.Obeying Crowdfunding rules are important. The process is called "Due Diligence".
.The Issuer has a due diligence obligation to confirm that potential investors are eligible to invest
in your company.There is a net worth or annual income test. It is on a sliding scale. The higher
the investable threshold amount, the larger the permissible investment, subject to a cap.
.Investors also have a concomitant due diligence requirement to keep track of their aggregate
investable amount under Regulation Crowdfunding on a twelve month period (not on a calendar
.They must answer all questions truthfully in the questionnaire given to them by the Issuer(s).
.All numerical thresholds are subject to a 7% adjustment every five years. (On May 16,2017,
the offering threshold was increased to $1,070,000.)
.The Issuer has an obligation to be candid about the investment risk. Failure to do so, can be
deemed to be grounds for civil and/or criminal liability.
.Form C, a 23 page document, must be filed electronically on www.sec.gov within 15 days of the
.There are subsequent filings which are less demanding but should be taken as seriously as the
.Offerings under Regulation Crowdfunding must be made be made on a funding portal approved
by the SEC or FINRA. The offering must be on only one funding portal.
.Every Issuer must designate a community manager, the only person who can answer potential
investors' questions. The community manager can only be contacted via the portal. The manager
may be an officer, director, employee or an independent contractor.
.Resist all temptation when friends or family ask about the offering. Refer them to the Campaign
.It is possible for a campaign to go viral and still be compliant. However, it must be done within
the Crowdfunding Regulations.
."Bad Actors", individuals who have committed financial crimes, are ineligible to participate in
Regulation Crowdfunding offerings, unless they secure permission from the SEC.
.Offerings can be interstate or intrastate. Regulation Crowdfunding is allowable even if there is no state
.There are other considerations that can best be handled when you take advantage of our
The purpose of the Crowdfunding JOBS ACT was threefold: to create a source of working capital
for existing businesses, seed money for startups for and to protect the investors who
will be putting their money in them. Crowdfunding became law as part of the JOBS Act on April 5,
2012. The SEC 's Regulation Crowdfunding Rules finally became effective on May 16, 2016.
For many of you, a Crowdfunding campaign is very doable. Most of you would be better served by
hiring an adviser who has a good working knowledge of what needs to be done.
Our goal is to get you or your business from where it is to where you want to be, whether it is
funding to take it to the next level or provide seed money for your startup.
Listed below are some of the ABCs for a successful Regulation Crowdfunding campaign.
Subject to your review, we will provide you with your needed support and documents. We will
explain every step in the process to you. Our commitment is to always have all documents filed
on time and in compliance.
The devil is in the details. We will provide you with a checklist of what we will need from you and
establishing a date for getting it to us.
You will pay a flat fee, encouraging you to contact us without hearing the clock ticking.
All disbursements, if any, will be approved by you.
We are committed to keep every client in a state of compliance before, during & after funding.
All rights reserved. Edward J. Insley
Crowdfunding Gravitas, LLC