Raising Capital

Issuer Benefits

The FUNDSITION platform uses the Reg D 506(c) exemption to support companies in raising capital, as you can market and advertise these Offerings, issuers can take their deals to the world of accredited investors looking to invest.

AT FUNDSITION, WE ARE HERE TO SUPPORT COMPANIES WITH ACCESSING CAPITAL IN A SEAMLESS AND TIMELY MANNER FROM A WIDER INVESTOR POOL.
General Solicitation

A key advantage of structuring an offering under the 506(c) exemption is the ability to generally solicit or advertise the offering. This means that issuers can advertise their Offering, including online or more traditional channels.

This powerful benefit allows investors to show their current Offering to the world, with the goal of more efficient fundraising and a larger investor base for future capital requirements.

There is a significant benefit to leveraging a platform that can market for you. Our platform allows an issuer to showcase their Offering in a compliant manner to accredited investors who are members of the platform.

Potential Benefits

A major difference between the two types of 506 offerings is the different types of documents required to be disclosed, this is where 506(c) becomes easier and more cost effective for an issuer to manage.

It can make it easier for small companies to raise capital while decreasing administrative costs. With a 506(c) Offering, the document disclosure requirements may be less onerous as all investors must be accredited.

No annual funding limitations with 506(c).

Broker-dealer Verified Accreditation

While issuers can allow non-accredited investors in 506(b), both exemptions still require that accredited investors are verified. The difference is the requirement on how a verification takes place, with a 506(b) offering, investors are verified through self-verification, but with a 506(c) offering, the issuer or broker-dealer has to verify the accreditation status of the investor. FUNDSITION has a broker-dealer and the functional capabilities for accredited investors to upload a letter of accreditation by a CPA, attorney, or other professional and an online function.

Other Key Benefits

  • Allows business owners to focus on running the company
  • 506(c) provides an exemption from state rules that require pre-sale filings and reviews by state securities administrators, which can cause delays and extra offering expenses
  • Reduced costs with raising capital
  • Have no post-sale filing requirements other than filing Form D with the SEC and some states
  • Regulatory compliance supported by our broker dealer

Potential Risks

  • Issuers are subject to rule 10b-5 Anti-Fraud provisions
  • Intermediaries must be Broker Dealers and not simply funding portals to maintain securities compliance
  • With 506C Offerings, investors cannot self-certify like with 506B offerings
  • Rule 506C offerings are subject to “bad actor” disqualification provisions
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