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07/10/2019 02:30 PM

We are elated to welcome Stephanie E. Farrell, Esq., to Moustakas Nelson LLC. Stephanie E. Farrell, Esq., is a litigator with over 20 years of experience. Ms. Farrell handles all general and commercial litigation matters, and focuses on employment law and litigation of every type, including claims of discrimination and wrongful termination, at the agency, state, and federal levels. Businesses also depend on Ms. Farrell to guide them through the legal aspects of the processes of hiring, disciplining, investigating, labor force reductions, and terminations. She drafts and negotiates executive employment contracts, sales and commission agreements, and severance agreements, as well as helps employers with the process of developing, modifying, and implementing employment policies and handbooks. Prior to joining Moustakas Nelson LLC, Ms. Farrell was an attorney at Cooper Levenson and Jackson Lewis LLP, and most recently in the legal department at Ocean Resort Casino. A graduate of Rutgers University and Rutgers University School of Law, Ms. Farrell is admitted to practice law in New Jersey and Florida. News for You: Equity Crowdfunding: Is it for you? Entrepreneurs typically turn to outside sources of capital such as banks, private placements, or friends and family to provide themselves funds to create and sustain a profitable business. Depending on the terms of the financing, the company and investors must determine the risk/reward scenario before they make the decision to move forward with their investment. And the decision process can be long and arduous, making the timing of the funds just as critically important as operating the business itself. Due to recent SEC regulation changes, there is an alternative that entrepreneurs can explore to access capital - Equity Crowdfunding. Equity Crowdfunding refers to a financing method in which money is raised, regularly online, through soliciting relatively small individual investments or contributions from a large number of people (the crowd).Equity crowdfunding can be done through the sale of securities in a private company, typically a startup, through shares, convertible note, debt, or revenue sharing. This differs from other online platforms such as Kickstarter and Indiegogo whereby entrepreneurs raise capital through the presale of their product, often at a discount, or through tiers of various perks to attract their fans and potential customers. However, once the investor receives the product or the perk through these types of online platforms, then the contract is over between the company and the investor, leaving no upside for the investor if the company does well and continues to grow or go public. Companies raising capital through equity crowdfunding are private and yet raising capital from the public. Companies are hoping to get quicker access to cash in a timely manner and investors are excited to get in on the ground floor and avoiding the process of being classified as an accredited investor with an investment bank. Traditionally, buying equity in a startup was reserved to accredited investors only (those who have a net worth of more than $1M, excluding their home, or those who make over $200K annually over the past two years). Making a crowdfunding investment Anyone can invest in a securities-based crowdfunding offering. Because of the risks involved with this type of investing, however, you are limited in how much you can invest during any 12-month period in these transactions. The limitation on how much you can invest depends on your net worth and annual income. If either your annual income or your net worth is less than $107,000, then during any 12-month period, you can invest up to the greater of either $2,200 or 5% of the lesser of your annual income or net worth. If both your annual income and your net worth are equal to or more than $107,000, then during any 12-month period, you can invest up to 10% of annual income or net worth, whichever is lesser, but not to exceed $107,000. Crowdfunding investor vs. shareholder Being a crowdfunding investor is different than being a shareholder in a publicly listed company. For one thing, you cannot sell your shares at any time as you would be able to do if you held shares in a publicly listed company. In fact, you are restricted from reselling your shares for the first year, unless the shares are transferred: -to the company that issued the securities -to an accredited investor -to a family member -in connection with your death or divorce or other similar circumstance -to a trust controlled by you or a trust created for the benefit of a family member -as part of an offering registered with the SEC. If crowdfunding is an avenue entrepreneurs wish to explore, attorneys can assist them with preparing some of the standard documents to proceed. And if the funding documents are already in place on the established sites, attorneys can review those documents and provide critical feedback. Either way, crowdfunding is a risky strategy and sound legal advice is always recommended before using this vehicle for investing or raising funds. Crowdfunding platform websites are designed for investors and entrepreneurs alike. For entrepreneurs, they state up front that they charge a platform fee based on the money raised and there is a fee for those who invest by credit card. They also have a host of ideas on how to manage your start up business and how to maintain the growth. Investors simply choose the company they are interested in on the site, determine how much they want to invest and submit their credit card information online to make the investment. Investing in a business is made relatively easy on most crowdfunding platform website.They typically describe the product and the history of the company, how much money was raised vs. their goal, and how many individuals have already invested. If you agree to invest, you subscribe to the site and post the amount you are interested in investing. The site will typically list the progress of the funding and the evolution of the product development and launch. There are many websites for crowdfunding that have popped up over the last few years. Some take as little as $10 for an initial investment and the industries include anything from energy, mining, to cannabis. Is this the future of investing in startups? Just follow the crowd and you will see. About Town...... Radnor Hunt Races: Brian Propp, former Philadelphia Flyer and Ambassador for Moustakas Nelson, and Nick Moustakas attended the 89th Radnor Hunt Races on May 18th. Brian was a judge for the Ladies and Children's Chapeau contest. Plenty of fun and creative hats to choose from but Brian used his best judgment! Fun for all!

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