Many smaller companies are considering raising capital via the new equity crowdfunding mechanism.
While a crowdfunded offering is limited to $1 million, the offering costs are low, for example, there is no financial audit requirement.
I know companies that are considering a crowdfunded offering as the means to raise capital to cover the costs of a larger offering, such as a Reg A+ offering.
The rules and practices permitted for marketing a crowdfunded offering are new. I found the linked article describing the do’s and don’ts of crowdfunding communication written by CrowdCheck, a due diligence, disclosure and compliance services firm for online capital raising, to be a helpful and relatively easy to read guide.
… we wanted to go through what you can and cannot do as far as communications prior to and during the offering.
Unfortunately, there are a lot of limitations. Securities law is a very highly regulated area and this is not like doing a Kickstarter campaign. Also, bear in mind this is a changing regulatory environment.
We put together this guide based on existing law, the SEC’s interpretations that it put out on May 13, and numerous conversations with the SEC Staff. As the industry develops, the Staff’s positions may evolve.
Please contact us at Boustead & Co to discuss your capital market goals.