Legal Issues in Equity Crowdfunding

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

There are specific legal issues regarding equity crowdfunding campaigns.

Here’s a list to keep in mind:

The regulations for fundraising are as follows:

Reg CF -- SEC designation for an equity crowdfunding raise that lets anyone invest in a startup for equity up to $5M.

Reg A+ -- SEC designation for an equity crowdfunding raise that lets anyone invest in a startup for equity up to $75M.

Reg D -- SEC designation for a fundraise that requires the investors to be accredited such as an angel investor or venture capitalist.

The funds raised on a Reg CF or Reg A+ will be placed in a Special Purpose Vehicle (SPV) which takes one line on the cap table of the company.

You can promote your fundraise to your family and friends, but the content must be factual and you cannot include terms. 

The terms of the fundraise must be kept on the fundraise platform to ensure all investors receive the same information.

All investments must be made on the fundraise platform.

You can use SAFE notes, convertible notes, as well as equity for the type of security.

You must file a Form C along with two years of GAAP financials.

You’ll need to file one annual report one year from the date of closing the raise.

Keep these legal issues in mind in preparing your fundraise campaign.


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This is the Investor Connect KiwiTech 2022 podcast series. In this series, we discuss trends and topics in the startup world.

I hope you enjoy this episode.
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Thank you for joining us for the Investor Connect KiwiTech 2022 podcast series.

For more episodes, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/ 
For Investors check out: https://tencapital.group/investor-landing/ 
For Startups check out: https://tencapital.group/company-landing/ 
For eGuides check out: https://tencapital.group/education/ 
For upcoming Events, check out https://tencapital.group/events/ 

For Feedback please contact info@tencapital.group

Music courtesy of Bensound.