Why funds have shunned general solicitation

Author: Zoe Thomas | Published: 26 Jun 2015

US regulators lifted the ban on general solicitation by funds, but market uncertainty has stalled its use. Marianne Hudson from the Angel Capital Association addresses the leading concerns

In 2013, the US Securities and Exchange Commission issued rules allowing entrepreneurs to publicly advertise private investment offerings. Lifting the ban on general solicitation has altered the landscape for startups and investors and has led to inconsistent legal advice. Attorneys representing international issuers looking to raise capital in the US should ensure that their clients are aware of the general solicitation rules so that they understand their pros and cons and decide whether or not to take advantage of general solicitation before they begin contacting angel investors.

General solicitation is one of five initiatives in the Jobs Act Congress passed in 2012 to help startups access more capital for growth and job creation. The new general solicitation rules, although not discussed as...