Subject: File No. JOBS Act Title III
From: Mike Moyer
Affiliation: Adjunct Associate Professor of Entrepreneurship at the University of Chicago Booth School of Business, Adjunct Lecturer of Entrepreneurship at Northwestern University

January 25, 2014

The core challenge with any type of business funding is the inability for even the most savvy entrepreneur or investor to accurately value a company's stock. Even in public market this is an elusive task. Therefore, even people with the best intentions will appear to be defrauding investors when their companies don't produce the returns they expected.

The JOBS Act needs to be accompanied by a set of valuation standards that have universal application for boot-strapped start-ups (which are the main focus of crowd funding)

Because actual value of an organization is impossible to predict we need a proxy that is easy to model. Relative value is the best option because it is based on easily observable events in the market such as the fair market value of a person's labor and industry standards for sales commissions, finder's fees and royalties.

In the relative value model, using a dynamic split, a person's share is equal to the relative value of their individual contribution to the firm divided by the total relative value from all contributors.

Ownership = individual relative value / total relative value.

This equation changes over time to ensure that at any given time each person has EXACTLY the right ownership stake the deserve.

No other equity allocation model comes close to offering such a perfect equity split.

This model virtually removes the potential for fraud in crowd funding scenarios. It also removes many of the hurdles that have been proposed so far.

The core problem with crowd funding and any funding is twofold: 1) the inability to accurately define value and 2) the inability to accommodation change over time.

The relative-value based dynamic model is the perfect solution.

I've written extensively on this topic (Books: Slicing Pie, Get Them Gators) and I would be happy to work with the government to outline recommendations for equity allocations.

Both books are attached, read Get Them Gators first. Slicing Pie is an implementation guide. I've also included a spreadsheet for modeling the shares. For more information visit:

(Attached File #1: s70913-145a.pdf) (Attached File #2: s70913-145b.pdf)

Copyrighted material redacted. Author cites:
Moyer, Mike. Slicing Pie: Funding Your Company Without Funds. Lake Forest, IL: Lake Shark, 2013. Print.