If you are planning to raise capital for your business using Regulation D by marketing through your website, social media and meeting events you need to consider the rule options that can be used for public solicitation.
The vast majority of capital is being raised through rule 506 b which is your traditional Private Placement rules. When using this option the restrictions of public solicitation apply, so you can not market your offering to the masses by advertising or promoting the offering. If you are looking to market your offering publicly through your website, social media, email blast and cold calling, there are 3 options that allow to do that. The most commonly used options are:
Regulation D Rule 506 c The advantage of this option is it allows you to publicly solicit so you can advertise and promote the offering but you must target accredited investors only. In most cases those are the type of investors you want to pursue anyway. Telephone contact plays an essential and important role in this type of offering as a way to to vet and verify that they are an accredited investor and eligible to invest in the offering. 506 c does not have a cap or limit on the amount that you raise.
Regulation A+ sometimes referred to a “Mini IPO” The first thing to understand about the Reg A is it requires full approval from the SEC as well as ongoing reporting requirements, so it is time consuming and expensive but the upside is when you receive approval you have a publicly registered offering which allows you to advertise to anyone not just accredited investors, the massive playing field and not having to vet the investors gives an issuer a considerable advantage to raise funds. Reg A under Tier II allows you to raise up to $50,000,000 in a 12 months time frame.
Regulation Crowdfunding (Reg CF) While a popular way to raise funds by marketing to non-accredited investors it has its drawbacks. First, you need to go through a registered broker dealer to offer it, so you can not advertise it on your website or other favored ways of promotion, everything needs to be directed to the broker dealer portal. Another downside is it is capped at $1,000,000, those limitations can make it an unappealing option because in many cases that is enough for an entrepreneur to carry out their business plan.
The type of offering you choose really depends on where you are as a company and you can also use these offerings in conjunction with one another in various phases which many business do.
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The FinTech Group provides a payment processing platform for the above offerings. This solution will streamline your offering and allow the Issuer to operate more efficiently by providing the option to accept payments and Investor Funds by the Phone, Online with our “Invest Now” and “Reserve Shares” Button, by E-mail Invoice or Text Message and our newest feature Image Capture, Crowd direct offerings require giving the investor the ability to easily start & complete their investment in real time, and that is what we accomplish with our platform. Funds are Verified in Real Time, and deposited into the issuers bank account by the following business day.