The Latest on Equity Crowdfunding

We’re excited to share that Lathrop GPM lawyers have again worked with an entrepreneurial client to successfully launch a crowdfunding offering. This time with a company specializing in products and related services for producing non-alcoholic offerings in the craft beverage industry. As always, we are constantly amazed at the level of originality, energy, effort, and, to state the obvious, entrepreneurship that infuses these endeavors at every level!

Our latest crowdfunding client success made us realize that it’s been a while since we’ve written about Equity Crowdfunding; so I think we’re well overdue for an update! As we have written before, prior to the 2021 SEC rule changes (the “2021 Rule Changes”), crowdfunding was limited to offerings of up to only $1.07 million, and investment by the “crowd” through “special purpose vehicles” (which has the practical effect of listing potentially hundreds of “crowd” investors as a single shareholder on your cap table) was not permitted. As a result, crowdfunding at that time did not present a very attractive capital-raising mechanism for most entrepreneurs; few such offerings had been initiated and most of them had not been unsuccessful. The 2021 Rule Changes, among other things, increased the maximum raise to $5 million, and permitted the use of a special purpose vehicle, organized and operating for the sole purpose of acquiring, holding and disposing of securities issued pursuant to a crowdfunding offering, and into which all “crowd” members made their investment. Three years on, how have the 2021 Rule Changes affected the use of crowdfunding as a productive means of raising capital?

Let’s roll the tape! *

Downtown Kansas City: a Downtown’s Comeback

If you’re from the Kansas City area, you know downtown Kansas City as a bustling area full of thriving businesses, events, and citizens who both work and live within Downtown. And if you are in your late 20s like me, that is the only version of Downtown that you know. It hasn’t always been like this, however, and the revitalization of downtown Kansas City is a success story brought to fruition by the hard work and excellent foresight of City and civic leaders within the Kansas City metro area.

Open AI Raises Record Capital

Venture capital is an industry fed by ambition and optimism. There is no better example than Open AI’s recent investment round which raised a record $6.6 billion, while also reportedly turning down billions in potential oversubscriptions.

To provide some context, $150 billion is approximately what the entire U.S. venture capital industry had under management in 1999 to fuel the internet bubble. Just ten years ago, the states of New York, Texas and Florida raised about $6.5 billion—combined.

The Tragic Fall of the Tupperware Brand

Most children of my generation are quite familiar with searching through a cabinet filled with plastic Tupperware containers and lids to find the right match for packing up leftovers. The ubiquity of the Tupperware container defined the experiences of generations of families from the post-World War II era through the Seventies and Eighties and up through the turn of the Century. Spurred to tremendous popularity by a revolutionary marketing strategy that introduced easy-to-use and often unusually colorful products aimed to keep foods and drinks fashionably fresh, Tupperware containers seemed to be in every household in America. Unfortunately, the Tupperware Brand, once it lost its market leader status, was unable to keep up in the modern-day, post-pandemic market. It recently filed for bankruptcy protection in Delaware.

So Many Things To Do; So Little Funding To Do It

The start of a new business is a pivotal time for any entrepreneur. Unless you happen to be a serial entrepreneur who has played this game before, you are likely overwhelmed with your to-do list and rarely feel like you have a good sense of whether you are making the right strategic choices for your fledgling company. Many first-time entrepreneurs are laser-focused on the product or service they are hoping to bring to the masses, but with that laser focus they may overlook some important considerations, like having the proper legal protections in place.

Even those entrepreneurs who have thought through legal considerations as part of their business planning process often try to get by with the bare minimum in the early days. Let’s be honest, the term “legal” often conjures thoughts of grey clouds in an entrepreneur’s otherwise sunny and optimistic vision for their new company. One of the key drivers of a start-up not putting in place all the legal protections that will help it to be successful as it continues to grow is a lack of funding to obtain expert advice. With minimal available resources, most entrepreneurs prefer to focus their initial dollars on getting their product or service to market.

The 2024 Paralympic Games

“I will not be participating at the Paralympics. I will be competing.”

-Hunter Woodhall, Paralympic Gold Medalist in the Men’s 400M T62 Category

The 2024 Paris Olympics were a highlight of this past summer, with 30.6 million viewers tuning in across all NBC platforms, making it the most-streamed Olympics. Among many other highlights, Noah Lyles (USA) and Letsile Tebogo (Botswana) battled it out for the title of World’s Fastest Man, Katie Ledecky’s (USA) swimming prowess made her the most-decorated female American Olympian across all sports, Yusuf Dikeҫ (Turkey) stunned viewers with his nonchalant silver medal shot, and Cindy Ngamba won the Refugee Olympic Team their first ever medal with a bronze in Women’s Middleweight Boxing. My favorite event this year, by far, was the men’s 1500M. Cole Hocker and Yared Nuguse (USA) pulled off a huge upset and absolutely smoked Josh Kerr and Jakob Ingebrigtsen! Watch it here.

With all the excitement surrounding the Olympics this year, people were understandably disappointed when the Closing Ceremony wrapped up. A common sentiment I heard was, “Well, what do I do now?” I wanted to yell from the rooftops, “It’s not over yet!”

Fall, Football, and Figuring it Out.

I love September. When the calendar flips to September, it means a lot of things to a lot of people - it’s the arrival of Fall (Fall is the best season, by the way), students begrudgingly returning to school to the delight of their parents, and for a lot of Americans, its marks the return of their favorite sport, FOOTBALL.

About 72% of Americans identify as football fans, that’s more than 241 million people. Football is big business. The NFL generated roughly $20 billion of revenue in 2023 and during the Super Bowl, companies paid $7 million per 30-second commercial. College Football TV rights alone accounted for roughly $4 billion in 2023. That doesn’t include College Football’s merchandise, ticket sales, sponsorships, or any NIL deals, including the recent deal with EA Sports to use the Name Image and Likeness of current College Football players in their new videogame, “creatively” named (in a generic way my trademark colleagues would hate) “College Football 25.” Football is America’s favorite sport, but its also becoming the favorite business of many Americans too.