William Carleton
It's not widely known, but the SEC has proposed rules that, if adopted, would make startup financing harder. Let's collect a list of questions to ask the SEC during the comment period.
If an entrepreneur shares his pitch with a potential investor under 506b rules, but then the investors tweets, blogs or publicizes either a. info about the company or b. his investment in company...is that general soliciitation? and how does the start up know he's now got 30 days to file Reg D?
Presuming these angel groups plan to operate under the 506b exclusion, if they announce finalists or winners of their angel competitions, is that general solicitation?
If a group of investors, all accredited, are looking at a start up assuming the 506b exclusion, and that start up pitches at an open "pitch night", do they now all have to provide verfification of their private assets to said firm? I don't think they'll want to.
What if a malicious investor, wanting something other than the start up success deliberately does a general solicitation for a start up, just so they can later invoke recission and unravel a deal to achieve ends like fire sale of ip?
What if a start up makes a mistake, doesn't file form D in 30 days. now all seed round investors are at risk, since start up is in 1 year penalty box, and the firm is at risk without ability to generate capital. Is this what SEC and congress intended?
If a third party can do a general solicitation on behalf of a startup (which is unclear), and invoke 506c, how does an angel group ensure their investments are "safely" excluded in 506b.
Is the competition in and of itself a "general solicitation"? If the only investors are accredited, and members of an LLC that didn't do open solicitation?
We're a group that wants to create a vibrant local economy. We have created an accredited investor group that chooses firms to invest in, but in addition, we use our visibility as a group and event to provide public relations for all of the firms entering the competition, and especially the winners, with the hope that they will find CUSTOMERS not necessarily backers. How do we do this without it being perceived as general solicitation?
