August 14, 2013
I founded TwoGrand this year, and we'll be raising money beginning next month. The proposed rules that startups would be subjected to if raising money publicly would almost certainly cause us to raise privately instead.
For one, raising money is an iterative process. You don't make one set of materials, distribute to everyone, then sit and wait for people to give you money. You must constantly be meeting new investors and, based on their feedback, tweaking your materials and pitch for the next meeting.
It wouldn't be out of the question to modify your fundraising materials every week. The proposed rule saying those edits must be sent to the SEC is extremely cumbersome and prone to (accidental) error.
This proposed rule, along with many others, put significant roadblocks up for startup founders. The goal is to raise money, and that requires 100% of our time, energy, and focus. Doing so publicly would be a great benefit, but it's not worth the cost if the proposed additional rules go into law.