Lendingclouds.com Entrepreneur Comes Up with a Unique Royalty-Based Alternative Crowdfunding Platform

Entrepreneur Barry Rickert has created Lendingclouds.com, which is believed to be the first Crowdfunding website that is actually doing business legally. The model is unique because it combines a royalty-based, crowdfunding investment club and small business financing in a way that eliminates many of the obstacles that have previously left both small business owners and investors leery. The system provides exclusive investment opportunities to members who bring as little as $100 to the table, allowing members to spread their funds amongst many different royalty-based investments that begin making payments back to investors within 60 to 90 days.

Not every entrepreneur is sitting around waiting on the Securities and Exchange Commission to finalize the rules on equity-based crowdfunding. Barry Rickert, Founder and President of Lendingclouds.com and a 40-year veteran of private equity investing, has launched a royalty-based, crowdfunding investment club web portal that is a marketplace for the mutual benefit of small businesses and investors. LendingClouds.com is believed to be the first Crowdfunding website that is actually doing business legally.

Rickert has managed to eliminate many of the obstacles that have previously left both small business owners and investors leery. The combination of royalty based small business financing offers no debt and no personal guarantees to small business that need capital to grow, while at the same time giving investors access to high yield investments that pay immediate income. It’s really quite ingenious. The members only, online Crowdfunding Investment store brings together entrepreneurs and investors in a unique manner designed to benefit both. The funding group provides exclusive investment opportunities to members who bring as little as $100 to the table. Lending Clouds does this by accepting applications from entrepreneurs, which once approved, are offered to investors.

Investor members participate in what is known as crowdfunding. Rickert’s form of crowdfunding is focused on pooling resources to invest funds in new businesses, products and ideas that provide royalty based returns. Members are able to spread their funds amongst many different investments, which lessens their risk. Returns of 25%+ are expected on successful ventures. In 20 years, this can result in a $5,000 investment paying $1 million.

“We’re looking forward to working we people who have never invested before,” says Lending Clouds President, Barry Rickert, “and who may have a few hundred dollars or more to put towards various projects and products. There are a few unique aspects to Lending Clouds and crowdfunding, which makes us especially attractive to investors and entrepreneurs.” Rickert adds, “Unlike the stock market, investors don’t need a lot of money, and they start to see payments come back to them within 60 to 90 days.”

Members have access to exclusive listings posted on the Lending Clouds online store. They may read through the various opportunities and decide to put money in one or more projects. Once all funding is in place, an Investment Club is created as the vehicle for making the group investment. The club money is released to the user/grantee (entrepreneur) in return for a royalty agreement that details the product or service to be sold and the royalty to be paid over the term of the agreement. Investors start to receive payments as per the agreement between the user/grantee and grantor/investor usually within 30-90 days.

Rickert notes, “The opportunities we are providing investors with are easier to understand than stock offerings, with terms explicitly stated. Our investment opportunities are for expansion and growth with entities that are already established and familiar to our investors. This also helps to lessen risk.” He observes, “Grantees are looking for as little as $25,000 and as much as $2 million, with the average fund being capitalized at about $100,000. An investor can put as little as $100 into a fund."

Crowdfunding is considered to be attractive to both investors and entrepreneurs. Investors are seldom able to buy into Wall Street IPOs at their initial offering prices and those who wish to raise funds publicly must pay millions in fees to banks, brokers and attorneys. Lending Clouds has simplified the process, focused investment opportunities and created a method for distributing the risk and providing an early profit stream.

As part of Rickert’s lean startup strategy, he is giving away a significant number of $100 credits to new members, with no strings attached. About the only catch (if you can call it a catch) is that investors must pick an investment that gets funded. However, if it doesn’t, they’re free to use the funds to pick another investment. Rickert also states that while the offerings are very small today, he has some million dollar deals in the pipeline.

The company has also announced that it is now seeking and taking applications from those seeking funding and those wanting to invest.

About the company:

Lending Clouds (http://Lendingclouds.com), a Lending Clouds, Inc. company which connects entrepreneurs with investors in order to help new and established companies grow and investors realize a profit. Utilizing the concept of crowdfunding, which is designed to lessen risk for investors, and structured and royalty payments, which offers investors income returns quickly, Lending Clouds has defined itself as an innovative enterprise devoted to the fiscal health of businesses and those investing in them. Both entrepreneurs/grantees and investors/grantors are welcome and encouraged to contact Lending Clouds to discuss opportunities.

Barry Rickert 
Lending Clouds 
(804) 491-9722
Email: barry@lendingclouds.com: 

Follow us on:   

Are you Addicted to Crowdfunding? Probably Not

Do crowdfunding campaigns cause addiction?

Venture Beat columnist Christina Farr addresses this question in her recent article about “serial backers” – Kickstarter backers who pledge toward dozens, even hundreds, of Kickstarter projects at a time.

The article raises the possibility that backing Kickstarter projects has the same addictive quality as gambling; backers get a thrill out of picking the projects that they think will succeed. They click the refresh button over and over to stay updated, and heart rates rise as backers watch the close calls that barely make, or miss, their funding targets.

Serial backers cite a few motivations for pledging to so many projects. Some explain that they want to own the next new game or product. Even more of them, though, discuss how good it feels to support communities they care about: their local community, or the gaming community, or the startup community as a whole. That relatedness represents a major driver for Kickstarter’s most prolific users.

Joshua Rogers, a serial backer interviewed in the article, exemplifies a Kickstarter user who backs projects out of solidarity with a community. He focuses his funding on projects in his Chicago neighborhood and in game projects that interest him.

Will we see “serial investors” emerge in equity crowdfunding?

Several similarities between Kickstarter and equity crowdfunding platforms suggest that we will. First, equity crowdfunding features individuals and teams with ambitious projects that need funding. Though donation or reward-based crowdfunding fits a different set of ambitious projects than equity-based crowdfunding does, all types of crowdfunding share the high-risk, high-reward entrepreneurial environment. Investors enjoy trying to mitigate their risk by picking the right investments so they can walk away with the high rewards.

More importantly, though, crowdfunding investors and Kickstarter backers share a motivation to be a part of something larger than themselves; they relate to the gaming community, or the bicycling community, or their neighborhood, and they want to support the businesses that grow in that community.

Equity-based crowdfunding discourages impulsive serial investing, though.

First, equity-based crowdfunding campaigns support companies, not individual projects. So they don’t feature a physical thing that someone might buy on impulse if they happen to see it in the grocery store. A company might fund its business development goals through equity-based crowdfunding and cover the initial production costs of individual products through Kickstarter. For example, Nevermore Games, an independent game publishing company based in Richmond, VA, funded their game project called Mars Needs Mechanics on Kickstarter two days ago. The company itself, though, produces other games as well, like Utopia Engine and (upcoming) Chicken Caesar.

Second, investors buy a relationship with a company – potentially a long-term relationship. That relationship yields monetary returns after a year, or several years – but not a few months like some Kickstarter projects. As a result, people will approach investment with the intention to analyze their choices.

And if investors are smart, then serial investing will be more common than serial backing on Kickstarter.

The buys won’t be impulsive, Instead, investors will mitigate their risks by diversifying – by investing in a bunch of different things at once. And that’s a smart investment decision.

It’s funny that serial backing gets framed as a dangerous, addictive behavior, when the same behavior among investors is considered normal and desirable.

That’s not really fair to serial backers. Some of them might back things impulsively, but others might look at serial backing as a type of diversification.

Suppose a serial backer of board games is willing to pay $120 for a brilliant board game. He puts $40 into each of three different board games on Kickstarter. If just one of those board games gets produced and he gets one as a reward, even if he doesn’t demand a refund from the failed board games (which Kickstarter backers sometimes do), then the backer gets what he needs to be happy with the amount of money he spent. This backer strikes a balance between the likelihood that he gets a board game and the opportunity to lend a hand to new, fresh games and game designers. Maybe serial backing mitigates backers’ material
risks while allowing them to enjoy the reward of knowing that they helped someone create something new and special.

Maybe that’s just the calculus of philanthropic values, and it looks absolutely nothing like gambling or addiction at all.

Occasionally, we republish blog posts, press releases and other commentaries of interest to our community. This piece By Chelsea Dommert, appeared on EarlyShares.com

The Small Business Challenge Competition Looks for Companies That Show the Most Potential to Create Jobs in America

Equity Based Crowdfunding platform, EarlyShares sponsors the competition, which will award $50,000 to the top three companies that demonstrate the most promise for business growth and economic stimulation

Do you know a small business that can benefit from free cash?    The Small Business Challenge℠ will award a total of $50,000 in cash and advertising to three small businesses in order to create more jobs in the USA. It’s free to enter, and it takes less than a minute!  Click below to register or nominate your favorite small business through October 31st.   Every vote counts in this competition, so if you register, be sure to share the news with your entire network. Click here for ideas on getting the word out. For more information about the Small Business Challenge℠ visit our website www.smbchallenge.com. We look forward to making small businesses flourish! Thank you,   The Small Business Challenge Team

JOBS Act Update: Equity Crowdfunding Will Have to Wait

Submitted by Paul Winkle

Navocate Business Sales

 

The JOBS Act, signed into law April 5th, 2012 by President Obama has eight Titles (parts).  Title III – Crowdfunding allows businesses (Issuers) to raise small dollar amounts from many investors (the crowd) though registered websites, called funding portals, in return for securities.  While most people have heard of the JOBS Act, they remain unfamiliar with a component which is poised to allow American entrepreneurs and business owners create American jobs.  Wikipedia states: “The Jumpstart Our Business Startups Act or JOBS Act is a law intended to encourage funding of United States small businesses by easing various securities regulations.”

Rule 506 is of particular importance to crowdfunding. When The JOBS Act was enacted, it directed the Securities and Exchange Commission to remove the prohibitions on general solicitation or general advertising for securities offerings relying on Rule 506. By requiring the SEC to remove these restrictions, Congress sought to make it easier for companies to inform the public that they are seeking to raise capital through the sale of securities.

Yesterday, the SEC met to “consider whether to propose rules to eliminate the prohibition against general solicitation and general advertising in securities offerings conducted pursuant to Rule 506 of Regulation D under the Securities Act and Rule 144A under the Securities Act, as mandated by Section 201(a) of the Jumpstart Our Business Startups Act.”

During the 45 minutes meeting, the majority of commissioners voted in favor of proposing rules to eliminate the prohibition against general solicitation and general advertising in rule 506 and rule 144a offerings.

Commissioners Paredes and Gallagher, who both voted in favor of proposing rules, commended the Division of Corporate Finance for their hard work but also voiced concern about the delays in promulgating the rules. Both commissioners had expected interim final rules be in place already to allow Issuers capital access under the Title II of the JOBS Act.

The SEC missed the first deadline of July 4th prescribed in the Act to enact rules. Furthermore the Commission elected to vote on proposed rules yesterday instead of enacting interim final rules.  Yesterday’s topics were originally scheduled to be discussed August 22nd.

The Commission will seek public comment on the proposed rules for 30 days prior to promulgating final or interim final rules.  Representatives from the Division of Corporation Finance expressed an interest in public comments particularly involving the approach an Issuer would be required to use to verify accredited investor status.

Charles Kwon from the Commission’s Division of Corporation Finance proposed Issuers be provided flexibility in determining if an investor is accredited.  Issuers would be required to take “reasonable steps” to verify that purchasers of the securities are accredited investors and should  consider the facts and circumstances of the transaction.  Mr. Kwon stated an issuer be objective when determining the accredited nature of the purchaser.  Some criteria he mentioned the Commission may use to determine if an Issuer took reasonable steps in that determination are:

• The amount and type of information that the issuer has about the purchaser.
• Type of purchaser (accredited, institutional, etc.) that the purchaser claims to be.
• Terms of investment, such as a minimum investment amount.
• Method used to solicit purchaser.

Further recommendation was made that the Commission not require a specific verification method or use a non-exclusive list since it would be impractical and overly burdensome and might lead to a standardized form.

A current verification method used to determine if an investor is accredited is a self-authenticating questionnaire which is sent to the purchaser by the issuer or representative of the issuer.  A full definition of accredited investor.

It’s easy to understand why entrepreneurs and small business owners remain confused about how they should proceed, and what steps they should begin addressing now, in order to be prepared to take advantage of equity crowdfunding. To help with that preparation, CrowdFundingRoadmap and Laughlin Associates are hosting a one of a kind Crowdfunding Bootcamp to prepare entrepreneurs with the key elements they need to be ready to crowdfund under the new crowdfunding bill. Details for the event can be found at Crowdfunding Bootcamp.

About Navocate

Navocate provides Business Sales and Acquisition services for Emerging Companies with revenues from $3M - $30M. Specifically, Navocate focuses on the market segment above business brokers, and below investment banks.

Why is mainstream media ignoring Equity Crowdfunding?

How many of you have actually seen a blurb on your local or national new channel, or even a VNR on Equity Crowdfunding?  Is it because businesses cannot legally raise monies via equity crowdfunding until the SEC promulgates rules early next year?

Engage in casual conversation with people you meet and ask if they have heard the term.  My experience shows that some have, most haven’t and those that have do not know much about it.

The JOBS Act, signed into law April 5th, 2012 by President Obama has eight Titles (parts).  Title III – Crowdfunding allows businesses (Issuers) to raise small dollar amounts from many investors (the crowd) though registered websites, called funding portals, in return for securities.  While most people have heard of the JOBS Act, they remain unfamiliar with a component which is poised to allow American entrepreneurs and business owners create American jobs.  Wikipedia states: “The Jumpstart Our Business Startups Act or JOBS Act is a law intended to encourage funding of United States small businesses by easing various securities regulations.”

So why, during a Presidential election year focused on the US economy and job creation, isn’t equity Crowdfunding being promoted?  The Act passed with bipartisan support from the House and Senate.

I would like to hear comments from potential Investors and Issuers (businesses wanting to Crowdfund) to some of the questions posed below.  Keep in mind, since the SEC has not yet promulgated rules for equity Crowdfunding, background information on each category below is subject to change:

Investors

Will you invest in Crowdfund companies?
What criteria will you use to select an investment via a registered Funding Portal (sector specific investments, past performance of portal, your own research)?
What are your thoughts on resale restrictions and lack of liquidity?

Specifically, what would you like to learn more about regarding equity Crowdfunding?

There are restrictions on the amount of money non-accredited investors can invest and on the aggregate amount invested:

Non-accredited investors can invest the greater of $2,000 or 5 percent of their annual income or net worth if either their annual income or  net worth is less than $100,000; and 10 percent of their annual income or net worth (not to exceed a maximum aggregate amount sold of $100,000), if either their annual income or net worth is equal to or more than $100,000.

You will not be able to readily sell your shares for a period of one year unless they are bought by an accredited investor, the issuer or under certain circumstances (death or divorce) a family member.

There may not be an established trading market after the one year holding period and therefore limited liquidity.

Issuers

Can you recite the current rules and regulations required for an Issuer to offer securities?
What is your plan for choosing a registered Funding Portal?

How will you value you company’s securities offered to satisfy regulations and not discourage subsequent financings?

Specifically, what would you like to learn more about regarding equity Crowdfunding?

The rules can be onerous for the unfamiliar.  As an Issuer, you are required to file with the SEC and provide to investors and the relevant broker or funding portal pertinent information about your company and its owners; describe the financial condition of your business, the amount you want to raise, the deadline for raising the funds and the price and terms of the securities being offered; explain how the securities being offered are being valued; define the risks to purchasers of the securities; only provide notices which direct investors to the funding portal or broker (e.g., you may not advertise the terms of the offering).  In addition you must be familiar with corporate governance and the financial statements reporting requirements.

That’s why it is important to start the education process early and align yourself with industry experts who can guide you and help manage the reporting requirements of the Act. Consider the long term picture too. Crowdfund Investing portals that have thoughtfully considered how to educate and align you, the owner, with capable experts will pay off. Select ones that can introduce you to Merger and Acquisition (m&a) firms that specialize in helping Emerging Companies. You will need their help securing future financing or negotiating and executing the sale of your company. This will help keep your new shareholders satisfied.

Current rules in the Act require issuers to make available to potential investors the price to the public of the securities or the method for determining the price, provided that, prior to sale, each investor shall be provided in writing the final price and all required disclosures, with a reasonable opportunity to rescind the commitment to purchase the securities. Issuers must also show how the securities being offered are being valued, and provide examples of methods for how such securities may be valued by the issuer in the future, including during subsequent corporate actions.

Navocate provides Business Sales and Acquisition services for Emerging Companies with revenues from $3M - $30M. Specifically, Navocate focuses on the market segment above business brokers, and below investment banks. For more information please visit www.navocate.com.

An Invitation to the Upcoming Equity Crowdfunding Bootcamp

If you’re an entrepreneur seeking funding, I have some great news!

I'm pleased to announce that Navocate plans to participate in the upcoming “Crowdfunding Bootcamp”.... A Conference and workshops for entrepreneurs to master the equity crowdfunding process!

Do you want to start a crowdfunding campaign? Have you ever wondered if you have a good enough idea or the determination it takes to launch a business and get the crowd to support your idea?

The Crowdfunding Investing Bootcamp is the FIRST event to immerse entrepreneurs in the best practices of the new regulations for Crowdfund Equity Investing. This is an innovative conference and bootcamp that bridges the best of a conference with practical hands-on access to lawyers, accountants, social media advisors, crowdfunding experts and other technology professionals.

Start understanding the intricacies of compliance requirements for Crowdfund Investing while connecting with the world's most sought-after community of Crowdfund Investing thought leaders, developers of new and emerging funding portals, and other service providers.

The new JOBS ACT imposes certain requirements for companies seeking to utilize the crowdfunding exemption. Will you be ready?

You have a very short window of time to run a crowdfund campaign, so preparation to be compliant, to build social capital and creative capital will lead you on the road to "Access Capital".

Learn how at this amazing Bootcamp where you can fine-tune your presentation with the help & assistance of industry experts who will help you master the crowdfund for equity process.

Take advantage of this rare and exclusive opportunity to collaborate face to face with the foremost funding portals in the crowdfunding industry. If you're serious about equity crowdfunding for your new start-up or existing business then this is the place to be! Gain insight, share ideas, learn about the facts and so much more!

Click Here

The Crowdfunding Bootcamp will be the first annual Crowdfunding Professional Association convention, and is scheduled for October 9 through the 11th, 2012, at the Ravella Resort and Spa in Lake Las Vegas, Nevada.

So what are you waiting for? Get your enterprise organized for equity crowdfunding success.

Just visit www.Navocate.com and click on the “Attend the Crowdfunding Bootcamp” link, or  click on the registration link to the right. Oh, and there’s one last item; if you sign up before August 1st, you’ll receive a One Hundred dollar discount on event access.