Disclosures

  1. SeedInvest’s due diligence process is no guarantee of success or future results. All investors should carefully review each investment opportunity and cancel their subscription within the allotted time-frame if they do not feel comfortable making any specific investment based on their own DD. Learn more about due diligence on the SeedInvest Blog (https://www.seedinvest.com/blog/angel-investing/how-to-assess-an-investment) and our vetting process in our FAQs (https://intercom.help/seedinvest/en/).

  2. SeedInvest’s selection criteria does not suggest higher quality investment opportunities nor does it imply that investors will generate positive returns in investment opportunities on SeedInvest. Learn more about due diligence on the SeedInvest Blog (https://www.seedinvest.com/blog/angel-investing/how-to-assess-an-investment) and our vetting process in our FAQs (https://intercom.help/seedinvest/en/).

  3. Diversification is only across multiple early-stage investment opportunities within the asset class. There is no guarantee that this program will lead to a well-balanced portfolio of companies across industry types or stages across the asset class. In addition, enrolling in this program will not lead to diversification across your entire investment portfolio. In order to achieve diversification, we do not recommend you allocate more than 10% of your entire investment portfolio to alternative assets.

  4. Testimonials may not be representative of the experience of others and are no guarantee of future performance or success. No individuals were compensated in exchange for their testimonials.

SEC Comment Letter: Crowdfunding Costs Are Too High - Tell the SEC Today

 

Click Here to Tell the SEC to Reduce Crowdfunding Costs

Since the proposed crowdfunding rules were released on October 23, 2013, the top concern for many  in the industry has been that the costs of compliance would make crowdfunding too expensive to be useful.  Our Crowdfunding Cost Model further backed up this concern, indicating that offerings under approximately $115,000 would actually result in negative cash flow over a 5 year horizon and larger offerings would result in an exorbitant cost of capital:

 

According to our analysis, the biggest cost driver is the requirement that companies file ongoing annual reports, including both narrative disclosure and financial statements every year after the offering.

To address these concerns, we’ve submitted this Comment Letter to the SEC to ask that these annual reporting requirements should be limited to only to the materials required by the JOBS Act and that exceptions to these requirements should be implemented for:

  1. small offerings below $350,000,
  2. where there can be no investment decision,
  3. for Institutional, VC or Angel led deals and
  4. where all of the investors have contractually waived the right to receive ongoing reporting.

If you agree with our Comment Letter and that the costs for crowdfunding should be kept under control, click the link below to let the SEC know.

Click Here to Tell the SEC to Reduce Crowdfunding Costs

 

January 21, 2014

Ms. Elizabeth M. Murphy
Secretary
U.S Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549

Re: Proposed Regulation Crowdfunding (Release Nos. 33-9470; 34-70741; File No. S7-09-13):  Ongoing Reporting, Costs and Practical Implications

Dear SEC Commissioners and Staff:

We would like to thank you for all the thought and hard work in drafting and releasing Proposed Regulation Crowdfunding.  We believe that this is a great framework for a new industry and hope that it, with some modifications based on industry feedback, can give true meaning to the legislative intent of the JOBS Act (namely, to create jobs).

Based on our research, we believe the largest obstacle to making crowdfunding a viable option for startups and small businesses is the post-offering ongoing annual reporting obligations, including the annual disclosure and financial statement requirements.  Issuers would be required to effectively become mini-public companies with reporting obligations potentially extending indefinitely.  These items create a cost structure that is out of proportion with the amounts proposed to be raised, particularly for smaller offerings under $350,000.

Specifically, in this letter, we request both (i) a reduction in the scope of the required ongoing reporting obligations and (ii) implementation of several exemptions from ongoing reporting obligations (both disclosure and financial statements).  These changes are required to make use of Regulation Crowdfunding a viable option for young startups and small businesses from a cost and time burden perspective.

CLICK HERE TO READ THE FULL LETTER

 

This post was written by James Han on January 22, 2014

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