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Why George Washington and Henry Ford would have loved crowdfunding

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Why George Washington and Henry Ford would have loved crowdfunding

By: Steve Sadler, CEO

April 05, 2016

George Washington is known as America’s `First Entrepreneur’ and I am fully confident he would have been a huge proponent of crowdfunding and the new Reg A+ rules — also known as the mini-IPO — that we are capitalizing on with a $30 million offering to strategically grow our business.

Washington was a fearless military commander and dauntless leader who was also a visionary businessman with an eye for disruptive technology. He’s precisely the type of man who is in such short supply in America’s leadership today.

I took some time recently to read up on Washington after some conversations I’ve had with John Berlau, an economist and a senior fellow at the Competitive Enterprise Institute in Washington D.C. and a recognized expert on crowdfunding. His paper titled, “Declaration of Crowdfunding Independence: Finance of the People, by the People and for the People” has been widely cited and he is also an editor of CrowdFund Beat.

I was able to reconnect recently with John at the NextGen Crowdfunding Ignition 1.0 event at South by Southwest (SXSW) where I announced our $30 million mini-IPO. Following the event, John was kind enough to mention Allegiancy’s mini-IPO in one of his blog posts titled, “Berlau at SXSW: Let’s Cut Red Tape Strangling Uberization of Finance.” I couldn’t agree more with John and encourage you to read the blog post.

Later, we were able to grab a few minutes with John to pick his brain on crowdfunding, new Reg A+ and the role of government in finance and the JOBS Act. I want to point out something interesting about John. He’s old school. While Pres. Barack Obama jetted down to Austin via Air Force One, John flew commercial. To Houston. In the interest of flying economically and to avoid a long layover he then took a bus up to Austin. He said the bus trip was a chance to mix with a different crowd.

“I can’t say that I engaged in that many quality conversations on the bus,” he said. “But you try and sell the free market policy to whoever you can.”

Something John wrote recently about Washington really piqued my interest and got me to thinking about how far we’ve come from our Founding Fathers, men who truly were the best this country had to offer. Here’s what John had to say about Washington.

“I would have liked to have dinner with George Washington,” John told me. “He knew business and he was our `First Entrepreneur.’ He knew about crops and agriculture I’m sure and he did some agro-engineering. He grew oranges at Mt. Vernon! He had a whiskey distillery. He introduced the mule to America and some agriculture experts believe that all mules in America came from those at Mt. Vernon. He would know a lot about what we eat at the dinner table.”

He also knew a lot about disruptive technology and was an early investor and proponent of the steamboat at a time when one of the country’s leading advocates and inventors behind the technology — a 41-year-old Bath, Virginia, innkeeper named James Rumsey — was considered a “crackpot,” as Berlau tells the story.

It’s not all that unlike today’s perception of the new Reg A+ rules. There’s plenty of opposition out there to this new method of raising capital — whether it’s government or fat cat bankers who don’t like folks cutting in on their action — but just as Washington didn’t let the detractors stop him, we’re forging ahead with our vision for the democratization of capital.

John has an interesting take on what the “democratization of capital” with new Reg A+ would truly look like in this country. He compares it to how Henry Ford’s friends and neighbors invested in his business and then turned $5,000 into more than a million dollars. Sure the technology is different today — crowdfunding online and via computers is worlds apart from Henry Ford paying his friends and neighbors a visit and sharing his vision over coffee or a drink — but a million bucks is still a million bucks.

“That was a lot of money in 1919,” John said. “That was the crowdfunding of Henry Ford’s day. Why should there be more red tape around a $100 crowdfunding investment than buying a piece of real estate for a couple of hundred thousand dollars? There’s less regulation in buying real estate than in a $100 crowdfunding investment because it fits in the box of `securities.’”

Another argument of John’s is why limit the amount of the offering under new Reg A+ to $50 million, as the current regulations stand? Why not raise the amount of offerings up to $100 million?

“I want to move to a regime to let investors choose what kind of risk they are willing to take,” John said. “I would certainly prosecute cases of fraud. But I would actually expand the pool of accredited investors and also open up choices to ordinary investors. Let’s let investors decide the risk they are willing to take.”

A small startup is not a Fortune 500 company, John continued. “I think people know the risks when they are investing in startups,” he said. “It’s not like there’s not a risk in large companies — people found out there’s risk in Enron and GM — but if people want to take those risks, those small companies might be the next Microsoft or Apple.”

We’re not Microsoft or Apple at Allegiancy. But we’re innovators and disruptors using cutting-edge technology and data analytics in a commercial real estate industry that’s largely operating with virtually the same tools Henry Ford used. It’s all about innovation and vision.

“I see the future is bright because there are so many innovative businesses utilizing Reg A+ and other provisions of the JOBS Act,” Berlau said.

In the spirit of George Washington and Henry Ford, will you join us in making a bright future for this country?

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The final offering circular is available at https://www.sec.gov/Archives/edgar/data/1579173/000135448816006600/0001354488-16-006600-index.htm. The information pertaining to the offering is qualified in its entirety and should not be read or otherwise used except in conjunction with the final offering circular.

No offer to sell the securities or solicitation of an offer to buy the securities is being made in any state where such offer or sale is not permitted under the “blue sky” or securities laws thereof. No offering is being made to individual investors in any state unless and until the offering has been registered in that state or an exemption from registration exists therein.

Publication of the final offering circular is not a recommendation by W.R. Hambrecht + Co., LLC that any particular investor should purchase the securities described in the preliminary offering circular or that the securities are a suitable investment for any particular investor.

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