Raising Early Stage and Growth Capital

We help start and grow companies efficiently, by using new capital market resources available to them.

One of these new resources was created by the JOBS Act. Enacted in 2012, the Jumpstart Our Business Startups Act, or JOBS Act, sought to reduce challenges to capital formation, for small to medium sized companies.  Under the JOBS Act, the  SEC changed existing exemptions from registration of securities offerings under the Securities Act of 1933 and created new rules that permit issuers to more broadly promote their offerings of securities to raise capital without SEC registration.  On July 10, 2013, the SEC adopted amendments to Rule 506 of Regulation D and Rule 144A under the Securities Act to implement the requirements of Section 201(a) of the JOBS Act.  The amendments became effective on September 23, 2013.

Rule 506(c) of Regulation D – Enhanced Crowdfunding to allow Equity Crowdfunding

Section 201(a) of the JOBS Act required the SEC to eliminate the prohibition on using general solicitation under Rule 506 provided that, all purchasers of the securities are “Accredited Investors” and the corporate issuer takes reasonable steps to verify that purchasers or investor in that issuer are Accredited Investors.

“General solicitation” includes advertisements published in newspapers and magazines, public websites, communications broadcasted over television and radio, and seminars where attendees have been invited by general solicitation or general advertising.  The use of an unrestricted, and therefore publicly available website constitutes, general solicitation.

To implement Section 201(a), the SEC adopted section (c) of Rule 506.  Under Rule 506(c), issuers can offer securities through means of general solicitation, provided that:

  • all purchasers in the offering are Accredited Investors,
  • the issuer takes reasonable steps to verify their Accredited Investor status, and
  • certain other conditions in Regulation D are satisfied.

An “Accredited Investor” includes a natural person who earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, or has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).

Companies that wish to take advantage of the broad marketing to investors, allowed under Rule 506(c), are “Issuers” of securities. They may directly market their the equity of their company or engage advisor and broker dealer firms to assist them with the offering.

Choices for Companies Raising Capital under 506(c)

Some Internet portals provide Issuers a platform to post their offering and disclosure documents online. These platforms market their sites to attract Accredited Investors and try to create a match connecting investors to the issuer.

SPG Capital uses the Internet to assist in marketing its client companies and managing  transactions as well. However, we work extensively with clients throughout the capital raising process, in readying the client company for market. We provide assistance in valuation and structure,  we help prepare offering materials to meet regulatory disclosure requirement. We also actively marketing the opportunity to Accredited Investors, institutional funds, angel networks, family office investors and Registered Investment Advisors and other securities brokers.

We believe that today the passive match making of retail accredited investors to issuers, solely through a match making portal, is not enough to ensure success of an offering campaign.

We also believe that most company owners need support and guidance from experienced investment banking professionals, as well as securities professionals and experienced independent legal counsel, to assure compliance as an issuer with the myriad of SEC rules and requirements for any securities offering.

In short, we provide a blend of traditional investment banking services with the leverage of Internet enabled general solicitation and deal execution, to more effectively serve its clients.


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