Advertising a Live Offering (Reg CF)
After filing your Form C, the SEC will decide whether or not to approve it. If your filing is approved, your campaign is ready to launch!
After launching, SEC regulations state that you can begin publicly advertising. This is also the time when you would reach out to any potential investors from your “testing the waters” phase to allow them to confirm their interest in your offering and purchase shares.
However, the Securities Exchange Commission has specific restrictions on what you are allowed to communicate in your advertisements about any Reg CF offerings.
How can I advertise my Reg CF?
There are two terms that are often used to differentiate the most common types of communications meant to advertise to investors during your crowdfunding campaign: tombstone announcements and non-term advertisements.
There must be a clear distinction in the information offered for each of these types of advertising, and while they can be used concurrently, they may not be used side-by-side to create a complete picture except on your intermediary/crowdfunding platform page.
Can I still run normal company advertisements?
Yes! You may continue to advertise your business as normal so long as you do not mention that you are raising capital and do not increase the amount of advertising.
Did you know? It may be tempting to ramp up advertising before an offering goes live, but this could be considered “conditioning the market” and is not allowed under SEC regulations
Tombstone Announcements
A tombstone announcement is a plain advertisement posted in a newspaper or magazine, and gets its name from its standard appearance: black text on a white background, with a thick black border surrounding the notice. These announcements are typically underwritten by a broker or banker involved in trading the securities being offered by the issuer, and are included in the disclosure requirements for security offerings required by the Securities and Exchange Commission (SEC).
A tombstone ad provides basic information to investors about an upcoming public offering, and are limited in scope. Photographs, descriptions of benefits of securities being offered, or any other information that might make the announcement seem promotional in nature are not permitted in a tombstone ad.
Information included in a tombstone announcement:
Information about the available securities
Basic information such as the date that securities will become available, the type of securities being offered, and the quantity being sold by the company will all be listed clearly in any tombstone advertisement.
Assigned security ratings
If security ratings have been officially assigned, the ratings may be included in a tombstone advertisement. Security ratings that are only tentative or expected may not be included, as they are considered preliminary and not actual assignments.
Who has undersigned the securities
The names of the underwriting group members involved in the offering securities will be included, usually in alphabetical groups according to the extent of their participation.
Non-solicitation clause
As a tombstone advertisement is only intended to be an informative announcement of an available or upcoming securities sale, there is often a statement included that clarifies that the advertisement is not a solicitation and is intended for information purposes only.
The URL of the intermediary’s platform or a point-of-contact
Tombstone advertisements cannot solicit sales of securities themselves, so they must include a way for interested investors to contact a broker or an intermediary (usually a funding portal or platform like WeFunder or StartEngine) that can provide more information about the offering and facilitate sales of any securities being offered.
Non-term Advertisements
Non-term advertisements, also referred to as “soft” advertisements, are communications that contain information about the offering without providing any details about the terms being offered. Instead, investors must be made aware of the intermediary conducting the offering, and directed to the intermediary’s platform for information regarding any terms.
Once on the intermediary’s platform (typically a funding portal, such as WeFunder or StartEngine), issuers may communicate about the terms in more detail via the platform’s communication channels. These communication channels are often a Question & Answers section or a discussion board built into the platform’s campaign page.
Allowed Topics in Non-Term Advertisements
Your Company’s Name and Tagline
Introduce your company. Who are you, and what is your tagline if you have one? What is it that you do?
Your Company’s Mission
Investors will want to know your company’s motivations. Why did you found your company? What are your goals for the future?
Your Company’s Growth
Your investors will need convincing to put their trust in your company’s success. How have you grown as a company since your foundation? What are some of your accomplishments? Remember not to include any hyperbole or misleading information that may violate the SEC guidelines for communication.
Your Team
Tell potential investors about your team. What do each of them bring to your company? How are they qualified to set your company up for success? Why are they passionate about your company?
Link to Campaign Page on Intermediary’s Platform
Most non-term advertisements will include a link to the intermediary and the campaign page hosted on their platform, because a non-term advertisement cannot contain any information about the terms. This is usually just a button that says “Invest.”
Companies should take caution not to use language like “Time is running out” or “Invest today” in any non-term advertisements, as it can create a sense of urgency or imply offering deadlines, which count as a deal term and are not permitted. Similarly, mentioning that you have currently raised a given percentage or dollar amount of your target number would be a direct violation of SEC regulations, as the target offering is considered a deal term.