If you have started a company or are thinking about starting a company, at some point you will probably need to raise money for your business.
Recently, new securities regulations went live, which now can help you reach more potential investors for your business through general advertising and general solicitation of potential investors.
In the video below, I provide an overview of these new regulations and how the changes significantly affect your ability to raise money.
Key Considerations – Before you begin to raise money through general advertising and general solicitation, consider the following:
1. While you can tell everyone, you just can’t sell to everyone:
- Although you can tell everyone that your company is raising money, you only can sell to Accredited Investors who meet certain financial tests.
- You also will need to take reasonable steps to verify that the investors truly are Accredited Investors.
2. Make sure that you comply with the filing requirements:
- Your company will need to file a Form D with the SEC and check a box indicating that your company is using general solicitation for the offering.
3. Watch out for future regulation changes and additional requirements:
- The SEC has proposed changes to the current regulations, which soon will require more disclosures as well as tighter pre-offering filing deadlines and requirements.
4. There are real consequences if you don’t comply:
- If you don’t comply with the requirements, then your company may be barred from using general solicitation or the important safe harbor exemptions under Regulation D to raise money for one year.
- Once you use general advertising and general solicitation to tell the public about your securities offering, you must stick with it and comply with the regulations throughout the entire offering.