Although equity crowdfunding won’t be legal until early next year, if your company has decided that it wants to seek crowdfunding, there are things you can be doing this year, based on the requirements listed in the JOBS Act itself, to get a head start once the full regulations are issued by the SEC.
First, your company will need to decide how much money it wants to raise, and in what timeframe it can be raised in — pursuant to the JOBS Act, the final sale of securities cannot be executed until the target is hit, so you won’t want to set an exceedingly long funding period that you may have to wait the entire period of; however, buyers are allowed to rescind their purchases if the total funding amount isn’t reached by the target date, so you also don’t want to set a short amount of time that doesn’t allow you to reach your target.
The JOBS Act already sets out the initial framework for some documents that crowdfunded companies will have to submit to the SEC which will be made available to investors, including both financial records and an informational document regarding the company and the terms of the offering. Your company can start to begin to compile the information the JOBS Act sets out as required; however, it is also likely that the SEC will spell out additional information that will be required from issuers. Financial records that will be required include at the very least the last year’s tax return and financial statement — depending on how much money your company is seeking, you may need to have your financial statements at least reviewed by a CPA, and possibly fully audited by an accounting firm. The informational statement described in the JOBS Act will require information about your company and about your offering, including basic information such as what the company is, where it is, and who is in charge. You will also need to describe the equity structure of the company and how the particular security being offered fits into that structure. Finally, and perhaps most importantly, your statement will also need to include your business plan, which should also describe the risks of investment in the company. Your business plan will likely be one of the primary documents investors will use to scrutinize your company, so you should begin to update and polish your business plan by anticipating the questions and concerns investors are going to have about your business.
Finally, in a few months you may be able to begin to start the process of deciding which funding portal you want to list on. There are established crowdfunding donation and peer-to-peer lending sites as well as brand new companies that have announced their intention to enter into the equity crowdfunding industry. Many funding portals will likely have additional requirements for issuers above and beyond the statutory and regulatory requirements, although those requirements may not become clear until the SEC’s regulatory scheme is set in place.