twitter-icon facebook-icon linked-in-icon





News Room

11/15/2013 McKinsey & Co - Why crowdfunding appeals to the Middle East
12/30/2013 KQED Radio - Richard Swart - A How-To Guide to Crowdfunding 12/20/2013 Gulf Times - Silatech Hosts Seminar...

Our Book

Online Resources

10 secrets to success with Crowdfund Investing


Crowdfunding: Income or Gift

Although Internet based crowdfunding has been around for at least five years, a large degree of ambiguity still exists around how to file taxes for money raised. With no definitive ruling from the IRS as to how crowfunded money is to be taxed, the burden of making sure that everything is in order rests completely on the head of the person (or entity) raising the funds. This is a scary responsibility to take on for most people raising money via crowdfunding. However, listed below are some recommendations by experts in tax law, whom we interviewed, that should help to simplify the task. (Disclaimer- These are general guidelines and should in no way replace the advice of a professional accountant):

Are rewards being issued?

The majority of campaigns are being hosted on reward-based platforms. Depending on the structure of the campaign and the level of donation, the rewards offered may be intangible, such as a thank you e-mail or an honorable mention on the company’s website, or it may be tangible, such as a small token of gratitude or a pre-sale of a product. Tangible gifts may include products or services.

If the perks are not tangible then it’s not taxable, as no sale has occurred. In this case, donations are considered gifts, which according to the IRS, is the responsibility of the giver. This donation is not taxable up to $14,000 per person for a single donor or $28,000 per person for married couples.

If the reward is diminutive compared to the amount given, such as a gesture of gratitude, then no transaction has taken place. For example if a funder were to donate $50 and they were to receive a mug or a calendar as a thank you, this would not count as a transaction but rather a gift.

If the rewards issued are tangible and comparable to what the market price would be for that good, then it is a business transaction, and any profit derived from the sale is considered taxable income. If production expenditures match or exceed business earnings, then you may not owe anything. In other words, if the difference between the amount received and the cost of providing the perk/merchandise comes to zero or less, no tax payment is required.

If you are a registered non-profit organization or are partnered with a non-profit organization, and have applied to the IRS for tax exemption status, then you will owe no tax on income earned.

Does the reward have a well-defined market price?

If the reward has a well-defined market price and is being pre-sold or sold at a comparable price, your state government may expect your customers to pay a sales tax. Check your state laws regarding sales, particularly concerning Internet sales. (

Are you an artist?

Pre-selling or offering up as a perk paintings, movies, publications, or other forms of physical media where the amount donated to receive a particular perk is comparable to the market price of the good may be subject to a sales tax. 

If you are offering a reward where your costs of production are less than the amount earned through crowdfunding, then the profit is considered income and is subject to an income tax.

However if production costs exceed the amount received then no income is earned and income taxes are not applicable.

If producing an audio record, for example, and all the money received go to studio fees, no taxes have to be paid. Any income, meaning any monetary gain derived after considering the costs of production, is subject to a tax.

Are these funds being raised for a charity or registered non-profit organization?

The IRS lists the types of organizations that fall under charity and non-profits that qualify for tax exemption as well as criteria required to achieve exemption. Note that even if an organization is recognized as a non-profit it is the organization’s responsibility to apply for recognition. (

Donors can only receive tax deductions if they donate to a registered 501(c)(3) non-profit organization or a qualified charity organization. If a perk was received, the donor can only deduct the amount that exceeds the market value of the perk. ( Donations to a cause, unless associated with a non-profit organization or qualified charity organization is not tax-deductible.

Did you raise more than $200,000 from more than 200 transactions?

Crowdfunding platforms do not handle any of the monetary transactions; those services are outsourced to third parties such as Amazon Payments or PayPal. The IRS therefore requires that you fill out form 1099-K, which ensures that online sales are reported and allows the IRS to track transactions for tax purposes. You should receive Form 1099-K upon earning $200,000 from 200  transactions. (,-Merchant-Card-and-Third-Party-Network-Payments) If you don’t receive a form, contact the company that processes these transactions to make sure a form hasn’t been filled out for you.

Do you have international donors?

Backers should not have to worry about customs fees because backers are making donations and not necessarily purchasing goods from retailers.

One difficulty may arise your campaign includes perks that fall under multiple taxation criteria, whereupon best judgment based on the information above must be made. Regulations associated with crowdfunding are still under development, but it is the campaigner’s responsibility to evaluate the appropriate criteria for taxation. 

Special thanks to Ron Worsham, Associate Professor of Accounting at Brigham Young University, and Randy Stucki, Audit Intern at Ernst & Young

A Letter From The Crowdfund Capital Advisors Team

This one is for the Entrepreneurs!

What would it feel like to have enough money to really get your small business up and running, with all the capital you need to advertise, to rent the space you need, and hire the ideal people to help you grow?
Most likely, you’ve heard about “crowdfunding”, where you can raise money from real people, not big, greedy venture capitalists or nosy angels or even kind yet meddlesome friends and family.  In our new book “Crowdfund Investing for Dummies” Jason, Zak and I explain the exact process you can use to raise the money you need - faster, safer and more likely to succeed.

Entrepreneurs like you who need to raise $250,000, $500,000 or even up to $1M per year have found our simplified method exactly what they need to achieve their dreams.  Click here to buy the book on Amazon now.  

To get a sample of what you’ll learn in our book, we’re giving our newsletter subscribers a free taste.  Click 'How to Create a Great Crowdfund Investing Campaign' to view our timely video.  It will open your mind to how to prepare to raise money from your crowd.

South by Southwest (SXSW) 2014 - The Impact of Crowdfunding a Year from Now

SXSW 2013 is over and the cultural shifts taking place on the horizon are becoming apparent.  One of the biggest shifts will be the impact crowdfunding will have over the next year.  In our panel, the Global Impact of Crowdfund Investing, Jason Best and I described how Crowdfunomics© will sweep the globe. Crowdfunomics is the economic impact of crowdfunding.  It is the business case for the social web we’ve been waiting for.  It is different from donation-based crowdfunding because up until now there was no financial return tied to those donated dollars.  Rather than giving to support a cause, you are now investing in people with ideas that have profit potential.

Crowdfunomics is investment-based crowdfunding.  Where communities of interest, geography and origin become more than fans, followers or likes but rather small investors.  Where a group of investors decide to fully fund an entrepreneur who has provided digitally recorded disclosures about the business, revenue model and investment opportunity.  Where investments flow through SEC-registered websites and fund entrepreneurs in their own backyards, in a way that is fraud free (background checks are mandated in the legislation) and transparent. These community businesses will provide economic stimulus and sustainable jobs and the money will cycle from investors to businesses, employees and back to investors in the way of dividends, loan repayments, equity and a return on happiness. Not all companies will be successful but those that have an engaged group of investors stand a better chance.

The 10 day South by Southwest (SXSW) conference contains Interactive (technology/culture), Music, and Film components and takes place every March in Austin, Texas.  It began in 1987, and has continued to grow in size. SXSW Interactive is focused on emerging technology and trends.  It has earned the festival a reputation as a breeding ground for new ideas and creative technologies. Like the Consumers Electronics Show (CES) in Vegas, it is considered one of the premier events with a Who’s who list of speakers. Speaking slots are coveted and held by names that include famous entrepreneurs, Senators, author and TV personalities. Twitter and Foursquare, everyday tools for tech-enabled Americans, were launched at SXSW.  Theory has it, if you can afford to attend and want to be discovered, you’ll be at SXSW parading around with your technology in hand promoting it with a t-shirt on your chest.  Just to be in front of the eyes of 27,000 engaged participants who are the cultural and technological vanguard.

Two years ago at SXSW crowdfunding was a concept.  Last year, it was a new funding tool for artists or tech-related designers that were using it to gathering massive numbers of followers and hundreds of thousands of dollars of pledges or product pre-orders.  Not much attention was focused on the fact that our Bill (we wrote the legislative framework to legalize crowdfunding) was just lumped together with a group of other capital formation bills in the U.S. House and sent to the Senate as part of the very aptly named Jumpstart Our Business Startups (JOBS) Act.  The President signed it into law in April 2012.  This year crowdfunding is a serious topic.  We alone presented on 4 different panels.  There were at least 10 other panels that our peers in the crowdfunding industry either spearheaded or participated in.  And the buzz was that this is going to spur innovation unlike anything we have ever seen.  But not just innovation in apps or technology but in the private capital markets as technologies are built to facilitate communication with thousands of investors seamlessly and reputation management tools á la ebay and amazon are built to review not just ideas, but entrepreneurs, investors and their comments.  We have learned the pros and cons of social media.  And tying that into capital formation will create more transparent markets.   

Investing in private companies (unlike investing in large public companies on stock exchanges) has been around for a long time but these investments have until now - with the passage of the JOBS Act been available, by law, only to the rich.  The new Crowdfunding legislation takes friends and family financing and provides an infrastructure, technology and ecosystem to regulate and expand the process. Crowdfunomics will emerge out of the soon to be live crowdfunding provision of the JOBS Act. Once the SEC finishes the rules making, local communities will be able to pick up where Wall Street, the banks and VC’s left off.  It will put the power into the hands of people who decide what they want to do with their investible capital.  However it will now also include the wisdom and market power of ‘the crowd.’.  Companies won’t get funded until the crowd decides they are worthy of funding.  Post funding, customers will become investors with a mandate to share knowledge and experience to help the entrepreneur (aka their investment) succeed.    

So what will be different between this year’s SXSW and next?  This year people were recruiting fans, followers and likes (via the social networks). Next year they’ll be saying, “like what you see?  Why not invest in our company?”  And with tools like QR codes, they’ll direct people to a funding page on an SEC registered crowdfunding platform very likely hosted by SXSW as well.  When people ask companies how successful SXSW was for them, it won’t be measured anymore by ‘likes’ but by how many dollars they raised. The one thing that’s been missing from SXSW until now has been the ability to connect dollars to the ideas.  With an engaged crowd of 30,000 next year it will be interesting to see how much investment that equates to.  

Countdown to the SEC Rule on Crowdfunding


The JOBS Act has opened the door to Crowdfunding. While Crowdfunding has received lots of media buzz, it remains a mystery to many within the financial and legal communities. In just a few months, the SEC is expected to establish rules for equity crowdfunding campaigns involving unaccredited investors for private companies. This engaging webcast program will shed light on emerging issues and regulatory developments that are likely to impact the SEC rule and what investors, consumers and legal professionals can, and should, expect. Discussion points will address:

  • Better than friends and family
  • Fraud v Failure
  • Public like disclosure isn't necessary or helpful
  • If we are so smart why is CF lawful in the UK and Australia
  • Title III platforms will be able to demonstrate that investors have convenient memories for risk 
  • Liabilities of platforms; no class actions here
  • Valuation is as much a problem with public companies as CF
  • Is CF dd any match for conventional


crowdfunding webcast


CCA 2012 Year End Summary

Greetings from Dubai Crowdfunding Colleagues!
What an amazing year 2012 has been.  A year ago we were fighting the good fight in the US Senate to legalize Crowdfunding, now we have a tremendously bi-partisan Crowdfunding Law thanks to President Obama, the House and Senate, a vibrant industry forming and a book about Crowdfund Investing!  Here's our year-end summary:

Late breaking news:

  • Both Jason and Sherwood are presenting at the Global Entrepreneurship Summit and the GIST-CDRF in Dubai, U.A.E. this week.  They will be discussing how to utilize the Crowdfund Investing Framework which was the basis for the Crowdfunding section of the JOBS Act and modifying it for their cultural and regulatory needs in ways that will enable countries to build a robust early stage finance and entrepreneurial ecosystem that promotes jobs, innovation and economic stability.
  • The CCA team was awarded a groundbreaking project by the World Bank, "Crowdfunding: Unlocking early-stage financing innovative developing country entrepreneurs."   This engagement will create original research into the current state of crowdfunding in both the developed and

  •  developing world as well as models for the future of the industry globally.
  • Sherwood and Jason are co-founders of the new University of California, Berkeley Program on Innovation in Entrepreneurial and Social Finance Program. This Program will be the global "center of gravity" for rigorous academic research on early stage finance with an early focus on crowdfunding and crowdfund investing.
  • Jason was appointed as Entrepreneur-In-Residence for Berkeley’s Center for Entrepreneurship and Technology.
  • A new piece research by UC Berkeley, CCA & Thunderbird looks at the size of the crowdfund investing market over five years, based on an original algorithm and sensitivity analysis.  You can request a copy of this white paper that will be providing an academic analysis on what expert-VC Fred Wilson calls a $300 billion market.
  • On October 16, Sherwood and Jason were asked to present at the Richard Newton Distinguished Innovator Lecture Series for the Haas School of Business and the College of Engineering at UC Berkeley.  They told their story of how they helped to make one of the largest changes in securities laws in over 70 years as well as providing guidance for students in how to become effective change agents in their careers and businesses.
  • On November 3, Jason delivered a TED talk at TEDx San Miguel de Allende, Mexico.  His topic was being unreasonable in order to make rational change.
  • On November 8th, Sherwood and Jason spoke at the UC Berkeley Global Venture Labs, an association of academic accelerators and incubators at over 40 of the top universities in the world on 5 continents.  The topics included strategies to utilize crowdfunding that increase effectiveness in outcomes and ability to successfully exit the accelerator.  
  • On November 15th, Jason spoke at the White House.  The event celebrated Global Entrepreneurship Week.
  • On November 30th, Sherwood spoke at the US Treasury.  The event was to determine how the government can use currently stored data to deliver value to citizens and businesses.  Sherwood was named the Chairperson of the committee to create a mechanism to easily verify accredited investors.
  • We are excited to announce 3 new strategic advisory relationships:
  1. Ellenoff Grossman & Schole - With over 20 years of private and public capital market experience, EGS is the industry-leading securities law firm that has the most robust crowdfunding practice of any firm in the U.S.  Doug Ellenoff has been a skilled advocate for the industry and an amazing advisor.
  2. EarlyIQ - We are all concerned about crediting a credible and viable crowdfund investing marketplace.  EarlyIQ is going to help the industry by providing additional intelligence about issuers to support effective investment decisions. 
  3. WorkDistrict - Their motto is "work, grow, crowdfund."  This Washington, DC-based accelerator is the future of incubators that pull innovative companies together, provide them the infrastructure and mentorship to grow and adds on the power of crowdfunding to give them the capital to succeed.  CCA will be delivering strategic advice on how this accelerator can effectively harness crowdfund investing to enable their companies to transition to self-sufficiency.
  • We are very excited to welcome our newest team members: Ilona Major, Director of Operations and Robert Mitchell, Director of  Business Development and Strategic Partnerships.

Phase one of our book is now available! 

Crowdfund Investing for Dummies abridged e-book is now available (nook or kindle) and makes a great holiday gift! You can pre-order the full 360-page book to be released in March 2013 here

We are regularly asked to contribute to a number of publications and prepare CCA industry whitepapers. We have prepared crowdfunding country summaries following our engagements in Mexico, Italy, Canada & Colombia.  If you would like to stay up to date on the rapid evolution of this vibrant industry please visit the CCA website  regularly. For copies of the country reports email  This email address is being protected from spambots. You need JavaScript enabled to view it. .  

Here is where you can see us over the next few weeks:
December 11-12, 2012 - Dubai:
We will be speaking about Crowdfunding at the third annual Global Entrepreneurship Summit hosted by the U.A.E. government, the U.S. State Department’s Global Entrepreneurship Program in coordination with the White House and several U.S. agencies, and in partnership with Entrepreneurial Ventures of Arabia (EVA).

January 8, 2013 -Austin, Taxas:
We will be keynoting Startup Texas and speaking about crowdfunding  along with other industry leaders.
February 6, 2013 -San Francisco:
Sherwood and Jason will be presenting with investment adviser Bob Hunter at the Western Association of Chamber Executives. There, several chamber of commerce presidents will be attending the event where CCA will explain the roles of chambers in the crowdfunding process and how crowdfunding in general can stimulate the local economy.

February 17 - March 7, Asia Tour
Sherwood and Jason will be traveling to Asia to present on Crowdfund Investing in Singapore, Malaysia, Hong Kong and Sydney.  Send an email if you are in the region and you wish for us to stop by.
March 8-12, 2013 - Austin, TX:
We will be leading the panel "Global Fight to Democratize Access to Capital" at this year's annual South by Southwest Conference in Austin, TX.

Last week marks the eight-month anniversary of the signing of the Crowdfund Investing bill into law. We wanted to take a moment to thank you for your support and hard work in creating the crowdfund investing industry.

During the past eight months we have had the opportunity to work with many of you in forming this brand new industry from a simple piece of legislation. We have come together from around the world, leveraging our unique talents, assets and hard work into this groundswell of unified strategic action to define what the crowdfund investing industry will look like and to ensure that the implementation of the JOBS Act goes smoothly.

Together, we are creating “Web 3.0” where the social Web meets capital formation to solve the funding void for our nation’s job creators, Main Street small businesses and startups. The movement is now global!

For more information regarding CCA and our services, please contact Robert Mitchell at  This email address is being protected from spambots. You need JavaScript enabled to view it.  

WHAT DO WE DO?           
Many of you have asked us, 'what do you do?  Who are your partners and who do you advise.'  Here's the answer:
Crowdfund Capital Advisors
We incorporated Crowdfund Capital Advisors and work with Crowdfunding industry professionals and government agencies.  We advise businesses and individuals globally and our clients include:

  • Small and large investors and organizations seeking to understand and invest in this new asset class.
  • Governments seeking to implement Crowdfund Investing to spur entrepreneurship, innovation and job.
  • Crowdfunding platforms and professionals looking to launch and grow profitable crowdfunding businesses within the regulatory framework.
  • We spoke at major Crowdfunding events in Washington, New York, San Francisco, Washington, Las Vegas and Chicago. Internationally, we traveled to Colombia, Canada, Mexico, Italy, Turkey and Sweden... and now, Dubai.
  • We met and forged relationships with entrepreneurs, angel investors, financial advisors, funds, local chambers, startup community leaders, and journalists, banking experts, lobbyists, development banks and government officials to collaborate and expedite the creation of the Crowdfund Investing industry.
  • The Crowdfund Capital Advisors team is growing and seasoned industry experts are joining the team to provide you with high value, concierge style advisory and consulting services to maximize your Crowdfunding endeavors success. 
Crowdfund Industry Advocates

We are Council Members for The Crowdfunding Accreditation for Platform Standards (CAPS) program.  It is an initiative by to promote the adoption of best practices for the operation of crowdfunding platforms globally.

Crowdfunding Professionals Association (CfPA) – We are founding board members of this 800+ member global trade association focused on educating entrepreneurs & investors, representing intermediaries, and providing a networking environment.

Crowdfund Intermediary Regulatory Advocates – We are founding board members of this advocacy group led by an amazing team (Candace Klein – Somolend, Vince Molinari – Gate Impact, DJ Paul and Freeman White – Launcht). 

CFIRA is working with the SEC & FINRA during the 270-day rule making period we are in while we wait for Crowdfund Investing to go live in 2013.
Invest Crowdfund Canada – We are advisors to the Legalize Crowdfunding movement in Canada.  Also the inaugural global partner to CfPA.

European Crowdfunding Network – We are advisors to the Legalize Crowdfunding movement in Europe.

Partners & Advisors:
As the industry rapidly prepares to go live (in addition to those listed above), we are pleased to partner with these companies that we believe will be winning players in the future of crowdfunding:

  • Crowdfunder – An equity & debt crowdfunding platform based in Los Angeles, CA
  • SeedInvest – An equity crowdfunding platform based in New York City
  • Crowdnetic – Consider them the & Bloomberg of crowdfunding
  • Gate Impact – Consider them the ‘Crowdfunding broker/dealer’
  • IRAvest – A vehicle to create crowdfunding access for self directed IRA plan investors
If it seems like a lot, it is...and YES there are some larger initiatives that you’ll just have to stay tuned to our website to find out as they are announced! 

Thank you for your help and support throughout this process, without your support this could not have been done.  If you want to stay updated on our latest news please sign up for our monthly briefing papers here.
If you recall we said, “2012 will be the year we legalize crowdfunding.”  Well, “2013 is going to be the year of the Crowdfunded Entrepreneur & Crowdfunding Investor!”  
All our best,
Sherwood & Jason

ps - If you are looking for a job, analysts and consultants to the front of the line.  Send your CV and tell us what excites you about Crowdfund Investing and what you would bring to the table.