Great question!

Impact crowdfunding is what is happening at the intersection of investment crowdfunding and impact investing.

As you know, investment crowdfunding was authorized by the bipartisan 2012 JOBS Act. It was initially implemented in 2016 with a $1 million cap, which was increased to $5 million last year. The space is mushrooming quickly.

Impact investing is less well known to our community but is a bigger global phenomenon dominated by wealthy families and institutions. They invest money for a financial return and a social mission. For instance, a venture capitalist backing Tesla in the early days would describe herself as an impact investor. She got a huge financial return and radically accelerated a transition to electric vehicles.

Investment crowdfunding allows for impact investing in the crowdfunding space. I call that impact crowdfunding.

SuperCrowd22 is a conference we're holding on September 15-16, 2022, to help everyone learn more about the space, both from an investor standpoint and from a social entrepreneur standpoint.

Don't miss it!

http://SuperCrowd22.com

This is a great question!

You should expect to spend about 10 percent of the money you raise on the costs of the offering, excluding marketing. I'd caution against spending money on marketing but remember it will take a lot of work.

Some legal and accounting costs will have to be paid before you can begin raising money. That would typically be at least $5,000 and could easily total 3 to 5 percent of the offering, depending on your circumstances.

The portal will also charge fees. They vary in structure and size but expect to pay 5 percent or more.

Yes! Absolutely!

Many people believe, I say correctly, that one day soon, we'll use blockchain to record title to all manner of physical or tangible objects, from boats and cars to real estate. The immutable, public nature of blockchain would be perfect for this purpose.

The trick will be for the blockchain community to fully embrace the regulatory and governmental aspects of legal ownership of non-digital assets.

I love crowdfunding because it helps people who traditionally have had trouble accessing capital. Women and BIPOC founders now have a new path to funding. Small businesses that are integral parts of a community, like restaurants, can now raise money from their customers. Our country is richer because of crowdfunding and getting richer every day.

Jordan, this is a great question. Thanks for coming to the CfPA Ecosystem for insights.

Of course, there is no industry or sector that can be thought of as traditionally raising money via crowdfunding. The industry is too new, implemented just six years ago and really gaining scale only in the past two years. We're all learning.

There is no reason you can't crowdfund for a gold mining operation. Obviously, this is a great time to be investing in gold.

FINRA-registered portals are required to do some screening to prevent fraudsters from attempting to raise money on their platforms. Portals are allowed to do some additional screening to curate a theme. They are not allowed to imply that they have done thorough underwriting of an offering. Broker-Dealers, like Start Engine, that operate portals are allowed to do more and charge more than the other portals, including offering more help raising money.

Some platforms focus on serving small business, real estate, tech or other niches. While I haven't spotted a portal focused on extractive industries, one may exist. However, you can test out the large players (Wefunder, Republic and StartEngine) where you are most likely to find admission.

You want to remember that there is no magic crowd; the money you raise will come from your networks primarily.

Good luck!

It's not really a test that you pass or fail. The Howey test is just one of the tests used in securities law to determine whether an instrument being offered is a security or not. There are other tests that can also be used, such as the Reves test. Which should be applied depends, as the SEC says, on the facts and circumstances.

If an instrument meets the various elements of the Howey test, it will be treated as a security. I guess that might be said to be "failing" Howey.

I'm not a tax advisor, but you might want to look into Section 1244 losses and if you might qualify.

https://crowdwise.org/taxes/three-ways-the-us-gives-tax-relief-for-investing-in-startups/

At the very least, your losses should qualify as capital losses, similar to if you bought a stock and it went to zero.