Solicitation Rule Changes – Part II

The most difficult type of accredited investor to verify is the natural person who meets the income or asset requirements. As discussed in a prior post, an accredited investor includes a person who has a net worth that exceeds $1,000,000.00 (without taking into account the value of a primary residence), or an individual who made $200,000.00 in the prior two years, or joint income with a spouse exceeding $300,000.00 in the prior two year, with a reasonably expectation of making […]

Read More

Solicitation Rule Changes – Part I

As noted in a prior post, general solicitation of investors for private investment has historically been prohibited under SEC rules. This has meant that a party seeking investment could not solicit the public to find investors through such means as websites, radio or television ads, articles in trade publications or magazines, and so on. Accordingly, parties seeking investment have always had to maintain a careful watch over how they look for, and find, investors.

In 2012, Congress passed, and […]

Read More

Resale Limitations for Securities from Private Placements

Another limitation under the SEC rules for a private placement which will be under the safe harbor provisions is that the issuer must take reasonable care to make sure the securities are not resold without registration or the application of an exemption. Specifically, this means the securities should not be issued to an underwriter, that is, someone who buys the securities to sell them again. Generally, this can be accomplished with a reasonable inquiry, a disclosure of the restriction on […]

Read More

What is an Accredited Investor for Private Placements?

Accredited investors are specific institutions and individuals defined by the SEC rules who fall within the definitions at the time of the investment. Accredited investors include directors, executive officers and general partners of the issuer or an entity in which all of the equity owners are accredited investors. The definition also includes any individual who has a net worth of, including a spouse, that exceeds $1,000,000.00 but without taking into account the value of a primary residence, or an individual […]

Read More

SEC Rules Providing Safe Harbor for Private Placements: General Condition of Information Disclosure, Solicitation Prohibition

A second general condition in the SEC rules allowing a safe harbor for a private placement is the mandatory provision of certain information described in the rules. The information includes audited financial statements and additional non-financial information. All of the investors must receive the same information.

Although the rules are changing on this particular issue, general solicitation of investors is currently prohibited. If the issuer and investor have a prior relationship, this is generally not a problem. If investors are approached […]

Read More

Business Financing: When Your Target Market is Investors, Top Five Investor Issues

Last week I summarized the topic of financing a business using sales, debt, or equity.  Remember, the Rockies Venture Club’s Angel Capital Summit is coming this March 19-20, 2013 at the University of Denver, Sturm Hall. Go to the links to register to attend, and perhaps I will see you there.

Meanwhile, the ECOops team, of which I am a part, has continued to discuss financing through sales. Specifically, the team has started to discuss the very practical issues of how […]

Read More

Business Financing: Overview re Debt and Equity Options

This month is the Rockies Venture Club’s Angel Capital Summit on March 19-20, 2013 at the University of Denver, Sturm Hall.  Partly in recognition of this event, I am going to focus on financing issues for businesses this month.  While the Angel Capital Summit is focused on what is sometimes referred to as the angel round of investment, today’s post will give a basic overview of financing options for businesses.

As Charles Crenshaw noted in his post on Growing Your Business, […]

Read More