Is publicly saying “we are raising money” the same as publicly soliciting a sale of securities?
Well, if you really are not selling securities, you are free to say “we are raising money” without falling under the scope of these regulations. This might be a donation crowdfunding platform, a Gofundme campaign, any kind of charitable donation, or many other things.
But if you are raising money by selling securities, then simply saying “we are raising capital” is the same as making an offer of securities (even if you include disclaimers like “this is not an offer to sell securities” in your documents!).
Debt very often counts as selling securities. Convertible notes, a popular option for early stage fundraising, is definitely a security. So are warrants that might go alongside debt. So is a SAFE.
Areas get grayer depending on how you phrase things: “here’s a link to my investor presentation”; “we are looking for partners to help grow our business”; “we are seeking a lead”; “here are our financial projections for the next three years”. You might not explicitly say “here is an offer of securities”, but it is pretty obvious you are.
Another related popular way companies and funds seem to skirt the general solicitation rules is when publicizing the “first closing” of their investment round or fund. Saying you’ve had a first closing of a round again does not explicitly say “You are selling securities”…but you obviously are. In our opinion you are blowing the 506(b) exemption.
As we frequently are lead investors in investment rounds, we always suggest our new portfolio companies avoid any public comment on fundraising – definitely not sending out a press release, but in fact not speaking to the press AT ALL while you are fundraising. An enterprising report might combine your Form D information (which we’ll discuss later) with the more general comments you made, and it will look a lot like you are trying to get fundraising advantages that are not permitted. Our companies listen once they read the next couple of posts.