In the article, “Three types of companies where crowdfunding works,” the Triangle Business Journal highlights Smith Anderson client, MockOut, a Durham-based startup, and its experience using crowdfunding to raise capital to fine-tune their product.
Reporter Lauren Ohnesorge spoke with attorney Alex Bowling, who advised MockOut and helped the company navigate the challenges of its first crowdfunding campaign.
Alex shared that to attract investors online, a company must have a sharp website that clearly communicates – via text and video – what the company is, while also being transparent about the risks involved. “It’s not just pulling legal documents the way you might for a private offering,” he added.
Alex described the three scenarios best suited for crowdfunding campaigns. The first involves an affinity investor, a potential financier who wishes to invest in something in which he or she has a personal stake. A second scenario is a company without established investor connections, but with a lot of time on its hands. Companies seeking recognition are the third scenario for crowdfunding initiatives. “For some companies, this is not only a form of financing, but also a form of advertising,” Alex explained.
Alex joined Smith Anderson in 2013, where his practice focuses on public offerings and private placements of securities, corporate governance and compliance matters, and mergers and acquisitions. In addition to representing clients, Alex regularly presents on recent developments in the areas of corporate and securities law, including SEC rule making related to the JOBS Act.
A copy of the full article is available here.