Crowdfunding: A Guide to Raising Capital on the Internet

CHAPTER 12

Living with the New Reg D and Its Impact on Pitch Events and Demo Days

Kiran Lingam

SeedInvest

Trent Dykes and Megan Muir

DLA Piper

With the passage of the Jumpstart Our Business Startups (JOBS) Act, the regulation governing most private securities offerings is undergoing a dramatic makeover. Congress tasked the Securities and Exchange Commission (SEC) with developing new rules allowing companies to generally solicit funds, subject to restrictions as determined by the SEC. In July 2013, the SEC issued final rules on this topic and also proposed additional rules that are not yet final. Managers of incubators, accelerators, angel groups, and others involved in startup capital raising have expressed great concern about how the revised regulations will affect them, particularly with respect to their public-facing events.

Whether presenting at a demo day event, angel group meetings, or business plan competitions constitutes general solicitation is a question that has caused great concern among many angel groups, incubators, and other event organizers around the country. This chapter is designed to provide practical tips to event organizers on how to structure their demo day, pitch event, or angel group meeting event in light of new federal rules and the current regulatory landscape.

Starting September 23, 2013, the final rules published by the SEC in July 2013 went into effect and companies began using general solicitation (or advertising) in connection with their securities ...