| New Rules! By Michelle Thimesch |
| Things just got a lot easier for you if you are looking to invest or raise money via Investment Crowdfunding. The following is a summary of changes that went into effect on March 15 and will improve Investment Crowdfunding for both companies and investors: *The maximum amount that companies can raise each year is $5M, up from $1.07M. *The investment cap no longer applies to accredited investors. They are free to invest any amount they choose. *The formula for determining the investment cap for non-accredited investors has improved. If an investor has income or net worth below $107,000, the investment cap is the greater of $2,200 or 5% of the higher of income or net worth. If an unaccredited investor has income and net worth above $107,000, they may invest up to 10% of the greater of income or net worth, up to $107,000. *A new ‘Test the Waters’ rule allows companies to solicit interest in an offering prior to the filing of the mandatory Form C. *The use of Special Purpose Vehicles is now permitted. This will be useful for companies that are concerned about having a large number of investors on their cap table. *The temporary relief measure allowing companies to raise up to $250,000 without the need for reviewed financials has been extended to offerings started before 8/28/22. *The SEC has clarified that offline oral communications with investors is permitted providing the communications are compliant. *Communications about the terms of the offering may now include progress (% of goal reached, for example) in addition to the amount of securities being offered; the type of security being offered (debt or equity); the price of the securities; and the closing date of the offering. All communications must include a link to the campaign. |
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