October 6, 2013
I ask that the SEC write clear rules on what does and doesnt constitute general solicitation.
I request that the SEC sanctify current practices surrounding Demo Days, business plan competitions and pitch competitions.
I ask that the SEC make clear that there is no absolute requirement of a substantive, pre-existing relationship in order for there not to be general solicitation or general advertising.
Instead, I ask the SEC to adopt a model that more closely hues to what Congress shot for in the JOBS Act. If a room is pre-screened for accredited investors, that ought to work. It ought to be clear that there is no general solicitation if only pre-screened accredited investors are in attendance at a pitch, regardless of whether the event is publicly announced or not.
We all deserve to have the SEC tell us what does and doesnt constitute general solicitation, especially with so much riding on this under the proposed rules. (I am referring to the one-year death penalty box). No startup or founder should have to operate in the dark with this sword hanging over his head.
In summation:
1. Please dont issue these rules at all. Congress didnt ask you to issue these rules. In fact, rules that Congress did ask you to issue you still havent gotten around to (crowdfunding rules, for example).
2. The 15-day Advance Form D filing requirement is unnecessary and a bad idea.
3. The one-year death penalty box is a terrible idea.
4. The filing of the Form D should not be due until after money is raised.
5. The SEC ought to consider lengthening the time period to file the Form D to 30 or even 60 days after accepting funds.
6. Clarify the way demo days can be run, the way business plan competitions can work, and the way current fundraising platforms that keep information behind walled gardens for accredited investors only, do not constitute general solicitation. No founder, startup or demo day organizer or accelerator should have to guess on this key question under the law.
Because no startup founder, startup or demo day organizer or accelerator should have to guess what the SEC intends under these rules, then suffer consequences under enforcement. Thats simply bad policy with real victims.