We Want You! Invest in Ginjan
I’m really excited to be the first to tell Ginjan Bros.’ superfans (and let’s face it, if you’re reading our blog or our newsletter, you are a Ginjan Superfan) that we’ve just soft-launched our first equity crowdfunding campaign.
I’m sure most of you are familiar with crowdfunding, but many people think of the archetype established by Kickstarter where a person or company seeks donations in return for perks.
Equity crowdfunding, or what I think is more accurately termed online capital raising, is different, in that the company seeking capital offers investors either debt or equity (or in our case debt that converts to equity) in return for supplying the company with capital. Until recently, online capital raising by small businesses hasn’t been possible, but Title III of the Jumpstart Our Business Startups (JOBS) Act, passed in 2012 under the Obama administration, changed everything.
Under the Securities Act of 1933, the offer and sale of securities must be registered unless an exemption from registration is available. Title III of the Jumpstart Our Business Startups (JOBS) Act of 2012 added Securities Act Section 4(a)(6) that provides an exemption from registration for certain crowdfunding transactions. In 2015, the Commission adopted Regulation Crowdfunding to implement the requirements of Title III. Under the rules, eligible companies will be allowed to raise capital using Regulation Crowdfunding starting May 16, 2016.
2. Requirements of Regulation Crowdfunding
In order to rely on the Regulation Crowdfunding exemption, certain requirements must be met.
a. Maximum Offering Amount of $1,070,000
A company issuing securities in reliance on Regulation Crowdfunding (an “issuer”) is permitted to raise a maximum aggregate amount of $1,070,000 in a 12-month period. In determining the amount that may be sold in a particular offering, an issuer should count:
- the amount it has already sold (including amounts sold by entities controlled by, or under common control with, the issuer, as well as any amounts sold by any predecessor of the issuer) in reliance on Regulation Crowdfunding during the 12-month period preceding the expected date of sale, plus
- the amount the issuer intends to raise in reliance on Regulation Crowdfunding in this offering.
An issuer does not aggregate amounts sold in other exempt (non-crowdfunding) offerings during the preceding 12-month period for purposes of determining the amount that may be sold in a particular Regulation Crowdfunding offering.
b. Investors Subject to Limits
Individual investors are limited in the amounts they are allowed to invest in all Regulation Crowdfunding offerings over the course of a 12-month period:
If either of an investor’s annual income or net worth is less than $107,000, then the investor’s investment limit is the greater of:
5 percent of the lesser of the investor’s annual income or net worth.
If both annual income and net worth are equal to or more than $107,000, then the investor’s limit is 10 percent of the lesser of their annual income or net worth.
During the 12-month period, the aggregate amount of securities sold to an investor through all Regulation Crowdfunding offerings may not exceed $107,000, regardless of the investor’s annual income or net worth.
Did you get all that?
No problem, it’s all laid out carefully and clearly on the official Campaign Page and there’s a great video made by Pando about why seed stage companies often issue “convertible notes” (that’s the debt that converts to equity I mentioned above) at the end of this post
The SEC requires that “Each Regulation Crowdfunding offering must be exclusively conducted through one online platform. The intermediary operating the platform must be a broker-dealer or a funding portal that is registered with the SEC and FINRA.”
But before all the various questions about the details of the offering, you might very well ask, why are you doing this now? The short answer is because we’ve been asked so many times by friends and acquaintances if they can invest in the company. “I love Ginjan and I’d love to support you but I can’t afford to invest more than a few hundred or a few thousand dollars,” they’ll say.
In truth it’s a lot of work raising seed capital and we’ve only accepted a handful of “angel” investments to date, and those were for larger sums. However, we really do need more working capital to continue the expansion of Ginjan into more and more stores, so Regulation Crowdfunding (a/k/a Reg CF) is a great way to ease the administrative burden of raising capital on our side, and makes it simple to invest on your side.
One more thing: there’s a very special project that Ginjan Bros. is planning, and your help is going to be crucial in pulling it off. I’m talking about a dream of our founders since they first started the business: creating a vibrant home in Harlem, New York, where Ginjan is made, where the founders live, and where our first customers made the juice a Harlem must-have. I’m describing the Ginjan Cafe, where Mo, Rahim and their team will create a welcoming slice of Africa serving up music, juice, coffee, food and all around good vibes. Read more about it at our Campaign Page –– and please, join us in making it a reality and invite your friends. Cheers!
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