All posts tagged financings

Event: Is Crowdfunding a Viable Funding Option For Your Business?

CROWDFUNDING OPTIONCrowdfunding has injected between thousands to millions of dollars to businesses which were not considered “traditionally” fundable at the time they created their campaigns. Many founders of startups have seen this and asked themselves, “Is crowdfunding really a viable option?” We’ve created this event to help the startup community answer this question along with answering the most important, and often undiscussed, questions around crowdfunding.

Our panel will cover:

  • How crowdfunding can help you start or build a business
  • The 3 main types of crowdfunding & the differences between them
  • Why you might want to choose one type of crowdfunding over another
  • The JOBS Act and how it’s affecting funding now, and in the future
  • Legalities around crowdfunding
  • The benefits of crowdfunding
  • The challenges of crowdfunding
  • Universal strategies for creating a successful campaign
  • And more!

Speakers

Moderated by Serena Walker, Founder and CEO Athena Business Institute

ABI SpeakersRegister Here

Date:      Monday, April 7th, 2014

Time:      6pm – 9pm

Cost:      $20 Live / $20 Replay + Online Q&A / $30 Both!

Where:  1201 Third Avenue, Suite 2200, Seattle.

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Angels Descend on D.C.

angel investmentThe Angel Capital Association is hosting its annual summit two weeks from now in Washington, D.C. If you are interested at all in angel investing, I think this will be a great conference to attend.

(Disclosure: I am on the ACA’s Public Policy Advisory Council)

The folks at the ACA have been critical in helping positively influence public policy on angel investing in the last several years.

Just to give you one example that you may or may not recall, but the first iteration of Dodd-Frank would have re-set the “accredited investor” financial thresholds for inflation going all the way back to the 80’s. That proposal, if it had been enacted, would have wiped out literally 3/4ths of all angel investors. The second iteration of Dodd-Frank was worse—it would have required all Rule 506 offerings to first be submitted to the SEC for 120 days for review, and if the SEC didn’t review then states would have been given the chance to review before offerings could go forward.

But for the involvement of the ACA, and folks like Dan Rosen and Senator Maria Cantwell, these things could have happened. Being involved is important. The upcoming ACA summit will be a great way to get started, if you are looking for a way.

Now is a critical time for angel investing in America. The SEC is currently evaluating a number of different issues that will have a dramatic impact on angel investing, such as:

  • The definition of “accredited investor.” It is possible that the SEC will propose to modify this definition to “define out of the game” a huge swath of the population that currently qualifies as accredited. See the ACA’s letter to the SEC.
  • The proposed Regulation D and Form D rules, that will require advance filings of Forms D and onerous consequences to companies if they file to advance file before they “generally solicit” their offerings.

(If you want to see the former Chair of the ACA, Catherine Mott in action, read the transcript of this SEC open meeting in which she questioned the SEC on whether demo days constituted “general solicitation.”) 

Policy makers need the input of people who are active in the early stage company ecosystem.

“We are hosting this meeting in Washington, D.C. for a reason,” ACA’s Chair David Verill said. “The Securities and Exchange Commission is not only assessing the underlying definition of who can be an accredited investor, but is also reviewing significant rules around the JOBS Act involving general solicitation and online crowdfunding platforms. Now more than ever is the time to join with angel colleagues to learn about, to shape, and to nurture this powerful economic engine.”

2014 ACA Summit

Angel Impact: Entrepreneurial and Economic Success

March 26th – 28th

Review the Agenda

If you plan to attend, please let me know and I can try to connect you to friends who will be there.

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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:  http://www.sec.gov/about/forms/formd.pdf

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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