The Key to a Successful Crowdfunding Offering

Since the effectiveness on May 16, 2016 of rules allowing equity crowdfunding, many businesses, both small and large, have commenced crowdfunding offerings with varied success. The “boom or bust” nature of a crowdfunding offering has caused management of many businesses to ask themselves whether they would be able to conduct a successful crowdfunding offering.

Many of the early businesses who commenced crowdfunding offerings have found that a successful crowdfunding offering can rely heavily on how many potential investors are aware of the offering. Equity crowdfunding rules do not allow an issuer to advertise the terms of a crowdfunding offering except in a notice that directs investors to the intermediary’s platform and includes not much more than the offering terms, the name of the intermediary through which the offering is being conducted (including a link to the intermediary’s platform), and general information about the issuer.

Due to these restrictions, oftentimes, the difference between a successful crowdfunding offering and a failure is the issuer’s social media presence. Management of any business contemplating a crowdfunding offering should be sure that the business has a strong social media presence prior to commencing a crowdfunding offering in order to increase the probability of the crowdfunding offering’s success. Because a business cannot engage in heavy advertising efforts for its crowdfunding offering, a large social media presence will ensure the most exposure of the crowdfunding offering as possible.

About the Author

Brian Higley specializes in assisting small businesses with planning for and conducting crowdfunding and other offerings, including federal and state securities compliance.  Brian graduated from the University of Utah S.J. Quinney College of Law and has focused on securities law his entire legal career. He is licensed to practice in the State of Utah and is a member of the Utah State Bar Securities Section. He is also fluent in Spanish.

Mr. Higley assists various clients primarily in the areas of public company disclosure, corporate finance, and mergers and acquisitions, including private placements, public and private offerings, Securities and Exchange Commission and Blue Sky compliance and reporting requirements, asset and stock purchases, and general corporate practice.

During law school, Mr. Higley externed for the Honorable Judge Carolyn B. McHugh at the Utah Court of Appeals. Prior to law school, he graduated from the University of Utah with a Bachelor’s Degree in Business Administration.