It means that the instrument/contract that is being assessed will be considered a "security" under applicable laws.  This means you will need to either register the offering of that security (with the SEC and applicable state regulators) or find an exemption for those registration requirements.  

Sometimes but it really depends on your particular circumstances.

Investment crowdfunding can potentially limit future financing options due to the large number of shareholders on the cap table. When a company has numerous individual investors from a crowdfunding campaign, it can complicate future fundraising efforts as new investors may be wary of coming into a situation with such a dispersed ownership structure. Additionally, managing communication and decision-making with a large number of shareholders can be challenging and time-consuming for the company's management team.

There are ways to limit the effects of both of these concerns with planning.  For instance, a company may be suited to issued non-equity securities, like revenue share notes, or might utilize transfer agents that consolidate ownership into one record holder.  You could also limit voting rights on regulated investment crowdfunding issued securities. 

Institutional and angel investors have varying views on crowdfunding.  There has been a significant shift in "acceptance" of the use of regulated investment crowdfunding by many more (but not all) institutional and angel investors.  It may also depend on the region of the country where those investors are located. 

I'd be happy to chat more about the realities as they would apply to your circumstances if you want to chat directly. 

Yes, both the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) play roles in regulating investment crowdfunding. 

The SEC oversees securities markets in the United States, ensuring that investors are protected, markets are fair, orderly, and efficient, and capital formation is facilitated. The SEC has established regulations for crowdfunding, which are designed to help smaller companies raise money while still providing protections for investors. These rules are part of Regulation Crowdfunding (Reg CF), which allows companies to offer and sell securities through crowdfunding.

FINRA, on the other hand, is a non-governmental organization that acts as a self-regulatory organization (SRO) for brokerage firms and exchange markets. FINRA is authorized by Congress to protect America’s investors by making sure the securities industry operates fairly and honestly. Within the context of crowdfunding, FINRA is responsible for regulating crowdfunding portals, which are online platforms that facilitate the offering and selling of securities through crowdfunding. Crowdfunding portals must register with the SEC and become a member of FINRA to operate legally.

Both organizations ensure that platforms adhere to the regulations set forth to protect investors and maintain the integrity of the securities market. This includes rules about who can invest, how much they can invest, and how companies can raise funds through crowdfunding.

Since the passage of the JOBS Act and the subsequent rulemaking, there has been massive confusion by the general and investing public who often conflate the activities of the regulated investment crowdfunding industry and those of rewards-based or donations-based crowdfunding platforms. Aside from marketplace confusion, there is considerable reputational risk that regulated entities, and the regulated industry as a whole, face by being mistaken for the activities happening in a less regulated environment and by unlicensed actors (e.g. GoFundMe, Kickstarter, IndieGoGo).

Furthermore, while admirable, the efforts by some industry participants to provide clarity through use of other terms (e.g. “online capital raising,” “investment crowdfunding,” or “equity crowdfunding”) are insufficient or, in some cases, potentially misleading.   

By embracing ‘Regulated Investment Crowdfunding,’ we not only clarify our industry's scope but also underline the legal and regulatory frameworks that govern our operations. 

Private equity (PE) investors play a crucial role in the financial landscape, providing capital, expertise, and strategic support to companies across various stages of growth. However, their involvement is not without challenges and criticisms. Here are some of the problems associated with private equity investors:

1. High Leverage
- Debt Load: PE firms often use significant amounts of debt to finance their acquisitions, known as leveraged buyouts (LBOs). This can place a substantial financial burden on the company, increasing its risk of default or bankruptcy if it cannot service the debt.
- Financial Stress: The need to meet debt obligations can force companies to focus on short-term financial performance at the expense of long-term strategic investments, potentially stifling innovation and growth.

2. Short-term Focus
- Exit Strategy: PE firms typically have a relatively short investment horizon (5-10 years) as they seek to exit their investments through a sale or IPO for a return. This can lead them to prioritize short-term gains over the long-term health and sustainability of the business.
- Cost Cutting: To boost short-term profitability, PE investors may implement aggressive cost-cutting measures, including layoffs, which can impact employee morale, company culture, and the quality of products or services.

3. Loss of Control
- Management Changes: PE firms often seek significant control over the companies in which they invest, which can lead to changes in management and strategic direction. While sometimes beneficial, these changes can also disrupt the company's operations and alienate existing leadership and staff.
- Strategic Shifts: The strategic priorities of the PE firm may not always align with the long-term vision of the company's founders or existing management, leading to conflicts and tension.

4. Operational Disruption
- Restructuring: The operational changes and restructuring efforts initiated by PE investors to improve efficiency and profitability can disrupt ongoing operations and may not always lead to positive outcomes.
- **Innovation and Growth:** The focus on cost-cutting and debt repayment can limit the company's ability to invest in innovation and growth opportunities, potentially leaving it at a competitive disadvantage.

5. Transparency and Accountability
- Private Operations: Given the private nature of PE transactions, there is often less transparency compared to public companies, which can lead to concerns about accountability, especially in terms of social and environmental impact.
- Regulatory Scrutiny: PE firms and their investment practices have come under increased scrutiny and criticism for their impact on employees, communities, and the economy, leading to calls for more stringent regulation and oversight.

6. Market Impact
- Consolidation: PE-led mergers and acquisitions can lead to industry consolidation, potentially reducing competition and innovation in certain sectors.
- Economic Impact: There are concerns about the broader economic impact of PE investments, particularly regarding job losses, wealth concentration, and the stability of financial markets.

While PE investors can provide valuable resources and expertise to help companies grow and succeed, it's important for companies considering PE investment to carefully weigh these potential challenges and ensure alignment of goals and values.

C-AR in April 2024 if any sales were made in this offering. Even if sales weren't made until the day before the C-AR was due! I have a funny story about that one.

SEC Staff say that (in contrast to the way sales are treated in Reg D and PIPE transactions) the "sale" is when the obligation to pay is binding on the investor and they can't withdraw their investment.