Thursday, December 27, 2012

Book Signing at Howard University

Author William Michael Cunningham will discuss his new book at the HUB on February 14th from 5-7pm.

About the Book: On April 5, 2012, President Barack Obama signed the Jumpstart Our Business Startups Act, better known as the JOBS Act. The act is designed to “reopen American capital markets to small companies,” defined in the act as Emerging Growth Companies. This is one of the most significant legislative initiatives in finance since the Securities and Exchange Acts of 1933 and 1934, and it opens up funding to a slew of companies previously shut out of the capital markets.

How can you get in on the new funding opportunities? That’s what The JOBS Act: Crowdfunding for Small Businesses and Startups is all about. Investment expert William Michael Cunningham shows how the new law will enable you to use the internet to raise significant amounts of capital funding for your startup.


Wednesday, December 26, 2012

Black Male Achievement (BMA) Fellowship

The Black Male Achievement (BMA) Fellowship is a new fellowship program established by Open Society Foundations and Echoing Green dedicated to improve the life outcomes of black men and boys in the U.S. It is the first fellowship program of its kind that targets social entrepreneurs who are starting up new and innovative organizations in the field of black male achievement. The application for the 2013 BMA Fellowship will be available online from December 4th 2012-January 7th 2013.

Monday, December 24, 2012

Commentary: The quest for crowdfunding enters a complicated, but critical phase

(Photo from: The JOBS Act: Crowdfunding Guide to Small Businesses and Startups by William ...

Since President Obama signed the Jumpstart Our Business Startups Act last spring, the most successful crowdfunding campaign — for an e-paper wristwatch called Pebble Watch — raised $10 million. Another campaign — this one for a video game, raised $6.3 million from 90,000 fans online — shows that companies with innovative products and services can raise significant amounts of money online.

In about six months, the beleaguered Securities and Exchange Commission will put forward rules that will govern how companies can raise equity capital using crowdfunding.

It has been slow going. The SEC, staggered by its role in the financial crisis, is extraordinarily cautious now. The agency remains under the influence of the industry it regulates, which is frightened by crowdfunding. Industry officials have built obstacles in the SEC’s path to creating crowdfunding rules.

Critics of crowdfunding say that the risk of fraud is high, but their case is weak given that individual dollar investment amounts allowed under the JOBS Act are so small that it would take hundreds of years for crowdfunding to cost the American people the $17 trillion they lost at the height of the financial crisis.

Further, the risk of fraud can be managed by any number of financial instruments designed to do so. Supporters of the movement, for instance, have developed something called the crowdfunding put option, which would allow investors to sell securities back to the seller if fraud is uncovered.

Participants are also likely to sound the alarm if they spot problems. Supporters already have uncovered a potential flaw in the crowdfunding process that might give rise to significant fraud. Rather than discuss this publicly, we have warned the two largest crowdfunding platforms. We will wait to spell out what that flaw is, since we do not want to encourage frauds and seek to protect this new marketplace.

In other words, we (supporters of the crowdfunding movement) got this.

Here is what I think the SEC must do now: Broaden the base. At its forum on small-business capital formation last month, where crowdfunding rules were discussed, the SEC did not have a single African American on any panel. It is important to get participation and perspectives from many communities.

Currently, securities lawyers, another group affected by crowdfunding, have a stranglehold on the rules process. The SEC needs to, again, get input from multiple stakeholders, not just the legal community. This is a time for flexible, open and market-based crowdfunding rules and standards.

The SEC also must be willing to stand up to financial industry interest groups, which also threatened by crowdfunding and have obstructed action.

The JOBS Act is designed to reopen American capital markets to small companies, in part via crowdfunding. Like open source software, crowdfunding is simply open source financing. The regulations required by the JOBS Act are clear.

So is the task before the SEC. Let’s hope the agency doesn’t take longer and make this more complicated than it needs to be.


Saturday, December 22, 2012

Tuesday, December 18, 2012

Blood on their hands

A recent announcement by a very large private equity/venture capital firm stated as follows: "In 2006 affiliates of Cerberus Capital Management, L.P. made a financial investment in Freedom Group." Freedom Group manufactures the Bushmaster Rifle. The Bushmaster was used to kill 26 people in Newtown, Ct., including twenty 6 and 7 year old children.

As the firms' press statement noted, "established in 1992, Cerberus Capital Management, L.P. is one of the world's leading private investment firms. Cerberus has more than US $20 billion under management invested in four primary strategies: distressed securities & assets; control and non-control private equity; commercial mid-market lending and real estate-related investments."

In seeking social credit for moving quickly to sell its investment in Freedom (Firearms) Group, Cerberus makes a number of spurious and disingenuous claims. Among these are the following:

"As a Firm, we are investors, not statesmen or policy makers. Our role is to make investments on behalf of our clients who are comprised of the pension plans of firemen, teachers, policemen and other municipal workers and unions, endowments, and other institutions and individuals. It is not our role to take positions, or attempt to shape or influence the gun control policy debate. That is the job of our federal and state legislators."

This is the "you are guilty, too" argument made by reference to "pension plans of firemen, teachers, policemen and other municipal workers and unions, endowments, and other institutions and individuals." As a large investment adviser in a highly unregulated space, Cerberus has full control over their investments. Clients, including firemen, teachers, policemen and other municipal workers, are prohibited from actually selecting investments. If I were these clients I would immediately place Cerberus on my review list, with an eye toward replacing the firm. "Firemen, teachers, policemen and other municipal workers" will want to know why they are being blamed.

Many faith based pension funds and other socially responsible investors do not invest in firms like Freedom (Firearms) Group specifically because they do not want to profit from human bloodshed. Cerberus was empowered to make the same choice. They did not. 

The next thing to notice is the claim that they are "investors, not statesmen or policy makers." This, too, is false. This firm, and others like them are, deeply involved in every policy issue of any consequence, from debates on taxing carried interest to discussions concerning financial reform. They are involved in the gun control debate, too, through their PAC and campaign contributions.

There can be no question that they bear some, admittedly limited, responsibility for the events in Newtown, Ct., as evidenced by the fact that they, and their clients, will be the target of several lawsuits. 

Now they, and their clients, have the blood of innocents on their hands. 

Friday, December 7, 2012

Took a while, but we got there: 7.7%.

According to recent news reports, "Despite Hurricane Sandy and the nationwide shutdown of Hostess Brands Inc., with many of the Twinkie company's 18,500 workers laid off, the nation's payrolls expanded by 146,000 jobs while the unemployment rate dropped to 7.7 percent, the U.S. Labor Department reported."

These numbers are in line with our October 31, 2012 forecast. As we said then "The consensus forecast is for a 7.8% to 8.0% unemployment rate. Our Fully Adjusted Return (TM) Model, combining social and financial data, predicts a 7.7% (unemployment) rate." Unemployment was 7.9% for October.

We also suggested readers "expect a 7.7% unemployment rate in November or December, even with the storm..." 

Today's 7.7% rate completes this forecast cycle. We will release our 2013 GDP and unemployment rate forecasts soon.