On July 10, the Securities and Exchange Commission, SEC, removed the ban on advertising for fundraising for privately held small businesses and start-ups. Until now, start-ups and small, rapidly growing companies could only solicit funds by approaching investor groups including angel investment groups, venture capital firms and, for some that are larger, private equity firms. The common denominator among these entities…or the people who participate in them (in the case of the angel groups)? They are all accredited investors.
By changing the law and allowing companies to advertise, small businesses can gain access to all those eligible accredited investors who do not actively invest in small businesses or who do, but can’t possibly be aware of all the options to invest. As an investor, how do you know a company is seeking money? You either heard a presentation, know someone who works for or with the company, or heard it through the grapevine. The change in law allows investors to hear it through traditional and nontraditional media channels. It also opens the door to equity crowdfunding.
Read more on the subject in the Inc.com article: Finally: SEC Lifts Ban on Advertising Fundraising Rounds.