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"These new rules provide an effective, workable path to raising capital that also provides strong investor protections."
Mary Jo White, then-SEC Chair, Mar. 25, 2015, on the updated Regulation A
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Workable path, strong protections. Both parts matter.
When Regulation A was updated in 2015, the SEC set the Tier 2 ceiling at $50 million. Today the rule allows up to $75 million in 12 months for Tier 2.
The path got wider. The protections came with it.
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Ask the ugly question first.
Who actually wants this, and can they pay for it?
Everything else is decoration.
Your unfair advantage isn't capital.
It's the people who pick up when you call.
Call them before you need them.
If your plan only works when everyone says yes, it isn't a plan.
It's a wish with a spreadsheet.
Build the version that still works after a few no's.
On Regulation A you can test the waters. You just can't take the money.
Before qualification, even before you file, you can gauge interest in writing or out loud. No money and no commitment of any kind until the offering is qualified.
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Once you've filed publicly, your message also has to point people to the Preliminary Offering Circular.
These messages still count under the antifraud rules.
Interest isn't an investment. Treat it that way.
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Most founders don't have a funding problem.
They have a nobody-knows-them problem.
Fix the second one first. The first one gets easier.
"There is a great deal of enthusiasm in the marketplace for crowdfunding, and I believe these rules and proposed amendments provide smaller companies with innovative ways to raise capital and give investors the protections they need."
Then-SEC Chair Mary Jo White, Oct. 30, 2015
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Two halves to that sentence. Founders love the first half. Investors live in the second.
Enthusiasm isn't a plan. Know which protections your investors get before you ask for their money.
Source: SEC press release 2015-249, Oct. 30, 2015
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