Upcoming DPO(s) will help bring about Equity Crowdfunding Rules

After reflecting on the event at Crowdfund Texas, I have come to the firm belief that the upcoming IPO(s) from IPO Village will encourage movement on the rules that will ultimately  govern equity crowdfunding. Equity Crowdfunding will bring about a new asset class that will have its own rules and regs from both the SEC and FINRA. The Direct to Public Offerings (DPO) being presented on IPO Village are a natural intermediate step to this new asset class. Unlike the traditional definition of equity crowdfunding, the offerings shown on IPO Village are not private equity offerings. They are in fact companies that are going to be publicly traded and include all the benefits that come with that status. Two of the benefits from the perspective of the investing crowd are the facts that these companies will have filed S-1′s that have been approved by the SEC (standard investor protection as exists under 1933 securities law) and an established secondary market (The issues stock will trade on the OTC market).
This actually resolves two of the biggest concerns surrounding equity crowdfunding, the first of course is the disclosure (investor protection) being offered by companies seeking to acquire capital through equity crowdfunding, the second being, once you own a piece of a privately held company how do you liquidate the holding. There will ultimately be a secondary market for equity crowdfunded offerings, the question is when. Under the JOBS act you are required by law to hold that investment for a minimum of one year, this is not the case with a public offering.
The updated and fully functional version of IPO Village will be available over the next few week. This will include an investor education section and many features to ensure the crowd has access to the same level of detailed information as the “professional” IPO investor. All SEC filings and disclosures will be made available to the crowd in one easy to find location, as well as business plans, video’s and financials for the companies being presented for DPO (Direct To Public Offerings). Unlike any IPO we will have seen you will have an open forum to discuss the offering with other members of the crowd and have the opportunity to “Ask the CEO”. These questions and answers will be made available to the crowd. You can’t get that kind of transparency on any other platform.
Once the power and intelligence of the crowd is proven through the success of IPO Village, it will speed the change to private equity offerings via equity crowdfunding.
The updated site will be available at www.IPOvillage.com , Signup to take your place in line for the democratization of the IPO process. Signing up is not a commitment to invest but it is the only way you will have the opportunity to decide.

Open Letter to Twitter CEO Dick Costolo – RE: Crowdfunding

To: DICK COSTOLO, CEO Twitter.com
From: HOWARD ORLOFF, Mayor IPOVillage.com
RE: Crowdfunding Twitter’s Initial Public Offering

Mr. Costolo,

Your recent interview in the New York Times and CFO Ali Rowghani appearing in Bloomberg have ramped up speculation that the company will be going public sometime soon.

With Twitter now seriously considering going public, you need to give thought to how you plan to do this. Taking the traditional way, working through a fleet of lawyers, brokers and investment banks has worked for a lot of companies, but it has also cost them a lot of money.

If Twitter takes the traditional route, it’s going to cost the company $150 million or more in discounts to the investment banks, lawyer fees and percentages paid to people who run the deal.

Mr. Costolo, that’s $150 million or more Twitter will never see.

Look at it this way. Your company is forecasting at least $1 billion in sales by 2014. $150 million is 15 percent of that expected revenue. Are you really willing to hand 15 percent of Twitter’s expected income over to a group of people who have done nothing to help your company?

Twitter holds a very special position in the world of mass communication. Twitter is powered by ordinary citizens across the world. Tweets by people are now major news. Twitter has already been cited as a significant source of information in countries where political strife has turned violent.

Mr. Costolo, Twitter is the everyman. It is the average person walking down the street with a smartphone. It is people who send a notice about the birth of a child and people who send a picture about government forces attacking rebels. It is politicians making missteps and touting their platform.

Mr. Costolo, Twitter is true mass media.

Since the masses are the people who make Twitter what it is, let the masses also share in the bounty that Twitter will produce. Let them share directly in the profits. Let them invest directly in the company that is now such an important part of their life.
By offering investment access in Twitter through a Crowdfunded DPO (Direct Public Offering), you have the opportunity to change capital finance to the same extent Twitter has changed the way the world communicates.

Take the Twitter IPO direct. Don’t lose $150 million to consultants, huge Wall Street banks and lawyers. Keep that money for the company. Don’t let these consultants and investment banks set the price for Twitter only to see the price plummet as Facebook’s stock price did.

Let the masses, the very people who have made Twitter into a global success, have direct participation. Let them buy stock direct, no middle man, no waiting until huge investment houses have made a profit (and kept Twitter from receiving that money).

Mr. Costolo, you owe the people who make Twitter what it is the chance to get in on the ground floor of the company. Let them invest direct with a crowdfunded IPO. Let them reap the profits and let Twitter gather as much from the IPO as it can.


Howard Orloff
Mayor, IPOVillage.com