truCrowd Answers Your Equity Offering Questions
As the SEC continues to fine-tune Title III of the JOBS Act, entrepreneurs across the country are busy preparing themselves for its arrival.
Or at least they should be.
At truCrowd we are putting the finishing touches on our new website and constantly updating our educational materials for future users. The entire truCrowd team has performed a considerable amount of research to become knowledgeable of both equity crowdfunding and our own truCrowd portal. We share in the excitement and anticipation of Title III and are always willing to share our knowledge with you.
When it comes to the Q&A section of our website, I try to put myself in the shoes of our users and think: “What questions would I ask if that was me?” There are dozens that come to mind, but to highlight a specific segment of an equity crowdfunding campaign, I have chosen to answer 10 equity offering questions for entrepreneurs.
Some of these answers are specific to our truCrowd portal and some are general rules under the SEC. Please reference the abbreviation in parenthesis.
· What is the minimum amount I can require from each investor?
(SEC) This amount will depend on your personal preference. A lower minimum amount with result in more shareholders. A larger amount will result in less. Example: If you are seeking $10,000 and set the minimum at $50, if you reach your target (with all individual pledges) you will have 200 shareholders. If you raise the minimum to $250, you will only have 40 shareholders.
· Do equity crowdfunding offerings require a target capital amount?
(SEC) Yes. An issuer must set a target capital amount that cannot be changed once the offering is live.
· Is there a maximum target amount for an offering?
(SEC) Yes. The current equity crowdfunding capital limit for any company during a 12-month period is $1 million. However, you may supplement the equity crowdfunding capital with other types of funding. Only capital raised in reliance to Section 4(a) (6) will be counted toward your $1 million capital limit.
· May an offering raise more money than the original target amount?
(SEC) No. Once the target amount has been reached, the offering is closed. You may begin another round of capital soon after, but unlike reward and donation-based crowdfunding, equity crowdfunding campaigns are closed once the target capital amount has been satisfied.
· May I edit an offering after launch?
(tC) The documents uploaded into your Virtual Data Room cannot be deleted or changed, but new documents can be added as clarifications. The details of your offer are final after launch. You may edit content that is inconsequential to the equity, such as content in the sales pitch, but nothing to do with the transfer of equity.
· May I create more than one offering at once?
(SEC) No. Each issuer can only have one active offering at a time. It is also illegal to have the same offering posted on multiple funding platforms.
· May I invest in my own offering?
(SEC) No. Current laws do not allow issuers to invest in their own offerings. A large investment from an issuer may give potential investors a false sense of success.
· May I end my offering early?
(tC) Yes. If you would like to cancel your offering for any reason, truCrowd will cancel it on your behalf. Please note: you will only receive money if/when your capital target reaches 100%. You will not be able to end an offering early and collect the current funding of 50% or 80% (for example).
· How long will it take to receive my money after a successful offering?
(tC) Upon the successful completion of your capital target, it will take approximately 3-4 weeks to complete the necessary legal documentation and transfer the funds to you.
Thank you for reading and please leave your comments below – I enjoy a good conversation.