Title III and Title IV of the JOBS Act completely reshaped the startup investing and fundraising landscape by enabling companies – for the first time in nearly 100 years – to solicit and accept investments from all investors, not just institutions and the wealthiest 2% of the U.S. populace.
But with this generational change in U.S. securities laws came a new set of challenges spanning regulatory compliance, shareholder management, and investor reporting. Companies raising “traditional” Reg D private placements accessible only to accredited investors, for example, had grown accustomed to pooling individual investors into single-purpose LLCs to manage their cap tables and limit the number of direct investors reflected therein. Such a mechanism was deemed necessary since large, institutional investors tend to avoid investing in companies with large cap tables.
SeedInvest has been a leading innovator in the equity crowdfunding industry since our inception in 2012 and we are continuing to develop new and innovative solutions to address the challenges posed by Regulation CF and Regulation A+. Among our most recent solutions is a proprietary form of convertible note specifically designed for companies leveraging Title III (Reg CF) offerings, which enables startups to reap the benefits of the crowd, maintain a clean cap table, and continue to raise capital from institutional investors.
But while the benefits of a large and diverse investor base have been demonstrated, the costs – both in terms of dollars and time – of managing these investors and complying with federal reporting obligations run the risk of undermining these benefits. With this in mind, we are excited to announce the launch of SeedInvest Shareholder Services – a program specifically designed to eliminate the ongoing burden of managing investors while also maintaining regulatory compliance so founders can focus on doing what they do best: growing their businesses.
With SeedInvest Shareholder Services, companies that raise through SeedInvest will enjoy the benefit of outsourcing the following obligations:
- Distribution of K-1s / tax documentation (if applicable)
- Ongoing SEC regulatory filings (if applicable)
- Financial review prep for SEC filings (if applicable)
- Investor updates and facilitation of investor communications
- Voting proxy services (i.e. single point of contact for any required votes or amendments)
- Transfer agent services
- Shareholder custodial services
- Share transfer management
- Share and note conversion execution
- Dividend and liquidation payouts
If you are interested in fundraising through SeedInvest or have questions related to SeedInvest Shareholder Services please contact the SeedInvest Venture team at firstname.lastname@example.org.
This post was written by aaronkellner on October 16, 2018
Announcing SeedInvest Shareholder Services