Do public pitch events put you squarely within Rule 506(c)?By http://profile.typepad.com/1237764140s22740 // July 14, 2013 in General Solicitation, Reg D
To generally solicit, or not to generally solicit?
Will the new rules let non-stealthy startups take their time on this existential question while they present at demo days and pitch events?
Or has the act of making a public appearance at which investors are pitched mean you are already necessarily under 506(c) and, in the immortal interjection of Gov. Perry, whoops, you'd better have filed your Form D 15 days back already?
Adam Gering asked me a question yesterday on Quora and a discussion has gotten going there that includes responses from Joe Wallin, Kiran Lingam and David Rose.
Rose's comments focus on how public so much of startup funding raising has already been for some time. The essential insight is that 506(c) may, for many startups or incubator programs, may not so much be a choice, going forward, as a cure for regulatory standards long at odds with industry practice.
Here are Rose's comments in part:
" . . . now that General Solicitation is going to be legal—with strict regulation—my own guess is that we will soon see a *significant* and sharp crackdown on the large majority of the current 'informal marketplace' for startup funding."
Go to the full Quorra thread for the entire discussion.
Meantime, the definitive article to date on whether 506(c) is worth it is the piece my friend Joe Wallin wrote this week for the Wall Street Journal: Time to Advertise Your Private Offering? Not So Fast.
Please keep in mind that all of this discussion takes at face value that the proposed changes to Form D will be implemented as proposed. They may not be. For the sake of honoring what Congress intended under Section 201 of the JOBS Act, the proposed changes to Form D should not be passed in the form proposed.
Photo: Kim Paulin / Flickr.