For those of us who were NOT initiated  into the secret world of finance and all its mystery, we will just take a moment to define general solicitation.  Here is the official definition of it:

  • Any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media or broadcast over television and radio;
AND…..
  • Any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.

It’s not explicitly included in this definition, but in today’s day and age, the internet and all social media fall under this definition as well.  To quickly summarize the effects of this legislation, most private offerings are banned from generally soliciting investors that you don’t have a significant pre-existing relationship with (i.e. friends and family).

It’s an interesting rule that may have served it’s role for investor protection over the course of the last 80 or so years. It’s even more interesting  how that worked because to effectively protect investors, true growth and wealth generating investment opportunities were kept in the hands of the elite: those individuals and conglomerates that had the professional and personal networks to source deals and THEN make sure that the syndicate was only formed with a handful of wealth mongers.

Oh, how times have changed. (Phew!)

Now the masses decide where we eat, travel, sleep and potentially even wed.  The internet has become a massive organic network of information and knowledge significantly shrinking the information asymmetry that used to exist many years ago.  In today’s era and with the power of Google, it’s hard to find a shadow from which to perpetrate financial crimes.  As a matter of fact, the most recent financial scandals that have occurred (such as Madoff and the institutional LIBOR fixing) were done under the auspices of “heavy regulation.” So what can be the solution?

Let the folks who are investing decide what to invest in.  Let them determine the future of business and the direction of innovation; and NOT be governed by ridiculous stock ratios that become nothing but buzz words when money is made, and then discarded at the first sign of trauma.

We are going to be permitted to generally solicit investors to create this fantastic new medium of capital formation; a HUGE directional shift for entrepreneurship and inevitably the future.

If you’re an innovative startup founder and are interested in how to leverage this, come to www.ReturnOnChange.com and sign up!!

 

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Sang H. Lee
Sang is the founder and CEO of Return on Change. He's constantly searching to help startups that are looking to change the world! He's a leader in equity crowdfunding and is always happy to help entrepreneurs and startups. He previously worked as an investment banker in the energy field at WestLB and BNP Paribas, accruing a wealth of expertise in financial regulation, business, and financial structuring. Sang is also the Executive Director of CF50, a global think tank of thought leaders within the crowdfunding industry. You can find him on Google+ and Twitter.
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