Recently, some investors/fund managers have voiced concerns about investing in a company that previously conducted a cap raise using a crowd funding portal. The reasoning? In their opinion, doing so creates an IR nightmare akin to running a mini-public company. Straight up, I disagree. A cap raise done correctly, with the proper deal structure and vendor(s) in place, should be a win-win! A few tips, in my opinion, for what you feel they are worth.
Tip #1: Structure the offering (making sure that the structure comports with your bylaws accompanied by the appropriate resolutions) to accommodate the potential increase in the overall number of shareholders. How? If you are offering equity, offer equity in the form of non-voting common stock.
An example of raise conducted in this manner quite recently is ifunding.co's oversubscribed and extended raise of $2.4M+. Exemption used? 506(c). Equity offered? Non-voting common stock.
Tip #2: Make sure that you are on the right platform, whether you are conducting a CF raise or launching an exempt offering under Rule 506(b) or 506(c).
There are dozens of factors that go in to picking the right platform, including risk. Personal opinion? Stick with those who do it right and have a solid track record. In looking at platforms that are focused on due diligence and thoroughness, of note for various reasons are (to name four out of 500+ . . .):
Is the vetting process more intense on such platforms? Yes. But there is a very good reason for that.
Tip #3: Engage a vendor (a transfer agent) to handle the issuance and maintenance of stock certificates, voting mechanisms and the like. An excellent example of a company that provides this service is vStock Transfer.
Attorney Advertising.
