Crowdfunding May Be Game Changer for Restaurant IndustryPDF
Jordan Bernstein's article, "Crowdfunding May Be Game Changer for Restaurant Industry" was published in Law360 on May 6, 2016.
From the article...
Have you always dreamed of investing in a restaurant, but never had the capital necessary to make that vision a reality? Or, perhaps you are an aspiring restaurateur looking to engage local food lovers more deeply in the launch of your business. If so, you’re in luck. On May 16, 2016, restaurant ownership will be open to the masses via equity crowdfunding under Title III of the Jumpstart Our Business Startups Act. In October 2015, the U.S. Securities and Exchange Commission adopted final rules for Title III permitting companies to offer and sell securities to unaccredited investors through web-based crowdfunding portals. For the last couple of years, businesses have been limited to crowdfunding via wealthy, accredited investors. These new rules carry the potential to be a game changer for small businesses, particularly within the restaurant industry.
The Dawn of Crowdfunding: Title II of the Jobs Act
With the JOBS Act came Rule 506(c) under Regulation D, which for the first time permitted those seeking to raise capital the ability to generally solicit their offering to potential investors. Previously, under 506(b), a restaurateur or other enterprise seeking to raise capital could not advertise or generally solicit investments. Companies had to raise capital from only those investors (and usually only those accredited investors) that they knew or were “in their network.” With Title II under Rule 506(c), restaurants are now able to raise capital by generally soliciting or advertising their offering to whomever qualifies as an accredited investor. Companies are not required to use a crowdfunding platform (or the internet, for that matter) but these mediums clearly provide the easiest and most expansive method for reaching potential investors in the U.S."
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