gas, and no Triple A or anything like that. A homeless man happened to be around. He had only $20.00 to his name. He offered to give it to her. She was able to buy gas and get home. Really nice gesture.What ensues from there is what gets interesting.This woman Kate McClure and her boyfriend Mark D’Amico started a GoFundMe page to try to raise – at the time - $10,000 for this good Samaritan that gave his last dollars to this woman that was stranded on the highway. They started the page. The goal was $10,000. It got all the way up to over $400,000. They stopped it at that point just because it was just getting out of control.For those of you that are not familiar with how GoFundMe works, anyone can donate money and it goes into this pool.