It has been illegal for startups to publicly advertise the sale of partial ownership to investors. And while services like Angelist and FundRoom have opened up the marketplace in recent years, those platforms are still membership-based and not entirely open.
After some actions by the Securities Exchange Commission last month, the time-honored ban on general solicitation is on the way out. Startups will be able to advertise their funding pitches and reach out to strangers who may be interested in backing their business.
Like all things in the securities and investment world, there are limitations and paperwork. Offerings that are publicly advertised will need to be documented with a pre-filed form, the advertising content will also need to be submitted to the SEC for the record. Later, when the investment offering period is over, another filing is required to close it out.
If you are interested in learning more about general solicitation as the SEC rules and revised forms are put in place, please enter your email address at http://generalsolicitation.co. We will keep you posted.