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Chapters:
- About Reg D briefly
- The two important forms of Reg D (506A & 506C) advantages and disadvantages
- Limitations and restrictions of Reg D
Disclaimer:
The content in this webinar is not and shall not be construed as investment advice. This information is meant to be informative and for general purposes only.
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Rod Turner
Rod Turner is the founder and CEO of Manhattan Street Capital, the #1 Growth Capital service for mature startups and mid-sized companies to raise capital using Regulation A+. Turner has played a key role in building successful companies including Symantec/Norton (SYMC), Ashton Tate, MicroPort, Knowledge Adventure, and more. He is an experienced investor who has built a Venture Capital business (Irvine Ventures) and has made angel and mezzanine investments in companies such as Bloom, Amyris (AMRS), Ask Jeeves, and eASIC.
www.ManhattanStreetCapital.com
Manhattan Street Capital, 5694 Mission Center Rd, Suite 602-468, San Diego, CA 92108.
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So what is RegD? RegD is one way or the other, it's been around for a long time, the SEC amended RegD in 2012, September of 2012 to enable companies to market themselves and their offerings online via for a RegD raise, so RegD is, there are two forms of it that matter 506b and 506c, many people who have only done raises offline habitually use 506b which where you when you know the people that you are emailing and making phone calls to are accredited then you're allowed to raise money via 506b and they're able to self-validate, they're able to state that they are accredited, what their income is, what their net worth is, which is a blessing. The disadvantage of 506b is that you are not allowed to market that offering online to anybody, you can only promote it to people that you already know are accredited, not that somebody else knows are accredited but that you already know are accredited.
So that is a significant restriction which is why most people use 506c when they're raising money online via RegD. 506c allows general marketing, PR advertising, social media advertising where people who are attracted may be accredited or not but you are only allowed to accept investments from those who are accredited and this is a negative that goes with that. They are required to validate that they are accredited with a third-party service that is run by an attorney, so we have such a service that we work with but it is a bit of a pain, somebody who is very wealthy has to prove that they're wealthy and they have to take some steps, upload a couple of documents and it's a bit of a pain to do that but that is the price of entry in order to be able to advertise and promote your offering to the masses essentially.
I'll be getting into more of these things later. Online solicitation is okay, I said that there is no maximum amount of money you can raise in a RegD in any period of time. Logistically you are limited by the number of investors that you can bring in. If you exceed 2000 accredited investors there's a thing called Section 12G which can in some cases, depending on the size of your business, when the business is big enough it can require you to do expensive audits every quarter as if you were publicly traded on the NASDAQ already. So that is a restriction that matters. There are legitimate ways to solve that problem. Typical investment amount in a RegD offering online will be 15 to 50K, obviously depending on the nature of the offering.
THIS TEXT TRANSCRIPT HAS ERRORS IN IT THAT WERE CAUSED BY THE SPEECH TO TEXT CONVERSION SOFTWARE WE USED. DO NOT DEPEND ON THE TEXT TO BE ACCURATE. WATCH THE RELEVANT PARTS OF THE VIDEO TO MAKE SURE YOU ARE PROPERLY INFORMED. DO NOT DEPEND ON THIS TEXT TRANSCRIPTION TO BE ACCURATE OR REFLECTIVE OF THE STATEMENTS OR INTENT OF THE PRESENTERS.
