Eyewitness Report from Meeting with the SEC

By Mark Perlmutter   CEO Microangels  :

On July 16, I had a private meeting at the SEC with 7 SEC lawyers invited by the Special Counsel Tamara Brightwell, who leads the team drafting rules.

The appointment was for me to share experiences on three topics:

1 – Lessons learned from the leading crowd funders in Australia and Europe.

2 – How existing DPO laws work for crowd funded startups to raise their next round.

3 – The California experience from allowing advertising of intra-state private offerings for 10 years.

I quoted statistics for Australian Small Scale Offering Board at 2,000 companies raised $125,000,000 in 7 years, with 86% still in business. I said neither Australia or Europe had unusual fraud problems. So based on their experience I supported a very light touch on required conditions for small raises up to $150k, and with some increased requirements for larger raises.

Then I explained that DPOs are the next logical funding round for crowd funded startups. I showed prospectus examples of completed DPOs. Several of the lawyers eagerly thumbed through these examples as if they had never seen a DPO prospectus.

Then I talked about the California experience with seasoned law 25102 (n) allowing advertising of intra-state private offerings. The SEC lawyers asked more than 10 questions during my presentation and we ran out of time at the end of 60 minutes. They thanked me as an industry professional for giving them real world data.