Raise Startup Capital, Investment via SEC 506(c) Internet Marketing, Advertising, Crowdsourcing

by Avatar in Blog September 16, 2013

In July, the SEC voted to eliminate 80-year old rules against advertising an offering of private stock, by businesses (this primarily was focused on smaller businesses, vs. the largest). Starting on September 23rd, under the new SEC Regulation 506(c) (part of the JOBS Act, formally the Jumpstart Our Business Startups Act), you’ll be able to promote sales of your company’s private stock on Facebook, Twitter, LinkedIn or just about anywhere else – online or off.

This is a very significant change in how small businesses are able to quickly and effectively raise capital through modern marketing and advertising.

Business owners (issuers) can now advertise stock offerings via any media, including online, interactive marketing channels, techniques, advertising and equity crowdfunding groups – this includes Facebook, Twitter, LinkedIn, Google Adwords etc. Actual investors, however, need to prove that they are an “Accredited Investor” (as defined in Rule 501 of Regulation D, from the Securities Act of 1933). While this threshold may limit smaller, newer investors, it does greatly expand the audience of potential investors, far beyond the “traditional” mix of Angels, Venture Capitalists, Private Equity funds and other typically hard-to-reach or engage sources.

While advertising and marketing your stock or ownership offering is now allowed, it must be carefully created and managed – and it must be focused to those investors who can be verified as accredited. You, as issuer may perform the verification, or verification can occur through third-party accreditors as delivered through services from entities like Crowdsourcer, AngelList or FundersClub. Note that crowdfunding entities like Kickstarter or Indiegogo are “donation-based” sites (vs. investment crowdfunding), that don’t actually deliver equity or share-based ownership to donors – but marketing opportunities for participation or cause support through these crowdfunding sites also requires competent, professional marketing and social media experience.

In short, only very experienced, knowledgeable and professional online, interactive marketing firms should be used to market your shares for sale online – such as KME Internet Marketing.

With our significant background in early-stage marketing, crowd-sourced funding, and demographic targeting for B2B niches (including very technical, focused subject matter), KME is uniquely qualified to help you effectively market your stock offering or investment opportunity online. We may also be able to provide referrals or assistance regarding investor verification (the burden of which now falls squarely on the issuer) – contact us for more information or referrals regarding help in:

  • Reviewing information about the investor, including tax returns and/or other financial statements;
  • Getting written confirmation from the investor’s lawyer or CPA that attests to the investor’s accredited status; or
  • Filing “Form D” for a securities offering; which must be filed prior to advertising and not at the end of the round, as has been the case.

Advertising and marketing equity for sale may seem like an incredible opportunity – and it is, but it’s not without standard risks. Issuing shares, dealing with new or prospective investors, managing marketing and advertising budget and campaigns – these activities continue to require professional risk management and execution, and perhaps even more so as the floodgates open.

Contact KME immediately to discuss your needs for online, interactive advertising and marketing of private equity (shares) for sale for your startup or new investment opportunity. Online, Internet marketing of equity shares for sale under SEC Regulation 506(c) can truly make a difference in your startup plans.

Note that KME (an Interactive Marketing Firm) is not a Law Firm, and makes no claims or representations of its ability or certification to engage in any legal or securities-related discussions or activities – be sure to discuss this new regulation and its applicability to your situation with your own legal counsel.