Accessing equity or debt capital from the “Crowd” is not a trivial task. The continuing success of reward sites like Kickstarter has inspired a multitude of start up companies, some even backed with venture capital, to build “Equity Crowdfunding Platforms.” The majority of the “Platforms” interact strictly in role of “introducing” companies and prospective investors, each posting their respective information on the site. Unlike match.com which collects monthly subscription fees from all parties, in the Equity Crowdfunding world only the companies pay to post. The investors are only asked to verify they are qualified and meet the SEC accreditation standards of $1 million net worth exclusive of primary residence or the $200 thousand annual income test.
Fact: Rewards-based Crowdfunding is an unregulated activity free from state or federal regulations or supervision. Fact: Equity Crowdfunding is a regulated activity that must adhere to both Federal (SEC) and state securities laws. Although Congress was inspired by the viral success of Kickstarter and others to facilitate entrepreneurs raising seed capital with thousands of small donations from the public, the same public solicitation for capital in return for ownership in a company has been highly regulated in the US by the Securities and Exchange Commission (SEC) and state agencies for over 80 years.
Therefore CMG has developed a comprehensive suite of services for client companies that need to acquire capital by issuing private debt or equity securities utilizing either the Reg D 506(c) or Reg A+ SEC guidelines. CMG breaks down the process into the following tasks and deliverables:
Structure the Offering: (Investment Banking Services)
Investment Development: (Funding Services) PPM, Deal Docs, Business Plan, Secure Deal Room, (3) Video Presentations, Press Release, Marketing Collateral & Due Diligence Package.
Investment Marketing: (Funding Services) Outbound Marketing Programs (direct response programs, email, telemarketing, etc.) Inbound Marketing Programs (SEO, Adwords, Banner Ads, Crowdfunding Platform postings, etc.) Primary Objectives: Create awareness and interest from investors that produces a request for additional information
Placement Services: (Investment Banking) Initial contact and qualification of prospective investors who have requested additional information, assist in the investment decision, complete the transaction. (These functions are performed by our affiliate, Maxwell Financial Services LLC, a boutique Investment Bank, with Securities offered through Growth Capital Services (member FINRA, SIPC), 582 Market Street, Suite 300, San Francisco, CA 94104)
Compliance Services: (Investment Banking) Form D filings, State filings, Audit Logs, Investor Verification, etc.
Market Awareness/Investor Relations: (Funding Services) Post offering investor communications, plus inbound and outbound market awareness promotions for pubco clients to expand shareholder base.
In summary, CMG, based on almost 40 years of providing new shareholder acquisition services for the financial community, is convinced to successfully complete offerings where the prospective investors are from the “Crowd” will require a variety of both inbound and outbound marketing strategies and tactics. Developing the 30, to 50 to 100 individual investors for a capital raise could require hundreds of thousands and perhaps several million touches and impressions. The message has to be effectively delivered multiple times to create a pool of interested, qualified investors that can complete the raise.