Finova Financial Unveils JOBS Crypto Offering

Regulated public securities offering would allow non-accredited investors to use cryptocurrency to invest in established companies

Palo Alto – November 8, 2017 – Cooley advised Finova Financial on the creation of a fundraising process known as a JOBS crypto offering or JCO. The offering, when completed, will give investors the opportunity to invest in equity ownership of previously privately held companies using cryptocurrency. 

“We think the JCO has the potential to have a massive impact on the way startups raise funds, while creating some much-needed regulatory clarity in the crypto investing space,” said Sheel Mohnot, partner at 500 Startups, in a news release issued by Finova.

According to Finova, JCOs are designed as a hybrid of initial coin offering investments, which allow companies to raise capital more readily through cryptocurrency investments, and a traditional IPO. In a JCO, tokens representing ownership of shares of capital stock would be tracked on a distributed ledger, or blockchain, and would be sold pursuant to a registration statement filed under the Securities Act or, for a transaction exempt from registration under the Securities Act, pursuant to Rule 251 under the Securities Act.

JCOs are the brainchild of fintech entrepreneur Gregory Keough, current CEO of Finova and former CEO of Mobile Financial Services, a MasterCard and Telefonica joint venture for mobile financial services. 

“I liked the idea of the ICOs when they were first introduced, as they looked like an exciting way for startups to raise funds from small investors, but I had concerns about regulatory compliance practices, especially for tokens that are clearly securities,” said Keough in a news release. “I designed the JCO as a process to open the doors of opportunity for the small investor, allowing them to participate using cryptocurrency in security offerings in compliance with SEC regulations. I envision the tokens sold in JCOs being listed on an alternative trading system, creating a liquid security and providing companies with an alternative to a traditional initial public offering.”

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