Capital Markets

Remember the days of 120-page private placements memorandums, 60-slide PowerPoint decks, and 90-minute investor presentations?  That was way back like, what, five years ago?  Actually longer than that, but the point is that today is a whole new world.  If you have something to sell, you have to communicate it in five minutes.  Sure, if you can initially hook a prospective investor, you’ll get a longer time with him or her down the line, but if you can’t set the hook in five minutes when you first have the opportunity, you are history, at least with that investor.  The “elevator pitch” that used to be confined to venture capital is now de rigueur virtually everywhere.  Investors simply don’t have time for anything else.  And even if they have the time, they demand simplicity in the business or at least that you have the ability to express it simply.  Here is a good guideline for your pitch.

The idea with the JOBS Act of 2012 was to have mechanisms in place for implementation of its various provisions by January 1, 2013.  Didn’t happen.  So crowdfunding enthusiasts are descending on the Capitol in an effort to push things along.  While I’m lukewarm, so far anyway, about the whole practical effect of the crowdfunding provisions, one provision of the JOBS Act I am following with interest is the one that waives the prohibition against general solicitations in Reg D private placements, provided the transaction is ultimately closed with accredited investors.    

The crowdfunding allowed by the JOBS Act of 2012 is getting a lot of attention, but we have yet to hear from the SEC and FINRA on how they are going to regulate it.  The details of that will spell doom or boom for crowdfunding.  In any event, the dollar limit ($1 million in any 12-month period) makes it kind of uninteresting from an investment banking standpoint.

As investment bankers, we like the element of the Act that waives the prohibition against general solicitations for Reg D private placements, provided the deal is ultimately funded with accredited investors.

This article on real estate and crowdfunding provokes ideas about how interests in capital assets might be bought, sold, and traded among accredited investors in the private markets:   

More on crowdfunding as regulatory issues are clarified.

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