Marketing Your Regulation Cf Offer: What Issuers Must Be Aware Of

1. Marketing Your Regulation Cf Offer: What Issuers Must Be Aware Of When they promote their crowdfunding pr campaign, organizations that seek to raise capital in accordance with Title III (JOBS Act) must adhere to the SEC guidelines. CrowdCheck's Sara Hanks has been invited to guest post about what issuers should know. Communications and Publicity by Issuers Prior To and During an CF Offering The idea behind crowdfunding is that the crowd friends, family and fans of a small business or startup company even if they're not rich or experienced investors can now put money into that company's securities. In a typically risk-averse field of law, this is quite a novel idea. Congress wanted to make sure that all investors had the same information in order to be able to make this leap. The solution that Congress had within the JOBS Act was that there was to be a single central location where investors could get access to the website of the funding portal or broker-dealer hosting the crowdfunding offering. It is the only platform where you can get most communication about the offering. On the platform, the company can use any type of communication and provide all the information it wants. Keep in mind that platforms are required to be able to communicate the offer with investors as well as potential investors. It allows you to control much of your messages. With that background in mind we set out to determine what you are allowed and not permitted to communicate before and during the course of an event. There are many limitations. Securities law is a highly controlled area, and it is very different from running a Kickstarter campaign. Remember that this regulatory environment is constantly changing. This guide was developed using existing law as well as interpretations provided of the SEC on May 13th, and many conversations with SEC staff. As the market develops and the staff's position may evolve. We understand that the rules can be a bit confusing and do not reflect the way people communicate these days. The issue stems from the wording of the law as it was enacted by Congress. The JOBS Act crowdfunding provisions have strict guidelines for publicity. To give small businesses and startups more flexibility The SEC "interpreted" the provisions to be as broad as they could. What can you say prior to you begin your offer Before the point at which you submit your Form C with the SEC You aren't able to offer any "offers" of securities, either publicly or privately. Be aware that the SEC interprets the term "offer" in a broad sense. So no meetings with potential investors, or divulging any information via forums which offer "sneak peeks" or "first glances" of your offer. No public announcements about the crowdfunding round, and certainly no discussions at conferences or a demonstration day on your plans to conduct a crowdfunding round.

2. Before filing the Form C publically, you may only communicate the offering in a way that doesn't mention it at any time and does not "condition" the marketplace for it. "Conditioning the market" is anything that creates interest for your business. It could include suddenly heightened levels of advertising, whereas regular information about your product or service or ads are fine. This does not apply to "coming in the near future" or hints. The normal promotion of your product or service is allowed. The SEC knows you have a business to run. However, if just before the offer, you begin producing five times the amount of marketing you've previously put out and the SEC could be suspicious that you're doing this to increase interest in investing in your company. It is an excellent idea to speak to your adviser if you intend to modify your marketing during the launch of your CF offering, or if your company is launching at the same moment as the offering. It is okay to openly talk with family members and acquaintances about your plans and get their opinions on how to structure your offer. You cannot, however, pitch to them as investors.