There are a rapidly growing number of websites that are designed to present Reg D 506(c) and Reg A+ offerings to investors. The more appropriate description is probably “Platforms,” not websites.
The industry started out with several sites that allowed entrepreneurs to solicit a donation in return for either a pre-production purchase of the next new thing or a coffee mug or cute t-shirt. Kickstarter being the most successful of these “donation-based sites,” was quickly labeled as a Crowdfunding website.
The number of “Investment Platforms” has grown rapidly with some estimating as many as 1100 worldwide. There are several models supported. The most prolific model can be described as the subscription model. This enables a “direct issuer” to post information about the offering and in turn, the company pays a monthly subscription fee. The “platform” has investors sign up for an account that allows them to review the posted deals and communicate with the companies. Typically, investors do not pay a monthly fee.
With this model the platform is performing a service not dissimilar to the traditional online dating sites. They provide an environment for investors and offering companies to “meet.” The platform does not review or approve the merit of each offering. They can, however, require that certain information is made available and even format the data, but it does not in anyway issue an opinion on the deal.
The vast majority of the companies operating these platforms are not SEC/FINRA Broker-Dealers (BD) or affiliated with a BD. Therefore, the issuers (the companies raising capital) assume complete responsibility for interacting directly with prospective investors. Also, they are responsible for compliance with all of the SEC regulations covering Reg D 506(c) offering including the verification of investor accreditation.
There exists another group of funding sites/platforms that are BDs or partner with a BD. By definition and design, they can offer a different range of services. Since these firms have registered representatives, they can take a more active role in the deal selection process, investor interaction, document delivery, and transaction completion.
The book by Thomas Vass, Equity Crowdfunding, offers an excellent in-depth analysis of the choices available to companies using Reg D 506(c) to raise capital. We offer a free copy of this ebook; just complete the form and we will email you download instructions.
Part of the core services of our 506(c) and Reg A+ Funding Services Marketing Program is the selection of the right group of funding platforms for an offering. Once the selection is made, and the client approves the monthly budget we post the required information and any subsequent updates. Also, we manage the investor responses assuring that the client answers all questions promptly. All contacts are entered into the client’s Funding Services CRM system. Our escrow and transfer services support the client in completing all investor transactions.
In every 506(c) Funding Services Marketing Program, the client’s offering is initially posted on (3) different investment platforms. This number will continue to be revised as more sites come online. These three postings are included in the base monthly marketing fee. Depending on the type of offering and the costs to post on additional sites, there could be some other charges that will be approved by the client in advance.