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crowdfunding Archives - Regulation D and PPM Lawyers

On January 25, 2017, Riveles Wahab partner Kaiser Wahab gave a presentation on considerations in structuring and raising funds for single purpose vehicles (“SPVs”), sometimes also called single purpose entities (“SPEs”).  The SPV is an entity that is structured to take in investor monies towards funding a singular dedicated project or opportunity. They may be used

Equity Crowdfunding Now a Reality

Thursday, 04 August 2016 by

On May 16, 2016, the long awaited equity crowdfunding rules authorized under the JOBS Act of 2012 came into effect. Unlike non-equity crowdfunding, which became popular during the past decade and rewards supporters with goods or services instead of profits, equity crowdfunding allows businesses to publicly solicit an unlimited number of non-accredited investors for small

While Regulation D possesses significant differences from crowdfunding, there is no reason that an issuer cannot leverage both approaches.  In addition, several crowdfunding platforms blend the regulation and general solicitation under rule 506(c).  The following provides a brief summary of some of the more popular crowdfunding platforms out there for business ventures.      

With most crowdfunding, funders can “donate” monies to a startup or going business concern that is raising capital. Critically, however, they won’t get a stake in that company in exchange. As a result, those funders are “technically” not “investors” and technically not governed by federal and state securities laws. The JOBS ACT’s goal (among others)

Early stage companies raising money have several core options to raise capital (e.g., crowdfunding). However, when raising money from funders who expect a return on investment (i.e., they are buying a security) those funders are essentially “investors” and the issuer company likely has triggered the securities laws. None of this should be cause for alarm

In order to satisfy Regulation D or applicable crowdfunding rules, the issuer must typically make significant disclosures regarding the parameters and characters of the offering and critically, the associated risk factors. The ultimate disclosure document is typically dubbed a “Private Placement Offering Memorandum” or “PPM”. One of the PPM’s core functions is to provide investors

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