Business Finance – Crowdfunding Can Give Your Next Big Idea a Critical Boost

Ever had a great idea but nowhere to turn for capital to get it off the ground?  Entrepreneurs and startups all across the country frequently face this dilemma.  Some turn to friends and family (or even to more sophisticated “angel investors” if the idea has substantial promise) to provide sorely needed initial capital.  Traditional sources of debt financing such as home equity loans, commercial financing or even microloans can also help, but in some cases the individual may not meet the criteria required or the amount of capital needed is too large or too small, as the case may be.  No matter where the business owner turns, difficulties in getting the critically needed funding have always been a fact of life.

Help may now be more readily available through “crowdfunding” (also called “crowdsourcing”), which continues to grow in popularity.  In crowdfunding, a large number of individuals pool funds (usually through social media or internet “funding portals”) for purposes of providing capital to specific products or ideas.  There are two common types of crowdfunding.  The first is a “donation” model, which provides the funder with designated rewards (ranging from discounts to actual products).  The other type is an “investment” crowdfunding model that provides actual equity ownership in the recipient company.

Although the idea for crowdfunding has been around for years, the impetus for making crowdfunding a reality came with the signing of the Jumpstart Our Business Startups Act (JOBS) by President Obama in April of 2012.  The JOBS Act provided a framework for stimulating funding of smaller and startup businesses and relaxing certain regulatory hurdles faced by these companies.  As part of this process, the JOBS Act directed the U.S. Securities and Exchange Commission (the “SEC”) to develop rules for implementing crowdfunding. In late March of this year, the SEC issued its final rules for a two-tiered crowdfunding structure which will enable companies to sell up to $50 million of securities ($20 million under the lower tier) in a 12-month period, subject to certain eligibility, disclosure and filing requirements.  As a result, crowdfunding is likely to increase in popularity, because it will allow the everyday “non-accredited” investor an opportunity (subject to SEC limits) to invest in new projects.

Crowdfunding sites, such as Kickstarter, Indiegogo, Rockethub and not only provide members of the general public the opportunity to fund business proposals (generally called “projects”) that appeal to their subjective tastes or sense of activism, but also provide venues for  entrepreneurs to submit their business start-up ideas for public backing.  The result of this is that equity funding sources are no longer limited to either personal relationships or a local geographic area.  A unique product or business model can now appeal to potential investors across the country, removing barriers and boundaries to accessing the capital needed to get to market.

Crowdfunding is not for everyone.  The SEC’s new rules place substantial limitations on issuers and investors alike, as well as filing and disclosure requirements similar to those required of other business entities selling securities.  Because the SEC rules (and crowdfunding in general) are so new, expect a substantial “trial and error” period to iron out the kinks in the new funding regime.

If crowdfunding looks like it might be something that fits your needs, you still have a lot of work ahead to get your business idea (and your business) into position to be ready to take advantage of crowdfunding.  There are some important steps and considerations for anyone thinking about crowdfunding:

  • Determine if crowdfunding is right for your business model. Is the business idea, product or solution unique enough to attract crowdfunding?  Are the capital needs of your business appropriate for crowdfunding?
  • Make sure your business is set up properly. Do you have an operating business entity or is this still a dream or a “napkin drawing”?  Are you maintaining corporate formalities and avoiding problems?  Additionally, you will need to either write a solid business plan or review and revise your current plan if you already have one.
  • Consult business, accounting and legal professionals. Depending on the size of the offering, you will need to draft offering and disclosure documents and make the appropriate filings. The securities rules, even for crowdfunding, can be complex.  For instance, you will need to understand the mechanisms and rules for crowdfunding and be able to evaluate for yourself the pros and cons of this type of funding. Your financial records may need closer scrutiny by a CPA, depending on the amount of funding you are seeking.
  • Make sure your intellectual property is protected. Nothing will kill a great business idea like disclosing the underlying, unprotected intellectual property to the public or inviting unwanted competition by putting your model out for public scrutiny.  Got a new design?  Look to patent it.  Got a catchy name for your product or business?  Seek trademark protection.  Investors will also want to know that an idea which they are crowdfunding has a strong IP position.

Like any business venture, there are always risks, both for the investor and the entrepreneur.  Due to the presence of many smaller investors, the individual risk to a single larger investor may be mitigated in the early (and riskiest) stage of the business.  Even with the inherent risks, crowdfunding promises to provide a source of investment capital that was seemingly unimaginable only a few years ago.  It also promises to provide inventive and entrepreneurial individuals with a means to access the broader market and make a public appeal for the success of the “next big idea.”

Operating While Intoxicated (OWI) – Refusing BAC Testing

Most drivers understand that getting convicted of OWI in Wisconsin means that you will face several different consequences.  An OWI conviction can result in hefty fines, jail time, and the loss of your driver’s license.  But what many people don’t understand is that the loss of your driver’s license can occur very shortly after your arrest for OWI, but long before you are ever actually convicted.  This loss of your driver’s license can come about in one of two ways, but in this article we will focus on revocations which result from refusing the testing of your breath, blood, or urine (refusal).

In Wisconsin, section 343.305 of the Wisconsin Statutes says that if a law enforcement officer has probable cause to believe that you have been operating a motor vehicle while intoxicated he/she may then request that you provide a sample of your breath, blood, or urine in order to find out what your blood alcohol concentration is.  Before they can make this request the officer has to read a form to you called the Informing the Accusing.  It is a rather lengthy and cryptic form which basically tells you that the officer can ask you to participate in the testing, and if you don’t your license could be revoked.  If you refuse to participate in the test, we call it a “refusal”.

Refusing blood, breath or urine testing when an officer has probable cause to request it can mean rather severe consequences against your driver’s license.  A refusal can result in a 12 month revocation of your license, a 30 day waiting period for an occupational license, and the installation of an ignition interlock device in any vehicle that you own or operate for 12 months (and it doesn’t matter what your BAC is).  These penalties are worse than the driver’s license penalties for an actual OWI – 1st offense conviction, and it could happen before you even go to court for the OWI.

Many people don’t even realize that they have been found to be in violation of the refusal laws.  Getting arrested for OWI can be very stressful and traumatic.  People often just focus on the ticket that says Operating While Intoxicated on it with a court date in the upper left corner, and put the rest of the paperwork on a shelf to deal with later, not realizing that their driver’s license is about to get revoked.  They often don’t realize that they refused the test at all because they had submitted themselves to the officer’s breathalyzer device after they did the field sobriety tests and therefore think that they have already submitted to the chemical testing.  However, this small handheld device that officers often use on the roadside is not an official test that can be used in court.  An official breathalyzer is a larger machine that is often located elsewhere (police station, jail, truck stop, etc.) the results of which can be used in court.  Or, you may be taken to a hospital to have your blood drawn.

If a person is found to have refused chemical testing, the officer must then provide them with a form called Notice of Intent to Revoke Operating Privilege.  This notice tells the driver that they have 10 days from that date (often date of arrest) if they wish to file a request with the court to fight the refusal and subsequent revocation of driver’s license.  It also tells them that in 30 days their license will be revoked.

The OWI laws and how they affect your driver’s license can be very confusing.  That is why it is best to hire an experienced attorney who will not only fight your OWI, but also help you to navigate through the strange and very misunderstood world of suspensions and revocations.

You must not rely on the information on this website as an alternative to legal advice from an attorney.  If you have any specific questions about any legal matter you should consult with an attorney immediately.  You should never delay seeking legal advice, disregard legal advice, or commence or discontinue any legal action because of information on this website.

The law firm of Simon & Feldhausen, LLC is a Green Bay law office comprised of Green Bay attorneys who are experienced in the areas of OWI and how those charges can impact a person’s employment, freedom, driver’s license, and other areas of a person’s life.