On investment publicity tools
So that now you're allowed
To pitch to the crowd
And separate money from fools.
Once your IPO had to be edited
To keep the investors accredited -
No public appeal
For an IPO deal -
But did Congress know better? You bet it did!
For an IPO deal -
But did Congress know better? You bet it did!
No more need for advisors advisin' it,
To prevent any legal surprise in it;
Just poke ev'ry friend
For cash they can send
To your shack with a couple of guys in it.
As the Wall Street Journal put it: Bring on the fundraising billboards! Yesterday new rules under the JOBS Act went into effect, lifting the longstanding ban on general solicitation of private investments. For the last 80 years, for an IPO or other securities offering to get exemption from SEC registration requirements necessitated compliance with Regulation D. Under Reg D, a company or fund looking for investors had to avoid any "general solicitation" and ensure that every investor was "accredited;" essentially, wealthy and sophisticated.
Under the Jumpstart Our Business Startups Act, however, investments can be solicited as generally as you want - through blogs, tweets, TV, radio, Facebook, LinkedIn, YouTube, you name it. Such openness puts the onus on entrepreneurs to take "reasonable steps" to ensure that angel investors are also accredited investors, and puts a higher burden of trust and due diligence on investors, who must be sure that they can place not only their money, but also their private financial data in the hands of up & coming impresarios.
Let the crowdfunding begin!
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