By now, most entrepreneurs and CRE developers know the securities regulations have changed and capital raises are now operating under a whole “new normal” approach that includes new filing requirements, new compliance requirements and new rules governing so-called “general solicitations”.
Many entrepreneurs, developers and businesses may be unaware of the opportunities to solicit interest using broad advertising pursuant to the new Rule 206 of the Securities Act of 1933, as amended.
Raise Capital More Efficiently & Create Investment Leverage

While the reporting and disclosure requirements are important considerations in the execution of a pre-offering “communications” campaign, the potential benefits are indeed breathtaking:
- Communications to “test-the-waters” under Rule 206 allow sponsors seeking capital financing to generate interest, receive feedback and/or entertain investor discussions;
- Investor discussions are non-binding and no money can change hands until the registration-exemption is elected but this concern is largely semantic in nature;
- These disclosures can be used in combination with the new Rule 148 Demo Day investor presentations (think TV show, “Shark Tank“, and you get the idea) in strict compliance with the rules;
- The new rules create the opportunity to potentially stairstep the capital financing to as much as $75 million, thus creating the opportunity to potentially control a billion dollar transaction using a structured finance approach that may result in extreme levels of financial investment leverage for the sponsor’s benefit.
There are many considerations and requirements, so don’t charge off with your business plan without talking to an expert and your legal counsel. The new securities regulations have some pitfalls and your legal counsel should be consulted at every step in the process, and have the assistance of a crowdfunding consultant who understands the disclosure requirements as well as execution management requirements that attend the New Normal.