SEC Rules

By: Marianne Hudson, ACA Executive Director

One of the most important and effective things ACA does for our members is to represent you in Washington, DC. We do this to ensure you have the best possible environment to invest in and support interesting entrepreneurs.  This gives you the best possible chance to enjoy your angel experience and to help wonderful companies exit, leading to good returns for you.

Sometimes our work is aimed at creating new tax benefits or legislation allowing more investors in a fund, but other times our work is truly “do no harm.”  In fact, over the last eight years, our main public policy work has focused on ensuring the definition of accredited investor is not changed in a way that cuts the number of angels in half.  The Securities and Exchange Commission (SEC) is lobbied all the time to raise the thresholds for net worth and income by inflation beginning in the 1980s, more than doubling the $1 million and $200,000 requirements.  Our past research with ACA members showed more than 30 percent of us would no longer be angel investors if that happened.  That’s what I call “existential!”

By: Marianne Hudson, ACA Executive Director

The Angel Capital Association has been very active in educating policy makers in Washington, DC for six years, and I am proud to say that this Fall ACA has ramped up our activity and effectiveness even more.  In case you missed it:  here’s what the association has done to advocate for startups and angels in the last two months, and providing insights to our members:

  • Wrote a letter to the Trump transition team – ACA’s memo highlights the importance of new businesses to job creation in the US and the need to promote policies that free up capital and minimize regulatory burdens.  The focus is on what President Elect Trump can do immediately, during his first 100 days, and also in his first year in office on everything from appointing SEC commissioners who understand early-stage investing to keeping the current accredited investor definition the same to tax policy that catalyzes investment in high growth, innovative startups.

By: Christopher Mirabile, ACA Chair, Launchpad Venture Group, and co-founder of Seraf-investor.com

This post originally appeared on Inc.com

It’s almost time for a pat on the back. You’ve found investors, agreed to terms, and have a few more yards to reach the fundraising touchdown. Getting to closing has been a ton of hard work. It would be a shame to fumble at the one-yard line. One sure way to fumble is to forget your Form D filing with the federal and state securities regulators.

Not every entrepreneur realizes this, but even if you do a completely private and exempt offering in the U.S., a filing with the Securities and Exchange Commission is required. In fact, these filings are how many journalists hear about the obscure private startup fundraises they cover. In fact, many publishers of startup lists and databases get their data directly from the U.S. government.

By: Marianne Hudson, ACA Executive Director

Equity crowdfunding for all Americans is now more than two months old, and with that come some new stats on investment activity.  Among the key tidbits:

  • 70 companies registered offerings, requesting more than $35 million.
  • Nearly $5 million in capital was committed

By: Marianne Hudson, ACA Executive Director

This post originally appeared on Forbes.com

On May 16 when new “Regulation Crowdfunding” took effect, all American citizens received a gift that angel investors have enjoyed for years—they can buy stock in startups. But behind all of the excitement are a few surprises both investors and the companies raising money might not realize. These curveballs may mean that equity crowdfunding, won’t deliver the financial impact that Congress intended for startups when it passed the JOBS Act four years ago. 

By: Marianne Hudson, ACA Executive Director

Many angels, startups, VCs and the startup ecosystem have asked for more clarity about demo days for a couple years now.  These events seem to meet the definition of “general solicitation” and most investors don’t want to invest in companies that publicly advertise, but they have seen demo days as an important part of our world for decades.  The confusion may get clarity because of the work of a bi-partisan group of Members of Congress.

The Angel Capital Association supports HR 4498, the Helping Angels Lead Our Startups Act (HALOS Act) and want to thank Reps. Chabot, Sinema, Hurt and Takai for introducing this bi-partisan bill last week.  We believe the HALOS Act helps more job-creating startup companies raise the funding they need because it removes a barrier to funding.  There has already been discussed in a hearing of the House Financial Services and could be on a positive track.  A similar bill is also in the Senate, with bi-partisan sponsors as well.)

By: William Carleton, Counselor @ Law, and volunteer chair of ACA Public Policy Advisory Council

Yes, there's Title III under the JOBS Act, promising equity crowdfunding (think Kickstarter or IndieGoGo, just not restricted to awards or products, but instead offering ownership in the company); yes, there's Reg A+, also bequeathed by the JOBS Act; and there are a plethora, now, of state crowdfunding laws that lower the bar to who may invest in private companies.

By: Marianne Hudson, ACA Executive Director

The Securities and Exchange Commission has recently provided three written statements that provide clarification and/or insight into their thinking on different aspects of general solicitation in Regulation D offerings.  I encourage angel investors and entrepreneurs alike to read these SEC materials and discuss them with your legal counsel.

Two of the writings are “Compliance and Disclosure Interpretations” (kind of FAQs) published on August 6 and the other is a “no action letter” written on August 3.  Let’s take a look at each, with my quick interpretation and then the actual language from the SEC:

Don’t be surprised to see substantially more companies using Regulation A to sell securities through public solicitation of investors beginning June 19, when the SEC’s new “Regulation A+” rules take effect. Why? The new “Reg A+” provides a new option for “mini-IPOs,” allowing companies to raise up to $50 million from investors in unregistered public offerings. Angels benefit it two ways. This is another opportunity to invest or it can help their portfolio companies secure the funding needed to take them to the next level. 

By: Marianne Hudson, ACA Executive Director

The SEC unanimously approved a new rule, dubbed “Reg A+,” on March 25th.  The rule allows companies to raise up to $50 million from the general public in unregistered public offerings, building on a part of the JOBS Act passed by Congress in 2012.  Issuers may begin using this rule in about 60 days.

Many ACA members have asked what Reg A+ means for angels and the early stage investing community, especially given some blogs and media stories with a wide variety of interpretations.  This post provides basics about the new rule, and ACA is following up with two activities:  a special breakfast briefing at the ACA Summit on the new rules, led by law firm Reed Smith and ACA’s policy advisory council of attorneys is preparing a deeper information piece for ACA members.

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