New Rules on General Solicitation

NEW RULES ON GENERAL SOLICITATIONSEC issues new rules on allowing general solicitations on certain private offerings as part of JOBS Act

Charting a course in a new world

Monday, September 16, 13

Legal DisclaimerThis presentation is for general informational and educational purposes only and does not constitute or purport to render legal advice or legal opinions. The material is intended, but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as an indication of future law and practice. Transmission of the information is not intended to create, and the receipt does not constitute, an attorney-client relationship between us. The opinions expressed in this presentation are personal views only and do not reflect the opinions of any governmental organization. You should not act or rely on any information contained in this presentation, both oral and written, without first seeking the advice of an attorney.


Who am I?• Zack Miller, Head of Investor

Community, OurCrowd• 10 years focused on intersection of

social media, technology, and investing (Seeking Alpha, Covestor, Lending Club)• Author, Tradestream your Way to

Profits: Building a Killer Portfolio in the Age of Social Media (Wiley, 2010)


Little bit about OurCrowd first• Emerged as leader in venture capital-type crowdfunding

space ($20M in 31+ rounds, 27 companies)• 7 deals over $1M (#2 worldwide after Kickstarter)• 5 follow-on rounds (2x valuation upticks in months)

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Combining the best of 2 worlds

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Exposure to top dealflowProfessional due diligenceLegal issues/termsheetsPreemptive/other rights

Independence, DIYLow feesNo large upfront commitmentRelative speed and ease

Venture Capital Angel Investing


Portfolio company example: Argo/Rewalk

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Global in nature

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Investors from 19 countries


5 Follow-on rounds

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$5M pre … 11/12 $10M pre … 3/13 2X valuation in 4 months

$325K of $725 round

$350K of $800K round

2X valuation in 4 months

$2M pre … 1/13 $4M pre … 9/13 2X valuation in 8 months, Added Lool Ventures

$550K $215K of $1.3M round

2X valuation in 8 months, Added Lool Ventures

$3.25M pre … 11/12

$6.65M pre … 9/13

2X in 10 months, added 2 major VCs

$550K of $1.3M round

$110K of $4.5M round

2X in 10 months, added 2 major VCs

3 examples


Who am I?• Jay Kalish, General Counsel for

OurCrowd• 20 years experience as in-house

counsel/IR for publicly traded companies


History in a nutshell• Why: SEC role in protecting investors• How: No general solicitation or general advertising of

unregistered securities allowed• But: Current exemption – certain private offerings only to

accredited investors• Self-accreditation was sufficient• US accreditation standards


JOBS Act - 2012• Congress’ attempt to stimulate

jobs in the US economy by broadening investment in private companies• Mandate for Securities &

Exchange Commission (SEC) to issue operative regulations• First set of rules issued by the

SEC in July 2013, effective September 23, 2013


SEC Issues Rules• New Rule 506(c) provides:• General solicitation and general

advertising allowed• Only accredited investors can actually

purchase• Self-accreditation no longer enough –

need to implement verification procedure

• Bad actor provision• New reporting requirements –

currently in proposal stage• Relates to US residents only


Advertising & SolicitationGeneral advertising and solicitation allowed in the US only • All US residents now able to see and attend meetings with

actively funding companies (whether accredited or not)• Web site to contain limited info on funding companies for

US users only• Proposed regulations – pre-filing of Form Reg D;

marketing materials (510T); mandatory legends (509)


Accreditation• Definition of accredited investor remains the same• Self-accreditation no longer sufficient• New rule requires each US investor to provide certification

letter• Issued by registered broker-dealer; investment advisor registered

with SEC; licensed attorney; CPA• Certification letter needs to be renewed periodically• Confirm that certification letter is still accurate at the time of each

actual investment


Bad Actor Provision• Issuers can only use

Rule 506 offerings if no “bad actors” associated with them• SEC issued clear

guidelines • Gets bad guys off

the street – more protection for investors


New Reporting Requirements• Reg D filings must be completed at least 15 days prior to

offering• Proposed regulations – additional filing post-offering


In Summary…• New rules open opportunities for OurCrowd investors• Expanding the audience – “crowd building”• Evolving area of law• OurCrowd leveraging the changes while taking a

conservative approach


OurCrowd• Hybrid VC-crowdfunding platform for accredited investors

only• Operating under SEC’s VC exemption; full compliance with

US and Israeli law• Funded 26 companies to date• Raised over $20M for portfolio companies• Current focus on the best of Israel’s Start-Up Nation;

expanding to international• Investors from 19 countries to date

Any questions?email Jay ([email protected]) or Zack ([email protected])


mailto:[email protected]


