RAISE CAPITAL THROUGH CROWDFUNDING
At the Most Affordable Rate...
Exemptions from registration (Reg. CF and Reg. A)
Raise up to either (i) $1,070,000, or (ii) $50 million over 12 months
Issue free-trading shares (Reg. A)
Limited SEC disclosure
Limited financial statement requirements (Reg. CF and Reg. A Tier 1)
No PCAOB audit required (Reg. A Tier 2)
Non-accredited investors allowed
General solicitation allowed
For additional information on Reg. CF please click here
For additional information on Reg. A please click here
What are the general requirements to satisfy Crowdfunding as an exemption from registration?
Under Regulation Crowdfunding:
All transactions under Regulation Crowdfunding must take place through an SEC-registered intermediary such as a broker-dealer or a FINRA-registered funding portal. A list of all FINRA-registered funding portals can be found here.
Companies are allowed to raise an aggregate of $1,070,000 in a 12-month period.
Investors are limited in the amount they can invest in crowdfunding in a 12-month period.
SEC disclosure is required in a Form C and subsequent filings.
What are the benefits and downsides of using Regulation Crowdfunding as an exemption from registration?
The benefits to using a Regulation Crowdfunding exemption are as follows:
Issuers may offer and sell to investors who are not “accredited investors;”
Issuers may conduct concurrent private offerings (such as pursuant to Rule 506(c) of Regulation D);
Issuers are subject to limited SEC reporting requirements; and
Broadens issuer shareholder base.
The downsides to using a Regulation Crowdfunding exemption are as follows:
Offers and sales must be made through an intermediary;
Issuers relying on Regulation Crowdfunding must file a Form C with the SEC which must include financial statements;
Investors may only invest subject to certain limitations;
Securities sold in Regulation Crowdfunding offerings generally cannot be resold for one year;
Bad-actor disqualifications apply to Regulation Crowdfunding offerings; and
Investors who are not high net-worth individuals are not accustomed to investing in high-risk small companies which means they may require more attention than high net-worth individuals.