When it comes to raising capital, there are various ways you can raise money from investors. And while they all have their own specific compliance requirements, they all share one common goal: to protect investors while still providing them with opportunities to invest in private companies. Let’s look at the four most popular types of equity crowdfunding; through Regulation A, CF, D, or S. 

Regulation A+ (RegA+)
Offering size per year: Up to $75 million

Number of investors allowed: Unlimited, as long as the issuer meets certain conditions.

Type of investor allowed: Both accredited and non-accredited investors.

SEC qualification required: Reg A+ offerings must be qualified by the SEC and certain state securities regulators and must also file a “Form 1-A”. Audited financials are required for Tier II offerings.

This type of crowdfunding is popular because it allows companies to raise up to $75 million per year in capital and is open to accredited and non-accredited investors. Offering...more

The JOBS Act reached its tenth anniversary in 2022. We celebrated the date with the launch of our Podcast, KoreTalkX, recently mentioned by Spotify as in the top 10% of the most shared shows globally. But the regulations that brought a lot of novelties to the capital raising process still face some misconceptions, especially regarding Crowdfunding. We are introducing Online Capital Formation and why you have to understand it.

We do write a lot about the democratization of capital because we believe that everyone should be able to participate and share in the benefits, whether as entrepreneurs, brand advocates, innovators, or investors (both accredited and non-accredited). What we may be missing here is that Regulation CF (RegCF) has matured over the past decade, and it is time to look at it in a more complex way.

For many individuals, the word  “crowdfunding” still evokes KickStarter as a Top of Mind idea. Entrepreneurs that need money to launch a product pitch their ideas online ...more

To crowdfund or not to crowdfund?

The biggest paradigm shift in capital formation, post pandemic, is that every level of Investor and Founder has pivoted head on into #crowdfunding.

COVID19 forced Angels, VCs and Institutions online, ushering in a new era of FinTech adoption within capital formation. What was that fintech adoption? Platforms.

While the platforms have different regulatory requirements depending on the type of Crowd they're pursuing, they've all moved to digital platforms to facilitate funding.

GPs crowdfund for Funds from LPs on social media and private platforms, very similar to how Founders crowdfund for startup funds on social media using RegCF funding portals.

As Founders this is important for you to be aware of because regardless of The Crowd you're pursuing (VC, Angels, or Retail Investors) you'll be doing that online. So! If you have to pitch and pitch on online platforms, don't just pitch to a small audience. Pitch to the largest crowd you can get!

And that is t...more

A bit ago I was on a webinar for Financial Poise, where I said that startups can expect to have a sunk cost of ~$46k in travel expenses alone and expect to take on average 21 months to raise money using the Reg D exception. On the webinar was “Mark”, the archetypical securities lawyer, who in typical lawyer fashion disagreed vehemently with these figures. So, what follows is a simple breakdown of typical expenses incurred in raising money via not only via Reg D but also JOBS ACT Reg CF and Reg A/A+ crowdfunding. Because it turns out that it still takes money to make money. 

The Sunk Costs of Raising Capital  

“A sunk cost is a cost that has already been incurred and cannot be recovered.” 

There are numerous sunk costs in raising capital. For the entrepreneurs out there who will actually cut the checks here are the cold hard facts. 

Reg D 

Raising money via Reg D is the easiest and cheapest way to raise money if:

1. You have an established business that is current

Crowdfunding doesn't actually raise you money, marketing does. Gotta market your deal. 

Every Founder is looking for the same thing a) Customers b) "the right investor". You achieve both through marketing. Because at the end of the day its up to YOU to let the world know your business exist, what your vision for it is and how they're going to benefit from supporting you as either a customer, an investor or as an #Investomer.

To be clear, #crowdfunding doesn't HELP you raise money. It ENABLES you to raise capital from all levels of investors from VCs, Institutions, Angels and Retail Investors. It is still up YOU to market your deal, regardless of which type of investor you're looking for.

Hence another reason George Pullen and I are so pumped about GoingPublic.com as it is a marketing (and Distribution) engine for startups.

So, if you want to increase your odds of success for your funding campaign (RegCF, RegA or RegD) remember to be ready to tell your story and market your ass off...more

Q: Is Crowdfunding a good fit for my business? 

A: Always. 

I often get asked, “ Is crowdfunding a good fit for my business?” The answer is 100% of the time “Absolutely”. Why is pretty simple and straightforward and we’ll outline the why investment crowdfunding is suited for your business below. 

Funding Your Business - Knowing Your Options

Bank Loans. Traditional means of funding your business include bank loans and other forms of financial instruments that your bank offers. However, for many businesses banks are not your friends. While it’s true you can get a loan or business line of credit when you’re cash flow positive and don’t need them, securing a business loan or line of credit when you need it (e.g.: pre-revenue) is nearly impossible. If you can get a bank loan then why use crowdfunding? You’re right. Good luck meeting the bank’s underwriting requirements. Eve...more