August 19, 2013
To Who It May Concern,
You should definitely try to better balance the SEC's need for information on companies that are generally soliciting, the risk for the public, and the realities of fundraising for an early stage company.
If you make notification as simple as applying for an EIN number and it doesn't involve specific details other than approximate ranges of expected fundraising and a company's tax id - I think the 15 day advance notification is reasonable.
That being said, a ban on fundraising for one year is probably not the appropriate penalty as there are still going to be many cases where college students and first time entrepreneurs who do not know about this law. A penalty system that accounts for the intention of the fundraiser - fraud or just negligence would probably be more appropriate.
The other two requires - submitting documents with offering materials and a legal boiler plate do not make sense within the context of the fundraising process.
If you are purely talking about the document an investor signs - e.g. a stock purchase agreement or a convertible note document - that could be reasonable for disclosure. But if you are talking about PowerPoint decks, emails, etc. that seems very unreasonable and would require a lot of time and resources for a start-up to comply with.
The legal boilerplate seems a bit silly as well. Again if it just needs to be in the signed documents - I think start-ups could do this without little effort. But if you are talking about every time a start-up "solicits" - including some boiler plate (e.g. Tweets, emails, etc) - I don't think that makes sense.
Hopefully this helps give some context to your rule making process.
Brad Weinberg, MD
Partner, Blueprint Health