A few weeks ago, I described to you a really special extracurricular project undertaken by one of my students, Brandon Whiteley, now an alum, this past year. The project? Proposing and securing legislative passage of Invest Tennessee, a Tennessee state securities law exemption for intrastate offerings that incorporates key features of crowdfunding. The legislation became effective on January 1.
In that first post, I described the project and Brandon's observations on the legislative process. This post highlights his description of the influences on the bill that became law. Here they are, with a few slight edits (and hyperlink inserts) from me.
On Influences
Our success with the passage of the Invest Tennessee legislation stems directly from the competence and passion of everyone involved. We got lucky, nothing short of it.
This bill never would have happened without my experiences during the summer of 2013. While I had an interest in startups and entrepreneurship, that blossomed by the passion from what I saw at Start Co. in Memphis, formerly called LaunchMemphis. Andre Fowlkes and Eric Mathews, not to mention Al Pickett (the “master mentor”) and Hillary Quirk (the community manager), have built an amazing high-growth startup accelerator and economic development mechanism in a city that struggles to modernize beyond its roots in agriculture and transportation. I’ve never met anyone that loved their community as much as these folks, and that passion influences and animates everyone around them. I left my internship there with a strong impulse to keep carrying that battle standard.
While I was with Start Co. doing social media outreach research, I came across a new idea from Georgia: using the intrastate securities registration exemption to raise capital for startups via special crowdfunding portals, namely SparkMarket, built specifically to connect Georgian intrastate offerors with Georgian investors. I studied securities regulation briefly during my Business Associations class with Prof. Joan Heminway during 2L year and recalled this little-used exemption. Combined with what I had learned from Start Co. about Tennessee’s accelerator programs and my own understanding of state geography and economics, it crossed my mind that Tennessee was the ideal place for intrastate crowdfunding. Georgia boasts a primary economic and cultural hub: Atlanta. Tennessee has four: Memphis, Nashville, Knoxville, and Chattanooga. That gives Atlanta a major economic advantage, as most of their capital pools to their major city, whereas ours stretches across the breadth of the state.
I watched and waited to see what Georgia produced. By October of 2013, SparkMarket celebrated tremendous success after a $100,000 capital raise with Bohemian Guitars. I thought, well, if a dinky oilcan guitar company can raise that kind of money on an offering, surely some of the companies from Start Co. could do the same. Nashville politics and the state legislature were not new to me. My experience included several years of leading mock legislative efforts and an internship there in 2010. By good fortune, I had taken Senator Doug Overbey’s State and Local Government course during the fall semester and intended on taking Securities Regulation when offered the following spring. I knew just enough about both state government and securities law to be bold, so I took the TennEquity project (later, the team wisely adopted the more appropriate title from Sen. Kelsey, Invest Tennessee) to the experts. Both Sen. Overbey and Prof. Heminway convinced me that this could work. By golly, they were right.
Ah, the power of human resources and connectivity . . . . I try to teach my students this kind of stuff in the classroom, but I have found that it's much better taught through experience in the "laboratory of life" (or in simulations that approximate the same).
I hope you all love this story–and Brandon's wonderful "can do" attitude and user-friendly personality (which shows in his writing style)–as much as I do. I kept wondering why he hadn't yet been hired. Admittedly, he was looking for a rare kind of job for newly minted lawyers–one with significant public service responsibiltiies . . . .
Good news on that front, too, however. News flash! Brandon recently accepted a position working with the Mayor of his home county (Shelby County, Tennessee), Mark H. Luttrell, Jr. I am confident that he will provide the mayor with valuable research and counsel.
Next up in this series: the third and final installment of Brandon's observations about his project. Stay tuned!
[Note: The original post stated that Bohemian Guitars had raised $1,000,000. Somehow, there was an extra zero in there. The number has now been corrected.]