With the ban lifted on general solicitation, the SEC's new rules advance 80-year-old securities laws to take advantage of technology and modern capabilities, setting the stage for Accredited Equity Crowdfunding. Now, the game-changing possibilities unlocked by the JOBS Act enable start-ups, small businesses and entrepreneurs to raise capital in an entirely new way from Accredited Investors. Learn what the new rules mean for businesses and investors, along with the important regulation updates you need to know about Accredited Equity Crowdfunding. Discover what steps to take next, the available investment vehicles, how the accreditation process works -- and the benefits of an online platform that puts it all together. Hear from industry and legal experts who have been at the forefront of the discussion and progress in Equity Crowdfunding. Speakers: Joanna Schwartz, CEO of EarlyShares.com Douglas S. Ellenoff, Partner at Ellenoff Grossman & Schole LLP This webinar was hosted on September 24th, 2013.

1. The Crowdfunding Platform presents
EquityCrowdfunding
ComesofAge:
TheNewRules
forRaisingCapital
Joanna Schwartz, CEO of EarlyShares.com
Doug Ellenoff, Partner at Ellenoff Grossman & Schole LLP

2. § The information which is being shared with you today seeks and may answer
some questions of yours related to Title II and the developments which are
being observed within the online funding platform industry, but is not intended
as a comprehensive analysis of the topic or situations directly impacting you
and any of your existing operations. In addition, this information should not be
relied upon as legal advice– these are only general observations of ours. You
are encouraged to speak with your own securities counsel. Your counsel may
analyze the same facts and rules differently and come to dramatically different
conclusions and recommendations for you.
§ Visit www.SEC.gov
§ This information is supplied from sources we believe to be reliable but we
cannot guarantee its accuracy.
§ This presentation is made solely for the interest of the participants on this call
and should in no way be relied upon or construed as legal advice. For specific
information on particular factual situations, an opinion of your legal counsel
should be sought.
DisclaimerofLiability

3. Speakers
Joanna Schwartz
CEO, EarlyShares
Douglas S.Ellenoff, ESQ
Ellenoff, Grossman & Schole

4. § EG&S has been one of the most active IPO law firms in the US for the last 5 years (top
20 in 2012 and 4th in 2011)
§ #1 Broker-Dealer counsel for PIPEs and Registered Directs
§ #1 world wide for SPACs and SPACquisitions.
§ We represent 50 public companies.
§ Heavily involved in crowdfunding. The Firm has sponsored conferences, webinars and
has been invited to speak at different events on the topic.
§ Douglas S. Ellenoff has met with the SEC several times to discuss many aspects of
the proposed new law, how the industry currently operates and how both the SEC
and FINRA will register and regulate funding portals and the crowdfunding activity to
be conducted.
§ The Firm is actively engaged with clients (funding portals, broker-dealers, technology
solution providers, software developers, investors and entrepreneurs). In cooperation
with the industry trade association, the Firm is discussing what level of regulatory
review and monitoring is appropriate by the SEC and FINRA in balancing the interests
of the program with investor protection.
EG&SandCrowdfunding

5. Today’sWebinar
§ JOBS Act- The Basics
§ Changes in effect NOW
§ Proposed Rules in the FUTURE
§ Working with EarlyShares

6. 99.7%
US firms classified as
Small Business
64%
New private sector
jobs created by Small
Business
49.2%
Private sector employed
by Small Business
Small Businesses drive the US
Economy
WhytheJOBSAct?

7. 1.39%
Chance of securing
angel funding
0.25%
Chance of securing
VC funding
(17%)
Decline in small
business lending
(44%)
Reduction in %
allocated to small
business loans
WhytheJOBSAct?

8. $33 Trillion
Investable Personal Savings
Sources: www.thecrowdcafe.com & Kickstarter, Deloitte Report Jan 2013, Massolution, CF Industry Report, Forbes, Inc., FDIC

9. Title III- Equity Crowdfunding
§ Implementation pending final rules from SEC
§ Opens door to unaccredited investors
§ Small businesses can raise up to $1million per year
§ Raises through Broker-Dealer or online funding portal
JOBSAct–TheBasics-TitleIII

10. Title II- Lifts the Ban on General Solicitation
§ Effective now- Companies can advertise capital raises
§ Working under securities exemption- Reg. D, Rule 506(c)
§ Only Accredited investors can participate- must verify
§ Bad Actors disqualified from participating
§ Additional rules being evaluated- SEC comment period
JOBSAct–TheBasics-TitleII

11. § General Solicitation under 506(c)
§ An issuer may still choose to conduct a private offering in
reliance on Rule 506(b) without using general solicitation
§ All purchasers of securities must be accredited investors
§ Under 506(c) burden of investor verification shifts to issuer –
must take reasonable steps to verify
§ The anti-fraud rules continue to apply
PrivatePlacementGeneralSolicitation

12. Methods that may be used to satisfy the verification requirement include:
§ A review of IRS forms for the two most recent years and a written
representation regarding the individual’s expectation of attaining the
necessary income level for the current year;
§ A review of bank statements, brokerage statements, tax assessments, etc.
to assess assets, and a consumer report or credit report from at least one
consumer reporting agency to assess liabilities;
§ A written confirmation from a registered broker-dealer, RIA, CPA, etc.
§ For existing investors (pre-506(c) effective date), a certification
ReasonableStepstoVerify

13. § Market participants, especially registered broker-dealers,
should consider applicable FINRA rules, including, for example
FINRA Rule 5123 and Rule 2210 (communications rule)
§ There are already a number of third-party providers that have
indicated that they intend to offer investor verification services
§ Third-party providers of verification type services should
consider closely the regulations relating to handling personal
identifying information
ThirdPartyVerification

14. § Prohibits issuers, underwriters, placement agents,
directors, officers, and shareholders of the issuer, from
participating in exempt securities offerings, if they
have been convicted of, or are subject to court or
administrative sanctions for, securities fraud or other
violations of specified laws.
BadActorDisqualification

15. Under review and comment- not yet in effect
§ Advance For D filing 15 days before sale
§ Closing Form D filing 30 days after sale complete
§ All General Solicitation materials to contain Legends
§ Submission to SEC of all General Solicitation materials
§ Severe penalty for breach- 1 year ban on fundraising
EarlyShares submitted letter of comment & recommendations to the SEC.
Available at www.earlyshares.com
AdditionalPROPOSEDRules

16. SimplifyingtheComplexity…

17. EarlyShares Guides
Issuers & Investors through the process
§ Due Diligence
§ Regulatory Filings
§ Investor Verification
§ Offering Docs
§ Marketing, Social Tools, Reach
§ Investor Relations
*We do not replace legal counsel and do not offer legal advice. All participants are
encouraged to seek representation specific to their capital raising activities.

18. IssuerProcessOverview
§ Submit initial application
§ Screened by EarlyShares
§ EarlyShares Account Manager assigned
§ 3rd Party Due Diligence
§ Prepare Legal Deal Docs, consult attorney
§ Prepare Live Offering Page- set permissions
§ Invite Investors
§ Campaign goes Live!

19. InvestorProcessOverview
§ Register & Complete Investor Accreditation Process
§ Request Access to Confidential Offers
§ Complete your own due diligence
§ Select "Invest" and begin the investment process
§ Complete "Commitment" page including your
investment amount & personal details
§ E-Sign Deal Documents
§ Accreditation status verification by 3rd Party
§ Investment Confirmation

20. WhattoExpectonEarlyShares
§ Capital raises full spectrum
§ Direct and Fund investments
§ Variety of industries- unique opportunities
§ New partnerships
§ Equity and Reward combination campaigns
§ Regulatory updates
§ Education sessions

21. Thanksfortuningin.
If you have questions please contact us at
info@earlyshares.com
Follow us at
@EarlyShares
@EarlySharesCEO
@DouglasEllenoff