What You Can and Can’t Say While Marketing for A Reg CF

Raising capital from thousands of investors (including your customers, fans and general public) has never been easier through a Regulation CrowdFund (Reg CF).

Through Regulation Crowdfunding, any investor over 18 years old can buy securities in private companies and these offerings are open to the public.

The trick is to get it done while still complying within the SEC’s Regulation Crowdfunding (Reg CF) Compliance requirements. One mistake can affect your entire crowdfund which is why this article here will serve as your blueprint for Reg CF Marketing Success!

Stage One of Campaigning: Testing the Waters (TTW)

Testing the Waters (TTW)

Since advertising for the raise can be limiting, it could be tough to know whether or not your raise will succeed. Although there are no guarantees, there are some things you can do beforehand to get an idea of how successful your reg CF will be.

“Testing the Waters,” is all about talking about your upcoming crowdfund and having people pledge the amount of money they would like to invest BEFORE your raise is SEC approved and your Form C is filed.

Form C is the offering statement your business files stating they are looking to raise capital from accredited and non-accredited investors through online crowdfunding (RegCF) without all of the responsibilities that come with registering the offer and sale of securities with the SEC.

Benefits:

• Gives investors a chance to learn about your campaign
• Let’s you know if you are on-track to having a successful campaign
• Brings awareness and some exposure to your fund before the launch
• Gets investors talking about your raise before they have access to it causing fomo (fear of missing out).
• A chance to market directly to your community to ensure a successful raise when it goes live.

How do I find out who’s interested in my offer?

You can create oral or written communications to find out if investors are interested in contributing to your fund. These communications can be made through email, social media platforms (i.e. Instagram), and/or posting on a crowdfunding portal site. The content of those communications are not limited but it must state that:

• No money or other consideration is being solicited and if sent in, it will not be accepted.
• No offer to buy the security can be accepted.
• No part of the purchase price can be received until the offering statement is filed and only through the platform of an intermediary.
• A person’s indication of interest includes no obligation or commitment of any kind.

What you can collect:

• Potential investors name, address, phone number and/or email address.

Note: All types of communication during your Test the Water campaign needs to be recorded for SEC & compliance.

Now let’s move on the tricky part, what CAN you say? In short not much…

Stage Two of Campaigning: Start Advertising (But Don’t Make It Seem Like It)

Prior to pre-launch you have to be careful about what you mention while advertising. The SEC says “An issuer may not advertise the terms of a Regulation Crowdfunding offering except in a notice that directs investors to the intermediary’s platform and includes no more than the following information.”

What does this mean? This means you have to be CAUTIOUS with the message you are putting out.

There are two ways to go about this:

1. You CAN have communication that DOES NOT mention the “terms of the offering”

2. You CAN have “tombstone” communication.

To put it simply, you can talk about your raise (goals, timelines, what success means for investors/company etc) but CAN NOT talk about ANY details or collect any money before your raise is live.

See the infographic below to define the two communications.

What does that look like?

Security Token Market is a great guide to follow

Key Takeaways from their post:

• They announce they will be doing a Reg CF but do not mention the offering
• They mention the platform where investors can find the information
• The viewer is aware they are crowdfunding but not told to invest directly.

Now that you know the rules and how not to get canceled by the SEC, stay tuned for my next article on how to develop a Marketing Strategy for your Crowdfund.

Disclaimer: All information provided is for educational and entertainment purposes only and should not be considered legal or financial advice.

Till next time,

Ana The Marketer.