Many companies that aim to raise capital use crowdfunding. In securities-based crowdfunding, companies pool money from large numbers of investors. This is a common way for them to jumpstart their capital formation, primarily on the internet through crowdfunding portals. Today, crowdfunding continues to increase in popularity, as a growing multiple billion-dollar industry.
Engaging in crowdfunding requires the use of a web portal registered with the SEC. The crowdfunding process involves three main steps:
- Coming up with an innovative idea
- Bringing that idea to life through a product or service
- Modeling the product in an engaging way that acts as an investor pitch to increase your audience
Marketing the product is vital to ensure that all the work you put in to creating and developing the product pays off by attracting interested, dedicated, and passionate investors. Further, it can be incredibly difficult to effectively create, develop, and persuasively advertise a service or product, as each of these steps require different specialized skills. Issuer Consulting, as your crowdfunding consulting firm, will ease your burden by guiding you through the process of executing a successful offering.
Why Issuer Consulting?
Crowdfunding offerings require large numbers of investors to be successful, so attracting these investors is vital. Issuer Consulting offers consulting services, helping you both plan and market your offering to maximize your investors.
Our services include:
- Devising advertising strategies to strengthen the appeal of your crowdfunding offering
- Developing a persuasive investor pitch that will gain the attention of a wide variety of investors
- Ensuring your familiarity with the rules of Regulation Crowdfunding (CF) offerings
- Helping you navigate the SEC-registered crowdfunding portals so you can effectively conduct your offering
- Partnering you with accountants that will provide you with realistic capital projections
- Partnering you with securities attorneys that will help you complete the necessary financial documents to conduct a Reg CF offering (Form C, Form C-AR, Form C-U)
- Crafting a timeline based on your offering to ensure you raise funds quickly and efficiently
Ensure Compliance with the SEC
We will ensure you fill out the required forms to engage in crowdfunding offerings (Reg A+, Reg CF, Reg D)
Help You Craft A Plan
We will outline your goals for the offering ensuring you raise capital efficiently
Prepare You and Your Company
We will help you devise advertising strategies and an investor pitch to engage your audience effectively
Reg CF Offering
The Jumpstart Our Business Startups (JOBS) Act of 2012 allows small companies to raise capital through crowdfunding while being exempt from the SEC’s regulations. Title III applies to companies that raise under one million per year. The only caveat is that these offerings must be made through online crowdfunding portals or websites approved by the SEC. Offerings conducted under the requirements of Title III are known as Reg CF offerings.
Reg A+ Offering
Another common offerings that provide exemptions to SEC rules is Reg A+. Reg A+ offerings allow private companies to raise no more than 50 million dollars. These offerings split into two tiers; Tier 1 includes companies that raise up to $20 million per year. Tier 2 includes companies that raise up to $50 million per year. Further, companies under Reg A+ are not required to register their securities with the SEC or other agencies. However, they must abide by other specific requirements to qualify for the offering. Tier 1 offerings are subject to local Blue Sky laws, whereas Tier 2 offerings are not. Lastly, Reg A+ offerings allow an unlimited amount of investors.
Regulation D Offering and Rule 506(c)
Regulation D, unlike Reg A+, is an offering that limits the amount of unaccredited investors to 35. It provides an exemption from SEC requirements as well, after the company files a Form D. Further, issuers may choose to file under Rule 506(c) of Regulation D. This rule maintains that if the company ensures that every investor participating in the offering is an accredited investor, the SEC will permit general solicitation of the offering. In other words, all participants may advertise the offering through any medium: flyers, posters, online, etc. This additional advertisement can greatly enhance capital formation while increasing publicity.