SEC Guidance on Using Twitter in a Regulation A+ Offering

Regulation A+ is of great interest right now to a lot of people because of the excitement around equity crowdfunding in general.

Regulation A+ Is Not for the Faint of Heart

An example: Bloomberg ran a story today on using Twitter to “test the waters” in a Regulation A+ offering.

In case you are wondering where you can find this guidance, you can find it here.

And here is the guidance quoted in full:

Question 182.09

Question: Can an issuer solicit interest (or “test the waters”) in a Regulation A offering on a platform that limits the number of characters or amount of text that can be included, thereby preventing the inclusion in such communication of the information required by Rule 255?

Answer: Yes. The staff will not object to the use of an active hyperlink to satisfy the requirements of Rule 255 in the following limited circumstances:

  • The electronic communication is distributed through a platform that has technological limitations on the number of characters or amount of text that may be included in the communication;
  • Including the required statements in their entirety, together with the other information, would cause the communication to exceed the limit on the number of characters or amount of text; and
  • The communication contains an active hyperlink to the required statements that otherwise satisfy Rule 255 and, where possible, prominently conveys, through introductory language or otherwise, that important or required information is provided through the hyperlink.

Where an electronic communication is capable of including the entirety of the required statements, along with the other information, without exceeding the applicable limit on number of characters or amount of text, the use of a hyperlink to the required statements would be inappropriate. [June 23, 2015]


Why You Shouldn’t Try This At Home

The securities laws are complex and difficult, and it is easy to read about the JOBS Act and innovations in finance brought about by the JOBS Act and think you can do things like Tweet about your private company’s financing.

Please hit the pause button in these instances. Remember the above guidance is only applicable to Regulation A offerings. Your 506(b) offering? These rules don’t apply.

Have fun, and be careful out there.

Financial and Personal Preparation for the Startup Transition

Preparation for startup

Guest post by Rebecca J. Conner

Taking the leap from the corporate world into start-up land can feel formidable. Some thrive on the uncertainty. Some make the jump and realize the old saying holds true: You don’t know what you don’t know. And, adding a family to the equation can further complicate your decision of whether to take the risk.

Recently I met with someone who had worked in a large tech company for six years. He was itching to jump, but was worried about the timing. He already had an offer to be a member of the founding team for a start-up with a vision he believed in, the autonomy to do what he wanted, and the power to make it happen. I could see how excited he was as he told me about the innovative platform the start-up wanted to build, the customer research that backed the need and the preliminary pricing structure.

“That sounds like an incredible opportunity! So why are you still ‘thinking’ about it?” I asked. His excitement suddenly waned, and he responded, “My wife and I are two months away from having our first child.” Plus, he continued, he was making a lot of money and was afraid to give up their lifestyle. He remembered being in his twenties, eating ramen and sleeping in his hole of an apartment (and being okay with it), but now that time felt so far away. Could his family make the move to living on less? What about health benefits, or what if something happened to him?

Making the move from an executive role at a large, established tech company to a small start-up is an emotional rollercoaster for many. How do you make the right decision and not live with regret or “what-if” syndrome?

As people move up the corporate ladder at tech companies, it’s easy to feel handcuffed by their vesting stock, a steady high-income paycheck, and the benefits. It can be easy to encounter lifestyle creep when enjoying time with friends in similar positions.

On the flip side, entrepreneurs and founders at start-ups need laser focus on their business and do not feel there is time to consider their personal situations. It’s easy to punt the financial tasks or to imagining their stock will take care of all their future needs.

And so the emotional rollercoaster begins.

Not every start-up makes it big, and many founders over time find their stock diluted and control given up as they seek additional funding or position the company for acquisition. So how do you prepare for the financial instability and whirlwind that life may entail?

Startup Transition Planning is a Family Affair

Setting boundaries as a family is important: communicating the risks and rewards, understanding where flexibility is and how the situation might change. Consider the following.

  • How much total money are you willing to contribute to doing the start-up? I’ve heard this number range from $100,000 to $500,000 or more. This is a very personal decision and will be based on the risk your family is willing to take.
  • What is your lowest possible budget? This will be your start-up family budget.
  • How much in lost wages can you sustain? If you are joining a start-up and will receive a salary, knowing your personal burn rate (total money to contribute divided by annual start-up family budget amount) will give you an idea of how long you can sustain the adventure.
  • Set success metrics. What does success at the start-up look like? What qualitative and quantitative factors keep the adventure alive? For example, the start-up is XX months away from breaking even, and at that time I can afford to be paid $YY salary. This means we would incur $ZZ additional expenses, if we maintain our customer acquisition trajectory. How sustainable is the customer trajectory? Do we have additional funds available for the additional expenses? What is the trade-off?
  • Check in over time. Be ready to track the metrics you choose over time and communicate them to your family. Establishing parameters around the situation is great, but if the metrics become out of sight, out of mind, emotions can escalate.

Carpe Cras – Prepare Now To Seize Tomorrow

If you get the itch to move to the start-up realm, but are still looking for the right opportunity, seize the day!

  • Start the family discussion now. Ask yourselves the questions above and begin decreasing your expenses to the start-up family budget amount now.
  • Throw additional cash into a savings account. Continue building your cash pile to the total amount of money you are willing to use toward the start-up.
  • Maximize current company benefits and know how they work.
    • Does your company offer a legal benefit to assist you in creating your estate plan/wills? Use it! Consider what could happen in the future – what if you died today? Do your children have a guardian? Who would receive your assets, and when?
    • Review your company health insurance policy. In the event of termination, does your health insurance continue to the end of the month, the day of termination or somewhere in between? When you begin as part of the founding team for a start-up, health insurance may not be set up through the company yet, so you will want to know your options and time frame for switching policies.
    • If you are making more now, consider pre-funding your 401(k) and optimize for employer match. Many start-ups do not have 401(k) plans, and Individual Retirement Accounts (IRAs) have a much lower contribution maximum.
    • Consider what you will do with your 401(k) funds post-termination. There may be benefits to moving your 401(k) funds to an IRA, and many companies require you to move your 401(k) funds once you leave the company. Consider talking to your financial advisor about how best to safeguard these funds in the transition to the start-up. Knowing your own financial philosophy on how you want to invest will minimize future distractions as well.
    • Evaluate your life insurance needs. Can you pick up the policy from your current company and continue it after termination? If something happened to you, how much would your family need to replace your income over time?

Moving from the world of large corporations to a start-up can be the most thrilling time of your life, but with those heightened emotions comes more risk for your family and the need to set and communicate a plan to help your whole family succeed in the adventure.

Rebecca J. Conner, CPA – Financial Advisor to Passionate Technology Executives and Founders for Merriman.

How to Compare Funding Options for Your Tech Startup

Funding Options

Fundraising Webinar 

Fundraising is unpredictable, time-consuming and ultimately will greatly impact the future shape of your company and the value you extract from it. Lighter Capital talks to hundreds of growing technology companies about funding their business growth.

Join their webinar to learn how to take control of your capital raising process, better understand the funding options available to you and learn how to build a funding path that works for you as your business grows. Also get some useful tips on how to make sure your business is in the best shape it can be to attract investors.

Speaker: Branden Harper, Director Lighter Capital


When: January 22, 2015
10am Pacific / 1pm Eastern

Length: 45 Minutes including Q&A

Angel Investments: Come Hear Angels Talk About Them

If you are interested in learning about how angel investors think about and evaluate their angel investments, you will like this upcoming event.

Angel Investments

Here are the details:


Quantifying Early Stage Angel Investment Results in the Northwest


Geoff Entress, Rob Martin, Andy Liu, and Edward Yim


January 20, 2015


4:00 p.m. to 6:00 p.m.


The New SURF Incubator

What Will Be Discussed

Come hear a detailed discussion from some of the city’s most active early stage angel investors, as Geoff and Rob present an early stage portfolio of over 30 companies, the IRR over a 5 year time frame, and metrics on specific performance attribution.

Andy and Edward will also talk through their portfolios and performance and the role they play as high value add co-investment partners. If you are an angel investor, you will be especially interested in this information. It may provide a unique opportunity to gauge your own angel investing experience and track record, or it may simply be useful in building an understanding of how to perform such an exercise and quantify the results.

If you are a company looking for angel investors, or perhaps re-deployment of capital after a liquidity event, it will help you to see the world from the point of view of an experienced angel investor, and gain a better understanding of the full capital life-cycle.

Register Here