Finders: Recommendations to the SEC

The SEC’s Advisory Committee on Small and Emerging Companies recently issued recommendations regarding the regulation of finders. If you are not familiar with the rules, the SEC takes a very narrow view of who can help companies find investors without having to register as a broker-dealer. Broker-dealer registration is so onerous that people won’t engage … Continue reading Finders: Recommendations to the SEC

Rule 701 Math: The 15% of Shares Test

If you are administering a private company stock option plan, you need to do what is referred to as “the Rule 701 math” before every grant of stock options or equity awards. What is “the Rule 701 math”? Rule 701 contains a set of mathematical limitations on how many shares of stock you can offer service providers … Continue reading Rule 701 Math: The 15% of Shares Test

Rule 701

What is Rule 701? And if you are a startup or emerging company, why do you need to know about it? Rule 701 is a federal securities law exemption for issuing equity to employees, contractors and advisors. You need a securities law exemption or registration statement in place to issue securities, and so finding and complying … Continue reading Rule 701

Pitching Folks You Just Met

Startups raising money need to know how to do so in compliance with federal and state securities laws. The trouble is–it is not always easy to know what the rules are. To make it more difficult, the rules keep changing. Congress passes new laws. The SEC issues new regulations. All of it becomes difficult and … Continue reading Pitching Folks You Just Met

Pitching to the Unknown

Pitching your company to investors and trying to raise money involves meeting a lot of people you have never met before. This is true regardless of the depth of your network. To raise money for a startup, you have to work hard and meet a lot of new people. The SEC has issued rules under … Continue reading Pitching to the Unknown

Angel Groups and the SEC

The SEC recently issued guidance on angel groups and the general solicitation and general advertising of private company securities offerings. General solicitation and general advertising of private company securities offerings is a hot area. The JOBS Act allows companies that are raising money solely from accredited investors to generally solicit and generally advertise their offerings. However, … Continue reading Angel Groups and the SEC

The “Pre-Existing, Substantive Relationship”

The SEC recently issued guidance on what constitutes a “pre-existing, substantive relationship.” The guidance is helpful for companies raising money for a number of reasons. The SEC guidance is especially helpful because there has been a fair amount of uncertainty about how to make sure a securities offering is not considered to have been generally solicited or generally … Continue reading The “Pre-Existing, Substantive Relationship”

Online Portals, Rules 506(b) & (c), and CitizenVC

The SEC recently issued an important no-action letter for online portals, and for other issuers of securities (including startup companies), trying to raise money in compliance with the SEC’s new 506(b) and 506(c) rules. We can thank Dan DeWolf from Mintz Levin and his colleagues for obtaining this guidance from the SEC. Dan wrote a post … Continue reading Online Portals, Rules 506(b) & (c), and CitizenVC

How to Make the Washington Crowdfunding Law Better

Washington State passed one of the first state-level equity crowdfunding laws in the nation in 2014, to great fanfare. The regulations implementing the law went into effect November 1, 2014. You can find a good summary of the rules at this link: http://www.dfi.wa.gov/small-business/crowdfunding The trouble is–despite the rules being in effect now for almost a … Continue reading How to Make the Washington Crowdfunding Law Better

Deadlines: Founders, Which Deadlines Should You Worry About?

If you are a founder, there are certain deadlines you do not want to miss. This blog post focuses on what I consider to be the two most important deadlines to worry about. Of course, as your company grows other deadlines will arise as well. But at the founding, there are two deadlines you want … Continue reading Deadlines: Founders, Which Deadlines Should You Worry About?