In this edition of the McBride Attorneys Law Show we discuss the basics of offering exemptions – how most companies raise money.
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Exempt Offerings: Crowdfunding Versus Other Exemptions
What are exempt offerings for raising money for your company?
Why are they important?
What are some of the popular exempt offerings?
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Here is a machine transcript of the show. We note this has not been checked for accuracy and is based on what a computer has generated based on the conversation. But we hope it is helpful to you.
Hey everyone, I The Our Shawn, welcome to another edition of the McBride Attorneys Law Show here on YouTube, make sure you subscribe, and check the bell.
I’m going to give you some ideas about crowdfunding exempt offerings, what they are, why they matter.
And we’ll dive into that a little bit quick disclaimer.
This is a show about a legal topic. I am not your lawyer by virtue of doing this show, we’re going to talk about legal principles generally need to consult your own a council.
So unless you work with me. I’m not your lawyer, consult your own or these are just general ideas and need to get your own specialized and personalized advice for your particular situation.
With that, let’s jump into what we have going on here. Okay, so here’s the deal.
Very simply, if you’re raising money for your company. If you’re selling something connected for profit, which is virtually any ownership interest.
Under US Securities Law, that’s probably going to be a security, which sounds very scary and it is regulated both federal and state levels.
The good news is a great many of the securities laws exemptions are set up to where if you comply with the US law, the federal level.
You don’t have to worry so much about the state level. So there’s some nuances there which we won’t have the time to get into today, but just understand
You generally want comply with the SEC rules and works with them now companies need to do one or two things ain’t on the offer securities, either they be registered
Winning the exact right so if you want, or the other, you know, everything goes in one or two buckets registration can be very difficult time consuming expensive.
Those are what the big companies generally do or you go through a full often with the SEC you start getting quarter before me.
Very expensive, very time consuming. Makes sense of your big, but if you’re small
You generally want to get an exemption and you will not leave this process and the exemptions and what we call conditional, you’d have to follow those conditions.
There’s a lot of ways you could raise money. If you go through a conditional exemption offer. One of them is crowdfunding. We’ll talk about that in today’s show.
But there’s also a menu of other exemptions and a lot of people have seen media for crowdfunding and they don’t think about the fact there’s other avenues.
To raise the money as well. So let’s walk through that crowdfunding or regulation CF is the one that gets a lot of attention came out with the JOBS Act.
Back in 2012 guessing some along with the regulations out there hasn’t been as popular as people think it is if you’re curious about crowdfunding want to hear the details.
Go to the McBride attorneys law show on YouTube, click the button and you’ll see a whole episode that runs you through the basic rules.
Of crowdfunding race. Yes, it will get you up to speed on Friday. Turner’s law share on YouTube again subscribe while you’re there.
What other exemptions are there there’s reg a plus, which is Regulation A and the updated instead a lot of set a lot of rules that that’s become very popular to tears and reggae plus
Offerings under 20 million offerings up to $50 million to be exempted.
You do have some disclosure requirements you possibly have some ongoing reporting requirements. So there’s some expenses and the issues there.
But what we found in the analysis is offerings around the $20 million MARK MAKES SENSE OF THEIR Tier one
offering up to $50 million makes sense and or tier two people are using them for those size of offers
What else is out there. The other thing out there is five or six been around for a long time. But now, five or six comes in two flavors. The old flavor.
Did not allow general solicitation. That’s still around and still very popular allows you to raise potentially an unlimited amount of money.
And you can use both accredited investors and non accredited investors accredited investor being those that have a
Network at least generally a network of around a million dollars excluding their homes and nuances and how that’s calculated
Or income 200,000 or $300,000 you’re paying whether our spouses and last supper higher net worth individuals, you can have an unlimited number of people involved.
Have up to 35 or non accredited. Now the trick with Ray rules either six offerings is you generally don’t want to involve non accredited investors, because the information requirements go up so much
The other thing that came with the new five or six at the possibility of having a general solicitation being let’s tell the public about your offer.
Now that comes with more restrictions on getting your investors, so people aren’t as lot about that either.
But you can see we’ve got a couple of different flavors of offering
Painless sized information, how you want to do your offering we’ll dive into that some more of an upcoming videos on the grind attorneys law show
But the key is to understand there’s this whole flavor of exempt offerings out there. You need to find the white one from your tool kit.
That matches your needs and it should fit your situation. So, think of it this way. If you’re raising money, you probably want to exemption.
And then you want to work with your lawyer or the SEC website or other information sources and figure out which exemption is the right one for you and your circumstances.
There is no one size fits all crowdfunding certainly got all the media attention, but it’s not the only tool. It’s some people will pick that too well to just
hasn’t been as popular as people think it is. But 506 remains in very comfortable.
And reggae plus nine powerful tool. So think of the exemptions being a variety of different tools that are available and then you need to pick the right one for you.
Alright folks. Dr. Sean I’m signing off. Thank you for joining me for a show. Make sure you subscribe to the grind attorneys law show on YouTube.
Ring the bell. So you get notifications when we put out more episodes. You can also check out our blog at McBride’s attorneys calm. For more information on items like this to help you.
propel your business forward. Alright folks looking forward to talking to you all again soon. Hope to catch you.
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