New Rules on General Solicitation


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New Rules on General Solicitation

  1. 1. NEW RULES ON GENERAL SOLICITATION SEC issues new rules on allowing general solicitations on certain private offerings as part of JOBS Act Charting a course in a new world Monday, September 16, 13
  2. 2. Legal Disclaimer This presentation is for general informational and educational purposes only and does not constitute or purport to render legal advice or legal opinions. The material is intended, but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as an indication of future law and practice. Transmission of the information is not intended to create, and the receipt does not constitute, an attorney-client relationship between us. The opinions expressed in this presentation are personal views only and do not reflect the opinions of any governmental organization. You should not act or rely on any information contained in this presentation, both oral and written, without first seeking the advice of an attorney. Monday, September 16, 13
  3. 3. Who am I? • Zack Miller, Head of Investor Community, OurCrowd • 10 years focused on intersection of social media, technology, and investing (Seeking Alpha, Covestor, Lending Club) • Author, Tradestream your Way to Profits: Building a Killer Portfolio in the Age of Social Media (Wiley, 2010) Monday, September 16, 13
  4. 4. Little bit about OurCrowd first • Emerged as leader in venture capital-type crowdfunding space ($20M in 31+ rounds, 27 companies) • 7 deals over $1M (#2 worldwide after Kickstarter) • 5 follow-on rounds (2x valuation upticks in months) 4 Monday, September 16, 13
  5. 5. Combining the best of 2 worlds 5 Exposure to top dealflow Professional due diligence Legal issues/termsheets Preemptive/other rights Independence, DIY Low fees No large upfront commitment Relative speed and ease Venture Capital Angel Investing Monday, September 16, 13
  6. 6. Portfolio company example: Argo/Rewalk 6 Monday, September 16, 13
  7. 7. Global in nature 7 Investors from 19 countries Monday, September 16, 13
  8. 8. 5 Follow-on rounds 8 $5M pre … 11/12 $10M pre … 3/13 2X valuation in 4 months $325K of $725 round $350K of $800K round 2X valuation in 4 months $2M pre … 1/13 $4M pre … 9/13 2X valuation in 8 months, Added Lool Ventures $550K $215K of $1.3M round 2X valuation in 8 months, Added Lool Ventures $3.25M pre … 11/12 $6.65M pre … 9/13 2X in 10 months, added 2 major VCs $550K of $1.3M round $110K of $4.5M round 2X in 10 months, added 2 major VCs 3 examples Monday, September 16, 13
  9. 9. Who am I? • Jay Kalish, General Counsel for OurCrowd • 20 years experience as in-house counsel/IR for publicly traded companies Monday, September 16, 13
  10. 10. History in a nutshell • Why: SEC role in protecting investors • How: No general solicitation or general advertising of unregistered securities allowed • But: Current exemption – certain private offerings only to accredited investors • Self-accreditation was sufficient • US accreditation standards Monday, September 16, 13
  11. 11. JOBS Act - 2012 • Congress’ attempt to stimulate jobs in the US economy by broadening investment in private companies • Mandate for Securities & Exchange Commission (SEC) to issue operative regulations • First set of rules issued by the SEC in July 2013, effective September 23, 2013 Monday, September 16, 13
  12. 12. SEC Issues Rules • New Rule 506(c) provides: • General solicitation and general advertising allowed • Only accredited investors can actually purchase • Self-accreditation no longer enough – need to implement verification procedure • Bad actor provision • New reporting requirements – currently in proposal stage • Relates to US residents only Monday, September 16, 13
  13. 13. Advertising & Solicitation General advertising and solicitation allowed in the US only • All US residents now able to see and attend meetings with actively funding companies (whether accredited or not) • Web site to contain limited info on funding companies for US users only • Proposed regulations – pre-filing of Form Reg D; marketing materials (510T); mandatory legends (509) Monday, September 16, 13
  14. 14. Accreditation • Definition of accredited investor remains the same • Self-accreditation no longer sufficient • New rule requires each US investor to provide certification letter • Issued by registered broker-dealer; investment advisor registered with SEC; licensed attorney; CPA • Certification letter needs to be renewed periodically • Confirm that certification letter is still accurate at the time of each actual investment Monday, September 16, 13
  15. 15. Bad Actor Provision • Issuers can only use Rule 506 offerings if no “bad actors” associated with them • SEC issued clear guidelines • Gets bad guys off the street – more protection for investors Monday, September 16, 13
  16. 16. New Reporting Requirements • Reg D filings must be completed at least 15 days prior to offering • Proposed regulations – additional filing post-offering Monday, September 16, 13
  17. 17. In Summary… • New rules open opportunities for OurCrowd investors • Expanding the audience – “crowd building” • Evolving area of law • OurCrowd leveraging the changes while taking a conservative approach Monday, September 16, 13
  18. 18. OurCrowd • Hybrid VC-crowdfunding platform for accredited investors only • Operating under SEC’s VC exemption; full compliance with US and Israeli law • Funded 26 companies to date • Raised over $20M for portfolio companies • Current focus on the best of Israel’s Start-Up Nation; expanding to international • Investors from 19 countries to date Any questions? email Jay ( or Zack ( Monday, September 16, 13