Trends Affecting Real Estate and Other Investments in 2015

According to PWC’s 2015 U.S. CEO Survey, CEO’s believe more opportunities exist today for their companies than was the case three short years ago.  The survey also suggests that CEOs outside the U.S. are looking to the U.S. more than any other market for their growth in 2015.

What are those CEOs – domestic and international – seeing? Let’s take a look at some of the trends that we expect to shape the 2015 investment year.

18-Hour Cities

Urbanization is a trend affecting everything from housing (condos, anyone?) to public infrastructure. If you’re 40 or over you likely remember that cities used to be places that buzzed with life from 9 to 5 and then quieted down as all the workers slipped back to their bedroom communities for dinner with the family. Today, more of those workers live within walking distance of their workplaces, and voila, we’re seeing the transformation of downtown cores with investments in retail, dining, housing and urban cores that suddenly boast high quality of life well past 5pm.

Mover Over Boomers, Here Come the Millennial

Boomers will still have a significant impact on investments and real estate development for about twenty years, but there’s a new cohort about to take over the lead demographic role in economic definition. As baby boomers die off, the millennial cohort is poised to become the largest living demographic cohort. This is the group, aged 18 to 34 in 2015, which will shape the economy the most in the next 20 – 40 years. Less affluent than their boomer parents, millennial will rent longer, postpone homeownership, and thus affect the real estate and development industries.

Disruptive Technology

Technological disruptions - Uber, crowdfunding and e-commerce are all examples – are increasingly viewed as an “adaptation challenge” and much less an “event” to be feared. New business environments and tools create and respond to new user demand as technology continues to push for changes in, among other things, real estate locations and usage of space.

Event Risk the New Normal

Geopolitical risks, natural disasters and global unrest are on the minds of most domestic investors, and as such, according to PwC, international investors (those international CEOs we referenced above) will likely be key to 2015 investment volume.

Housing Back to “Supply and Demand” Fundamentals
It appears the bubble and collapse are truly in the rearview mirror of the residential real estate industry, and consumer confidence in this sector is on the rise.

Expand your investment portfolio with confidence as an accredited investor. At VerifyInvestor.com, we help you self-verify confidentially, quickly, and cost-effectively.

Crowdfunding Sites for Startups

If you haven't yet tapped into the crowdfunding craze to help you raise money for your startup, it might be time. There are a few basics to understand before you decide which crowdfunding platform is the best for you to look for investors.

Equity and Reward

Rewards-based crowdfunding is the longest-running model, and involves the advance purchase of products and experiences or donations. In this model, funders aren't really “investors”, as they do not become “shareholders” in the traditional sense. Instead, they receive rewards for their advance purchase or donation. Equity crowdfunding is newer, enabled by Title II of the JOBS Act (and Title III, but that isn't yet effective), which now permits entrepreneurs to advertise publicly about their investment opportunity and investors to become shareholders and buy in online. The type of project or business idea that you have will dictate which type of crowdfunding campaign you launch, but here are some crowdfunding sites you need to know.

Kickstarter

By far one of the most well-known rewards-based crowdfunding sites, Kickstarter has been around since 2009 and has helped project owners raise more than $1 billion.

Indiegogo

Indiegogo is another rewards-based site but has a higher international profile than Kickstarter, and they are open to working with almost any type of project.

SeedInvest

A premier crowdfunding site focusing primarily on startups, SeedInvest is an investment, not a rewards based, crowdfunding platform. It’s not easy to get on. All startup investment opportunities are vetted by their investment team and must adhere to strict requirements -- only 2% of applying companies are accepted and made available for investment. What does that mean? It’s annoying to go through their process, but once you’re through, investors know that you’ve been pre-vetted.

Crowdfunder

Don’t want to go through extensive due diligence before listing your offering? Try one of the portals that believes that everyone should have an opportunity to list their deal. Crowdfunder is another investment crowdfunding platform and arguably boasts one of the fastest growing networks of investors. It has helped more than 22,000 companies raise more than $197 million.

EarlyShares

EarlyShares focuses on equity funding for small businesses in the U.S. “Rigorous selection criteria” are used to carefully review every investment opportunity and assess its return potential and viability. They don't accept just anyone – only 5 per cent of those applying are accepted on EarlyShares.

Fundable

Offering both rewards-based and equity-based crowdfunding campaigns for small businesses, Fundable also provides a series of guides to assist entrepreneurs who are starting and growing their companies.

EquityNet

Launched in 2005, EquityNet has been used by thousands of investors, incubators, entrepreneurs, and even government entities to raise money for privately-held businesses. Planning is a big focus at EquityNet, with tools that help entrepreneurs plan their campaigns and investors plan their opportunity assessment.

Crowdfunding, where you're generally solicit investors, requires businesses to verify that their investors are accredited investors. There's no better way to do this than VerifyInvestor.com, where we make it easy to verify accredited investor status.

Regulation A+: Investment Choices ↑, or Investor Protection ↓?

The Securities and Exchange Commission (SEC) anticipates stronger investor protections and more investor choice will result from its adoption of final rules for an updated and expanded Regulation A, as required by Title IV of the Jumpstart Our Business Startups (JOBS) Act.

$50 Million in 12-month Period
Smaller companies will soon be able to publicly sell and offer up to $50 million in securities in a 12-month timeframe, subject to disclosure, eligibility, and reporting requirements of course. The SEC believes this is a “workable path” to easing the process of raising capital that smaller companies may welcome, while still protecting investors.

State Regulators Unhappy
State securities regulators, and NASAA, the association that represents them, claim the rule strips investors of the important protections afforded by state securities regulators under so-called “Blue Sky Laws.” Their criticism springs from the new rule's “pre-emption” provision, which allows offerings to bypass state securities law qualification and review by state regulators. The SEC attempted to address this concern by limiting to pre-emption to “Tier 2” offerings as described below.

Two Tiers of Offerings
Regulation A+, as the new rules are often called, provides for two tiers of offerings:

• Tier 1: securities offerings up to $20 million in a 12-month timeframe, with not more than $6 million worth of offers from affiliates of the issuer that are selling security-holders.
• Tier 2: securities offerings up to $50 million in a 12-month timeframe, with not more than $15 million worth of offers from affiliates of the issuer that are selling security-holders.

Basic requirements for disclosure and issuer eligibility, as exist under the current provisions of Regulation A, apply to both tiers. However, Tier 2 offerings must include audited financial statements, and companies making Tier 2 offerings will have to file semiannual and annual reports with the SEC after the offering. For either tier the company must file an offering circular with the SEC for review and qualification, and companies proceeding under either tier may submit their draft offering circulars for non-public review by SEC staff before filing. Companies may still use solicitation materials after they've filed their electronic offering statement.

Pre-emption of state securities laws is available only for Tier 2 offerings. Companies offering $20 million or less in securities that seek to bypass state Blue Sky Laws may elect to make a Tier 2 offering.

As under the original regulation, an offering under Regulation A+ is considered a “public offering,” which means that securities purchased by non-affiliates will be freely tradable.

A Little Background on Regulation A
When a company sells or offers securities to potential investors, the Securities Act of 1933 requires the offer and sale be registered, or exempted from such registration. Regulation A has, since about 1936, been an exemption allowing up to $5 million in unregistered public offerings in any 12-month period.

While considered an exemption from registration, Regulation A has always had a “qualification” procedure involving submission to the SEC of a prescribed form of offering document, which is very much like the registration process. For that reason it has been thought of as “short form registration.” Because of those requirements as well as the low dollar ceiling and need to conform with state securities laws, Regulation A offerings have been quite rare in recent decades. Exemptions available for private offerings under the Securities Act have had much fewer regulatory requirements.

By greatly increasing the size of offerings permitted, allowing a bypass of state regulations and keeping regulatory requirements less onerous than full registration, the SEC staff believes that the adoption of Regulation A+ is an important step on the road to making it easier for smaller companies to raise capital.

VerifyInvestor.com offers simple, confidential and reliable processes that protect investors' confidential information while confirming them as accredited investors for companies raising private placement capital under Rule 506(c). Visit Verifyinvestor.com for more information.

Is Your Company Eligible for Registration Exemption Under Regulation A+?

Under the Securities and Exchange Commission's (SEC)'s newly-adopted final rules for an updated and expanded Regulation A (called Regulation A+), as required by Title IV of the Jumpstart our Business Startups (JOBS) Act, private companies will be permitted to make exempt public offerings of up to $50 million within any 12-month period. But not every company will be eligible for the exemption. Here's a brief look at who is eligible.

Location Eligibility

Exemption from registration will be limited to United States and Canadian companies. The issuer must be organized and have its principal place of business in either country. No other foreign companies will be eligible for exemption under Regulation A+.

Companies Ineligible

Regulation A+ exemptions would not be available to:

• Investment companies (including "business development companies")
• Companies that are already SEC reporting companies
• So-called "blank check" companies that don't have a business plan, or whose plan is simply to merge with or acquire another as-yet-identified company
• Certain companies issuing interests in mineral rights, gas, or oil
• Any company that has been subject to any order from the SEC under Section 12(j) of the Exchange Act (revoking registration for public trading) within the last 5 years
• Any company that has not, for the preceding two years, filed reports as required by the rules
• Any company that is disqualified as a "bad actor" because of past actions by the company or its controlling persons.

New Filing Requirements

As before, all offerings under Regulation A must be made through a Form 1-A offering statement filed with the SEC. Regulation A+ eliminates the possibility of automatic qualification and requires SEC staff review and formal notice of qualification for all offering statements. As before, a company can "test the waters" by soliciting indications of interest in the securities before qualification of the offering.

New Tier Structure

Regulation A+ establishes two new "tiers" of offerings. Tier 1 covers securities offerings up to $20 million, up from $5 million, within any 12 month period, and retains many of the pre-existing requirements from Regulation A. Tier 2 now allows offerings up to $50 million a 12-month period. Under Tier 2, however, companies must adhere to more rigorous reporting requirements.

Since the 1930s, Regulation A has provided rules under which a company could publicly offer and sell a limited amount of securities to potential investors and be exempt from the process of registering the offer. The use of this exemption under Regulation has been diminishing as other Securities Act exemptions have become available or companies simply chose to register their offers. In adopting Regulation A+ the SEC seeks to revive Regulation A as a middle path - for companies that are eligible - that provides advantages over private offerings without the full cost and burdens of registration.

Reg A+ a bit too much for you? Take a look at Rule 506(c) which lets you generally solicit investors so long as you verify that actual investors are accredited investors. At VerifyInvestor.com, we have developed confidential, reliable and simple processes to make it easy for you to comply with federal laws. Visit VerifyInvestor.com or call us at 818-925-6701.

Is Crowdfunding for You? If So, Which Type?

Crowdfunding platforms helped individuals and companies around the world raise $16.2 billion in 2014, according to research firm Massolution. Crowdfunding likely grew out of microfinance, or microlending, which has been around for centuries as a way to help people climb out of poverty. The first microlending website appeared in 2005, the first US peer-to-peer lending site in 2006, and in 2009, Kickstarter launched as a new way to fund creative projects.

Projects now range from social causes to app development, and everything in between. The JOBS Act has declared that crowdfunding should be an option for businesses in the U.S. You’re not alone if you are wondering if there’s a type of crowdfunding that might help you raise much-needed capital for your business.

Equity Investment
Equity crowdfunding, as the name suggests, allows investors a share of equity in exchange for their investment. While the JOBS Act has opened the door to equity crowdfunding, the SEC hasn’t yet walked through it, and its corresponding rules aren’t expected to be adopted until late 2015. Once that happens, small or emerging businesses will be able to raise up to $1 million in capital from the general public via crowdfunding platforms, without triggering other federal securities laws.

Royalty Based
Also tied up in the wait for SEC regulations, royalty-based crowdfunding provides investors with an opportunity to earn a percentage of future revenue. For entrepreneurs, this can be attractive because they don’t have to give up equity; for investors, it is attractive because they could earn back more than their original investment.

Reward Based
Under this model, entrepreneurs pre-sell a service or product without incurring debt or giving away equity. Typically used to fund the launch of a new offering, reward-based crowdfunding has been used to help fund things like software development, cool new apps, inventions, and scientific research.

Debt Based
Also sometimes called peer-to-peer lending, this type of crowdfunding is easier and less costly than a bank loan for many entrepreneurs. It’s also easier for an investor to buy into because there is a promised repayment with a small return. This type of platform is suitable for those with an established customer base and stable cash flow, which will ensure you’re able to make the debt repayments.

Donation crowdfunding projects are used for political campaigns, charities, or social causes - rarely for entrepreneurial endeavors.

Debt Crowdfunding Explained

Debt crowdfunding offers an opportunity for small businesses, including startups, to explore peer-to-peer loans without jumping through the hoops required for possible bank financing (often only to be turned down) that also come with high interest rates.  

How to Qualify
There are wealthy investors willing to offer loans at interest rates below what a bank would charge.  In some cases, they’ll make private loans that the bankers wouldn’t make.  There are still qualifications you’ll have to meet, however. You will still need to demonstrate creditworthiness, though the threshold will differ from the banks and will vary platform to platform, and creditworthiness isn’t the only factor at play in obtaining debt crowdfunding.  

Investors
There is some evidence to suggest that investors actually prefer debt-based crowdfunding to other platforms, with a recent survey showing more than 75 per cent of the funds invested going to debt-based crowdfunding sites. These numbers indicate that investors like the certainty of having their initial outlay repaid, with interest representing a small return.

How It Works
There are many lending portals up and running in North America, and they all have different processes and requirements. Expect some common elements, of course, and be ready to outline the purpose of the funds you’re looking for and how much, your credit profile and financial situation. Beyond that, there’s a lot of variety, so do your research on which ones best suit your circumstances, and then ensure you meet the portal’s specific required criteria before you start submitting your application.  Generally, you present your case for a loan online and investors decide whether they want to invest.

Promotion
Social presence is still a key factor in debt-crowdfunding, so promotion is still important. Market research will help you identify which channels you should focus on in order to attract attention from the right investors and/or consumers, if that applies.

Debt Crowdfunding History
Early forms of debt crowdfunding include microlending and microfinance, which have been around for a long time typically as a way to lend small amounts to low-income individuals that can help raise them out of poverty.  In the last decade, thanks to the Internet, debt crowdfunding has gained considerable widespread traction. The first microlending website, kiva.org, appeared in 2005. In 2006, Prosper.com was the first to launch a peer-to-peer lending site in the U.S.  LendingClub.com followed shortly thereafter in 2007, and this alternative funding method continues to gain in popularity.

Future
Ever since the passage of the JOBS Act, lending portals and crowdfunding sites have exploded in popularity.  It seem as if there are a few new sites popping up each week.  It’s an exciting world out there and investors are funding deals.  So what are you waiting for?  Get your deal listed!

3 World Trade Center Rebuilds With Crowdfunding

Five thousand dollars is all you need to own a little piece of this big Lower Manhattan real estate development project. The high profile 3 World Trade Centre (WTC) deal is just one of a growing number of real estate investment opportunities through a crowdfunding portal.

The Firm Behind the 3 WTC Deal
Fundrise co-founder, Dan Miller, calls it “proof of the power of crowdfunding”, and he appears to be right. Fundrise is the real estate crowdfunding portal where you can find the WTC offering. The Washington D.C.-based firm is using new securities laws to make it possible for more regular people to invest in a real estate deal, and technology is allowing them to distribute – or democratize - the investment, thereby challenging the traditional model, where, as Miller has been noted to say, the banks act like “country clubs” and control tightly who gets in.

How the Deal Works
Fundrise is underwriting the deal and funding the project on its own balance sheet. Investors are buying the bonds as senior secured debt instruments. There is a projected five per cent tax-free return over five years. Fundrise generally claims that all of its real estate crowdfunding deals include 10 to 20 per cent capital junior from the real estate company in the first loss position.</p>

Want In? There’s Still a Catch
It’s not quite as easy as grabbing the wad of cash from under your mattress. To be eligible for this opportunity, investors must be accredited (Are you? We can help you get accredited.) Under SEC rules, that means an individual must have earned income of more than $200,000 in each of the preceding two years, and a net worth of over $1 million.

About Real Estate Crowd Funding
The number of real estate crowdfunding firms continues to grow, and it is changing the real estate investment landscape. Developers have new ways to finance their projects. Socially minded investors have new ways to support their communities. And smaller investors now have a way in.

About 3 World Trade Center
WTC is expected to be the 3rd tallest tower on the Lower Manhattan site, with 80 stories and 2.5 million square feet of office space. Completion is scheduled for 2018.

Advertising for Investors – 4 Things to Know Before You Start

So you are ready to seek out investors. If this is your first time looking for a capital infusion from the crowd, there are a few things to know.

The Rules

The JOBS Act and SEC’s Rule 506(c) of Regulation D allow issuers – companies seeking investment capital, like you – to offer securities through “general solicitation”, including advertising, as long as a couple of key conditions are met:

• The investors you accept money from must be accredited, and

• You take reasonable steps to verify that your investors are accredited.

So, advertise away.

The Need vs. Readiness

A common mistake many entrepreneurs make is that they think they are ready to seek out investors, when in fact they are not. You may need to attract investment if you’re going to ______ (fill in the gap with grow/expand/survive/launch the next product/service/app), but that doesn’t mean you’re ready.

The Messages

If you embark on a campaign to attract investors before you are ready, you run the risk that your language, among other things, will trip you up. When you need investment, you may find yourself saying things like this:

• I’ve run out of the money I had

• I can’t/won’t invest any more of my own money

• I haven’t found any other investors, so I’m looking to you.

On the other hand, when you have done your homework and are truly ready for investment, you’ll be saying things like this:

• I know my customers, market and product/service and I’m ready to take my business to the next level. Now, I’m looking for a partner to help me get there.

• I’ve looked into a variety of sources for capital, and because you seem to be the best match, I’m interested in working with you.

The Advertising

Know what kind of investor you are looking for, and what kind of an investor may be looking for you. That will help tell you where to find them. Sites like Patch of Land or Crowdfunder help bring together investors and entrepreneurs, but there are many others out there. There’s social media (a must today), newsletters, newspapers, investor magazines, and even billboards. Once your research is done, and your budget is set, you’ll be able to put together a campaign to give you the greatest opportunity for success.

Want to Start Your Own Business?

Are you intimidated by popular TV shows that only show entrepreneurial aspirations being achieved by those with access to six and seven figure funding sources? Don’t feel that unless you’re in the same league as Donald Trump, you will never get your idea off the ground or make it profitable.

It doesn’t matter if you weren’t president of the small business club at school, or if you didn’t make enough money mowing lawns to buy your first car at age 16 - it’s never too late to unleash your entrepreneurial instincts. Here’s why:

Easier Access to Funding

Once you have a workable idea, backed by a solid business plan, it has never been easier to secure investment funding for your startup business. Unlike in the past, when strict rules were in place, governing who you were allowed to solicit for investment and how much you could ask for, today’s entrepreneur has greater than ever access to individual investors looking to invest in new ideas and new companies. Though at the moment, most private investors still need to be accredited, the process of raising capital is generally more accessible to all.

Easier Access to Global Markets

The Internet has opened up worldwide markets to even the most humble startup entrepreneur. Even as a one-man-show, if you have a website and a strong presence on a variety of social media platforms, you can expose your products or services to a person living across the street or across the world with equal ease. It is now possible to sell anything to anyone, anywhere.

Starting Businesses is Cheaper than Ever

Many businesses can be started from home, with one person, a computer and an Internet connection. Investment funding will undoubtedly be necessary at some stage as the demands of your business grow, but you can get started on a shoestring.

Less Pressure to Take Risks

While there is an element of risk attached to starting up any kind of business, it is less than it used to be because businesses are much cheaper to start. Failure, therefore, is less expensive. Many entrepreneurs used to work for other people, and realized that that is not risk-free either – redundancy could happen to anyone at any time.

There has never been a better time to start your own business. Learn more about how to ensure your investors are accredited investors by visiting VerifyInvestor.com

We Can’t All Be Silicon Valley Startups – Unglamorous Ideas Need Investment Too

“We can’t all be heroes, because somebody has to sit on the curb and clap as they go by.”

This famous quote from U.S. showman and social commentator Will Rogers can be applied to the business of starting a business. Because such a large percentage of startup investment dollars are channeled into the more “glamorous” areas such as technology and healthcare, many more “boring” bread-and-butter ideas fail to attract the investment they need. And yet studies show that it is often these businesses that are the most profitable.

Financial information company Sageworks, for example, recently surveyed the financial statements of over 1,000 private companies with annual revenue of less than $10 million, and discovered that “boring” accounting firms were making the most profit.

These types of service-related companies are quite often at the top of the profit margin list. Virtual assistants, for example, are becoming very popular as many small online and brick and mortar companies, who are unable to afford a full-time employee, make use of a virtual assistant.

Master the Mundane

There are literally millions of business owners who make a lot of money by selling unglamorous products or offering routine, everyday services. The secret of mastering the mundane is to offer something that your customers can’t or won’t do themselves, and can’t get done anywhere else.

Love What You Do

The success of any business really relies on what you can personally bring to the table. If you do something you love and are therefore passionate about what you do, it follows that you will also be knowledgeable, committed and tenacious. If, on the other hand, you’re unsure, or half-hearted about your business, this will undoubtedly show in your results.

Embrace the Everyday

So if you want to start a business, don’t overlook the unglamorous areas. If you look around, you’ll see that good business ideas are everywhere – from your garage to your car to your friends and neighbors. Identifying a viable business opportunity is often as simple as finding out what common problems are out there affecting large numbers of people, and finding a way to provide solutions to those problems.

Are you looking for investment for your business, no matter how unglamorous it may seem? Or do you want to become an accredited investor in order to offer funding to a startup business? If the answer is yes to either, go to VerifyInvestor.com.