In the context of regulated investment crowdfunding, "testing the waters" refers to the practice of gauging investor interest and soliciting indications of interest for a potential securities offering before formally launching the offering. This practice is permitted under certain regulations, such as Title II of the JOBS Act in the United States.

The pros of testing the waters in regulated investment crowdfunding include:

1. Market Validation: Testing the waters allows companies to assess market demand and investor interest in their offering before committing significant resources to a full campaign. It helps validate the viability of the investment opportunity and reduce the risk of launching a campaign that may not attract sufficient investor participation.

2. Feedback and Refinement: By engaging with potential investors during the testing the waters phase, companies can gather feedback and insights that can be used to refine their offering. This feedback can help identify areas for improvement, address investor concerns, and fine-tune the investment proposition.

3. Building Investor Relationships: Testing the waters provides an opportunity to establish relationships with potential investors early on. By interacting with them, sharing information, and answering questions, companies can build rapport, trust, and a sense of community around their offering. This can be beneficial when the formal campaign is launched, as these relationships can potentially lead to investment commitments.

4. Marketing Advantage: Engaging in testing the waters activities can help generate buzz and create awareness about the upcoming investment opportunity. It allows companies to start building a following, generating interest, and capturing potential investor leads, which can be leveraged during the formal campaign.

However, there are also potential cons to consider:

1. Legal and Regulatory Compliance: While testing the waters allows companies to solicit indications of interest, they must ensure compliance with relevant securities laws and regulations. There are restrictions on what can be communicated, limitations on the solicitation methods, and requirements to avoid actual investment acceptance until the formal campaign is launched. Companies need to carefully navigate the legal requirements to avoid any compliance issues.

2. Resource Intensity: Testing the waters can require significant time, effort, and resources. Companies need to develop marketing materials, engage with potential investors, respond to inquiries, and track indications of interest. This can create additional workload and costs, particularly for small businesses or startups with limited resources.

3. Potential Lack of Conversion: While testing the waters can provide an indication of investor interest, it does not guarantee that those who express interest will actually convert into investors during the formal campaign. There is a risk that the initial interest does not translate into actual investment commitments, which may impact the success of the crowdfunding campaign.

Overall, testing the waters in regulated investment crowdfunding offers several potential benefits in terms of market validation, feedback, relationship building, and marketing advantage. However, it also presents challenges related to legal compliance, resource allocation, and the uncertainty of converting indications of interest into actual investments.

The estimated accounting and legal costs for an ongoing Regulation Crowdfunding (Reg CF) offering of $5 million can vary depending on several factors, such as the complexity of the offering, the location of the startup, and the specific legal and accounting services obtained. However, I can provide you with a general breakdown of the potential costs involved. Please note that these figures are estimates and can vary significantly:

1 - Legal Costs:

- Startup Formation: When establishing a Reg CF entity, there are legal costs associated with forming the startup, such as incorporating the company, drafting corporate documents, and other regulatory compliance requirements. These costs can range from $2,000 to $10,000 or more, depending on the complexity and location of the startup.

- Offering Documentation: Drafting the offering documents, including the Form C, subscription agreement, and other required disclosures, can cost between $5,000 and $20,000, depending on the complexity of the offering and the legal services obtained.

- Compliance and Regulatory Filings: Ongoing compliance with SEC regulations and filing requirements may incur additional legal costs. These costs can vary based on the complexity and frequency of filings required by the Reg CF entity, but it's advisable to budget a few thousand dollars annually.

2 - Accounting Costs:

- Financial Statement Preparation: Reg CF requires the preparation and disclosure of financial statements. The cost of preparing these statements can range from $3,000 to $10,000, depending on the complexity and the level of detail required.

- Ongoing Accounting and Bookkeeping: Maintaining accurate financial records, bookkeeping, and financial reporting over the four-year term of the Reg CF offering will require accounting services. The cost of these services can range from a few thousand dollars to tens of thousands of dollars per year, depending on the complexity of the business and the frequency of reporting required.

It's important to note that these estimates are general and can vary significantly based on the specific circumstances of the startup, the location, the legal and accounting service providers chosen, and other factors. It's advisable to consult with professionals in the legal and accounting fields to get more accurate estimates based on your specific situation.

The average cost of investor acquisition for regulated investment crowdfunding under Regulation Crowdfunding (Reg CF) can vary widely depending on several factors. These factors include the specific marketing strategies employed, the quality and attractiveness of the investment opportunity, the target audience, and the platform used for the crowdfunding campaign. Additionally, the industry and market conditions can also influence the cost.

Since there are no standardized or publicly available data on the average cost of investor acquisition specifically for Reg CF, it is challenging to provide a precise figure. However, it's common for crowdfunding platforms and issuers to allocate a significant portion of their budget towards marketing and investor outreach.

Some of the expenses typically associated with investor acquisition in Reg CF campaigns may include:

1: Marketing and Advertising: This can involve digital marketing efforts such as social media advertising, content creation, search engine optimization, pay-per-click campaigns, and email marketing. Costs can vary depending on the scale and complexity of the marketing strategy employed.

2: Public Relations: Engaging with media outlets and influencers to generate press coverage and increase visibility for the crowdfunding campaign.

3: Platform Fees: Crowdfunding platforms often charge fees for hosting and facilitating the campaign. These fees can be a percentage of the funds raised or a flat fee.

4: Professional Services: Engaging legal, accounting, or consulting services to ensure compliance, provide guidance, and support the crowdfunding campaign.

5: Investor Outreach: Costs associated with directly reaching out to potential investors, attending industry events or conferences, hosting webinars, or other methods of engaging with the target audience.

It's important to note that the success and cost-effectiveness of a Reg CF campaign also depend on the quality of the investment opportunity, the clarity and attractiveness of the campaign materials, and the ability to effectively communicate the value proposition to potential investors.

As crowdfunding campaigns can vary significantly, it is advisable to consult with crowdfunding professionals, platforms, or experienced marketing specialists who can provide more specific insights and guidance based on your particular circumstances.

Yes, an issuer can run both a Regulation Crowdfunding (Reg CF) campaign and a Regulation A+ (Reg A+) campaign at the same time, as long as they comply with the requirements of both regulations.

Reg CF and Reg A+ are both securities offerings that allow companies to raise capital from the general public. However, there are some key differences between the two regulations, such as the amount of money that can be raised, the disclosure requirements, and the eligibility criteria for issuers.

Under Reg CF, issuers can raise up to $5 million in a 12-month period, and they must file certain disclosures with the SEC and provide ongoing updates to investors. Reg A+, on the other hand, allows issuers to raise up to $75 million in a 12-month period, and they must file an offering statement with the SEC and provide ongoing reports to investors.

Issuers must ensure that they comply with the requirements of both regulations, which may involve preparing separate disclosures and reports for each offering. They must also consider how the two offerings may impact each other, such as how investors in one offering may perceive the risks and opportunities of the other offering.

Overall, running both a Reg CF campaign and a Reg A+ campaign at the same time requires careful planning and compliance with regulatory requirements.

Thanks for the great question. With nearly 90 FINRA regulated funding portals and thousands of broker dealers all eligible to facilitate issuers for their crowdfunding raises, you aren't alone in looking for deals that meet certain characteristics (e.g. impact investments). Luckily, there do exist aggregators that collect data about live offerings and sort them into categories. 

KingsCrowd is one such aggregator and you can find companies with live offerings that they've sorted as having "Social Impact" by clicking on this link: https://kingscrowd.com/companies/search/?social_impact=true&status=Active I believe they have a team of analysts that tag issuers with certain labels to make them easier to sort. 

Another place where you can learn more generally about companies operating at the intersection of impact investing and crowdfunding is at the SuperCrowd conference where companies, including impact companies with live offerings, pitch, present, and discuss case studies. It's a major gathering of leaders in this sector and you can find more info here: https://thesupercrowd.com

#impactinvesting #socialimpact @Devin Thorpe @Brian Belley 

Before answering the question, it's important to understand the current state of how many equity crowdfunding companies are run by solo founders vs. two or more founders. From a recent KingsCrowd Chart of the Week, we can see that roughly 47% of all equity crowdfunding raises since 2020 were run by solo founders, while the other 53% had two or more co-founders.

With that perspective, let's look at some thinking around whether or not single founders or co-founders are more successful at raising funds. 

Looking at 2022 data from KingsCrowd for raises that closed in 2022, here are the average amounts raised for Reg CF campaigns (equity and debt crowdfunding):

The data shows that companies with 2 or more founders raised $433k on average, while companies with solo founders raised $338k on average. That being said, there have still been some very successful campaigns run by solo founders, so this is by no means a hard rule.

There could be reasons in the data that skewed a higher average towards companies with co-founders. For example, it could be that later-stage companies (those with revenue that tend to raise more money on average) may have been around for longer and potentially recruited additional founders to the founding team, vs. those founders who are just getting started out. 

However, there could be other reasons that lead investors to invest more in companies with co-founders. 

A company with co-founders may be a signal to investors that the product and mission are something that isn't just in the mind of a single individual, but something that has the potential to capture the passion of multiple founders. This could also indicate potential about one (or more) of the founders' abilities to sell the vision and the business potential to others.

Multiple founders may also be looked upon favorably by investors as a system of redundancy. Life happens and startups are hard, and it could be more reassuring to know that there are multiple founders on a team providing support to one another and encouraging each other to continue with the going gets tough. 

Co-founders can also use their combined network of contacts to seek out and establish relationships with investors, which provides greater access to potential funding opportunities than if a single founder was pitching alone. Finally, many large investor groups prefer investing in companies with more than one founder because they feel it reduces risk by providing more oversight and management than an individual leader can provide on their own.

Therefore, while companies with single founders may have success in raising funds through investment crowdfunding platforms, co-founded companies may have a slight advantage when it comes to this form of fundraising.

According to our data Q2 tends to have the most funded deals of the year. Since most offerings last around 4 months, launching in Q4 might be smart. Of course, there are other factors that play into account like whether the issuer is a startup or established and what geopolitical or macroeconomic events are pressuring investors. 

Yes, there are websites and companies that aggregate crowdfunding deals that are active (as well as other types of deals).

Some of these primary deal aggregators include:

1. KingsCrowd ("Trusted by over 475,000 investors to vet startup investments from 60+ online investment platforms")

2. so.capital ("Equity Crowdfunding, Donation Crowdfunding, NFTs, Alternative Assets")

3. Vincent ("exempt reporting adviser in the alternative investment space")

4. CrowdLustro ("Reg CF, Collectibles, Real Estate, NFTs, & other alternative assets")

5. Alts.co ("alternative assets" -- more than just crowdfunding)

6. Sharky - ("Discover startups like a pro!")

7. Investibule - ("Investibule opens the door to community investments - aggregating opportunities across 30+ platforms.")

For those looking for deals outside the US, there are other aggregators (e.g. CrowdInvest - "Invest in promising start-ups in India from the UK"). As with any service provider, it's important to verify information listed on these sites with information on the site of the funding portal or provided by the issuer. 

Completely different process for the two sorts of offering.

In a Reg CF offering, the Form C is filed with the SEC and the moment it shows up on the EDGAR system, the issuer can start accepting investment commitments on the intermediary's site. The SEC does not review or sign off in any way. That doesn't mean they (and other regulators) aren't looking, though!

In a Reg A offering, the SEC must review and "qualify" the offering before it goes live. (We don't use the term "approve"; the SEC never approves or blesses offerings.) If it's a Tier 1 Reg A offering, the states that the offer will be made into also have to sign off.

In both cases, you can "test the waters" before filing or qualification, but any materials you use to test the waters need to be filed with the SEC.