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Beware, Forms D Are Public

Forms DBy Christina Chan & Joe Wallin

If you haven’t been through the process of raising money for a startup before, you may not be aware of this, but when you raise money from angels or VCs you are generally required to file a Form D with the SEC and state securities regulators.

You can find the Form D at the following link:

Now, in general, filing a Form D might not sound too bad.  After all, it is only 4 pages long before the instructions and continuation pages (and 11 pages with all of those included), and the disclosure required is not that onerous (e.g., names of officers and directors, amount to be raised, amount raised so far).  But there are a few rubs.

Forms dFirst, the fact of disclosure itself.  What if you and your co-founders are working this startup as your “side hustle”?  What if you all have day jobs at big companies around town and you don’t necessarily want your name on a public document filed with the SEC saying you are the executive officer of a startup?  Unfortunately, the form requires all directors and executive officers to be disclosed.

forms dSecond, there are deadlines for filing the Form D.  Under the current rules, the Form D is supposed to be filed with the SEC no later than 15 days after the date of the first sale of securities (even the IRS gives you 30 days to file an 83(b)).  The rules define “date of first sale” as follows:  “the date on which the first investor is irrevocably contractually committed to invest.  If the due date falls on a Saturday, Sunday or holiday, it is moved to the next business day.”  So, you have a relatively short timeline in which to file your Form D timely.  It is actually pretty easy for a company to miss this deadline.  The deadline is especially short because you can’t just file the form.  First, you have to get Edgar filing codes and that form must be notarized.  Obtaining the filing codes typically takes a couple of days in and of itself.

forms dThird, the form you file, the Form D, is a public filing.  Forms D used to be paper filed only.  But they are now required to be filed electronically and various media outlets monitor these filings to report on them.

The Press

You may be alarmed when, after filing your Form D, the press reports about your fundraising efforts, or an article is written about your fundraising efforts.  You may be even more alarmed when a reporter calls out of the blue and wants you to talk about your financing raising efforts for an article.

Be careful if your offering is ongoing because if you are conducting a non-generally solicited Rule 506(b) offering, you cannot comment on your offering to the press.  Even if the press reports about your Form D filing incorrectly, you do not want to call and correct them.

To protect your 506(b) status, the safest thing to do if contracted by a reporter who is asking questions about your offering is tell the reporter, “Due to SEC rules, I am unable to provide details at this time.” That refers them to the SEC regulation rather than delving further into your offering and may help clarify the reporter’s understanding of the regulations.

Christina Chan – Associate – DWT – Christina focuses on representing startups and emerging companies and mature public and private companies.

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General Solicitation and Startups

General Solicitation and startupsPractical Law Company has just published a resource, General Solicitation and Startup Capital Raising.

The work is a collaboration between me and Lauren Hakala, Editor at Practical Law Company.

Lauren was incredible to work with. I feel fortunate to have had the chance to work with her on this project.

The subject of the article is general solicitation and fund raising for startups.

Here are some of the questions we tackle:

  • Implications of Using General Solicitation
  • Public Website, Social Media and Print or Broadcast Mentions of Offerings
  • Online Funding Platforms
  • Product Advertising and Business Announcements
  • Demo Days, Pitch Events and Other Meet-Ups

I hope you enjoy it!

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Is Sitting The New Smoking?

Is sitting the new smokingIn the United States, we watch televised dancing competitions in a sedentary state of hypnotic bliss, giving little thought to the implications. However, two studies published in the October issue of The British Journal of Sports Medicine have concluded that each hour you sit shaves 22 minutes off your life, as opposed to just 11 minutes for a cigarette. This conclusion was a result of an in-depth examination of data collected by the ongoing Australian Diabetes, Obesity and Lifestyle Study, funded in part by the Australian government, which maps the health habits of 12,000 Australians.

Sure, there has been ample media time given to the bulkification of America. In fact, we most likely saw said-stories while sitting and watching television. But merely closing the chip bag and searching on the internet for gym memberships is not enough! We sit at our desks, we sit during our commute, we sit at home; it’s as if our legs only exist to give us an excuse to buy new pants.

Many people are realizing this and deciding to do something about it. Walking meetings used to be reserved for movies where two trench-coated characters would have clandestine conversations while strolling through the DC capital mall. Now, regular people are having walking meetings as well, like my friend Greg Gottesman, described in his blog post Walk With Me.

Do you already have a standing desk? What about your friends? Do you chide them that they sit too much? Do you wear a Nike Fuel Band and compulsively compete with your friends?

Well, if you’re concerned that all of your sitting has shortened your life enough that you may keel over before you’re done reading this blog post, then my friends at client MVMNT, Inc. have a solution. They’ve launched a Sit Tracker crowdfunding campaign. It’s a device that will track how long you sit (pictured above). They intend to build software as well that will enable you to compete with your friends as to who sits the least.

I’m getting one. Ping me if you get one too. I look forward to competing with you!

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