Gardere Wynne Sewell LLP is proud to announce that Firm client NextSeed US LLC is the first online funding portal to be approved by the Securities and Exchange Commission and the Financial Industry Regulatory Authority Inc. The NextSeed funding portal will facilitate the offer and sale of debt securities of small U.S. businesses to the general public, pursuant to the Regulation Crowdfunding rules under Title III of the JOBS Act, which went into effect May 16.
“We truly believe that May 2016 will be looked back upon as a historic moment in the global finance industry,” says Youngro Lee, Co-Founder and CEO of NextSeed, which has offices in both Houston and Austin, Texas. “One of the biggest challenges that business owners face is the ability to get the money they need in order to grow…Ordinary investors previously had limited investment options, mostly driven by Wall Street. Everyone will soon have the opportunity to invest in hardworking small businesses across the country, so that we can all drive growth and create jobs, together.”
In October 2015, the SEC passed Title III of the JOBS Act, which is intended to facilitate investments by non-accredited investors in private placement deals. Until now, investors who did not meet specific income or net worth qualifications necessary to become accredited investors had difficulty investing in private businesses due to strict disclosure requirements. Under the new Regulation Crowdfunding rules, U.S. private businesses are now able to “crowdfund” up to $1 million annually by offering securities to investors, including non-accredited investors, through broker-dealers or online platforms operated by funding portals such as NextSeed.
Partners Adam Hull and Rick Jordan, who lead the Firm’s venture capital and emerging business practice, represented NextSeed in this venture. The model utilized by Mr. Hull and Mr. Jordan will help to shape the future of online crowdfunding representation and lay the groundwork for how related securities and broker-dealer laws, lending regulations, internal structuring and tax-related concerns are addressed.
“NextSeed is at the forefront of online funding innovation and Gardere is honored to represent an organization that is truly the first of its kind in the country,” says Mr. Hull. “NextSeed’s early success is directly attributable to the quality and commitment of its seasoned, sophisticated leadership team. Youngro Lee and his dedicated team are ideally suited to make NextSeed a breakout success.”
NextSeed’s full press release announcing its approval under Title III of the JOBS Act can be accessed here.
Led by Mr. Hull, Mr. Jordan and Partner Glenn Singleton, Gardere has one of the leading venture capital and emerging business practices in Texas. The Firm represents investors and issuers in venture capital and later-stage transactions and has a portfolio of emerging business clients throughout the country.