Category: SAFE

tandard SAFE agreement showing how discount and valuation cap terms can create unintended outcomes in early-stage startup financing

Some SAFEs Aren’t Safe

On By crowdfundattnyIn Crowdfunding Investors, Crowdfunding Portals, Investor, Legal Documents, SAFELeave a comment

Why “standard” SAFE terms can produce unintended – and unfair- results.

Simple Agreements for Future Equity are used widely in the startup world, including the Crowdfunding world. My impression, however, is that almost nobody reads them, not companies, investors, or funding portals. That’s too bad, because while SAFEs are simple in theory, they can be extremely complicated and lead to unintended results. Today, I’ll describe what can happen with one variation still being used by some funding portals.

Background

We use SAFEs in the earliest stages of a company’s life, when it’s impossible to know what the company is worth. A founder creates what he believes is an incredible app and goes to the market to raise $700,000 in development costs. Looking into a rosy-colored future, he thinks his company is worth about $50 million already. His investors, aided by their snarky lawyers, think it might be worth $5 million, if everything goes right.

To bridge the unbridgeable gap, we don’t agree on a value. Instead, we issue a SAFE. The SAFE says, essentially, “We’ll wait until later to put a value on the company, when it’s farther along.” Everyone agrees that when the company raises more money in the future, in a round where the parties can agree on a price, then the early investors will get what same price as the new investors get.

Well, not exactly the same price. Because they took more risk by coming in sooner, the early investors get a better price, typically in one of two ways:

  • A Discount:  The earlier investors get a discount vis-à-vis the priced round. If the new investors buy shares for $10.00 each, maybe the earlier investors convert at $8.50 per share, a 15% discount.
  • A Valuation Cap:  No matter how much the new investors think the company is worth, the earlier investors convert at a price that assumes the value of the company is no higher than a “valuation cap” established in the beginning. Here, the early investors might have insisted on a $5 million valuation cap. If the new investors value the company at $10 million, the early investors pay half the price as the new investors. But if the new investors value the company at only $4 million, the earlier investors get that price instead.

I said that early investors typically get either a discount or a valuation cap. But sometimes they get both. In that case, when the new money comes in the SAFE holders get the lower of the price they would get from the discount or the price they would get from the valuation cap.

That’s the best kind of SAFE for investors. Unfortunately, the standard SAFE with both a discount and valuation cap can reach the wrong result.

The Standard SAFE Form Doesn’t Work as it Should

Suppose NewCo, Inc. issued a SAFE with both a discount (15%) and a valuation cap ($5 million), for $500,000. Other than the SAFE, NewCo has 1,000,000 shares outstanding. Now the company is preparing for a priced round of Series A Preferred, in which NewCo will raise $1 million. That triggers a conversion of the SAFE.

NewCo and the new investors agree that NewCo is worth $4 million immediately before the investment. That means that immediately following the investment, the new investors should own 20% of the stock ($1 million investment divided by $5 million post-money valuation). All that’s left is some simple arithmetic to decide how many shares they should receive for their 20% interest.

They should get that number of shares such that, if NewCo were sold for $5 million the next day, they would get exactly their $1 million back.

To calculate that number, we need to calculate how much all the other shareholders would get, including the SAFE holders.

Given the structure of the SAFE, where the holders get the better of X or Y, you might think the standard SAFE would say that upon a sale of NewCo, the SAFE holders receive the higher of the amount they would receive from the discount and the amount they would receive from the valuation cap. But it doesn’t. Instead, it says they will receive the higher of the amount they paid for the SAFE or the amount they would receive from the valuation cap. The discount is nowhere to be found.

In this case, because the valuation cap is higher than the new valuation, the SAFE holders would receive their $500,000 back, nothing more. The other stockholders, who own 1,000,000 shares, will get $3.5 million, or $3.50 per share. And the new investors, to get their $1 million back, should get 285,714 shares of the new preferred for $3.50 each.

Upon a conversion, the SAFE holders receive the better of the number of shares they would receive under the valuation cap and the number of shares they would receive under the discount. Because the $5 million valuation cap is higher than the new valuation, the SAFE holders will get the number of shares under the discount. The share price for the new investors is $3.50, so the conversion price for the SAFE holders, with a 15% discount, is $2.98. Having invested $500,000, they receive 168,067 shares.

The fully diluted cap table now shows:

OwnerSharesPercentage
Original Stockholders1,000,00069%
New Investors 285,71420%
SAFE Holders168,06712%
TOTAL1,453,781100%

Here’s how a $5 million selling price would be divided based on those percentages:

OwnerPercentageConsideration
Original Stockholders69%3,439,308
New Investors 20%982,658
SAFE Holders12%578,034
TOTAL100%$5,000,000

As you see, the new investors get less than they’re supposed to, the original stockholders get less than they’re supposed to, and the SAFE holders get the difference. And that’s not because the SAFE is ambiguous. It’s because that’s how the SAFE was written.

Although Y Combinator no longer uses that SAFE, many still do, including funding portals like WeFunder. 

What Do We Do Now?

If you’re the new investors, you don’t do the deal unless someone makes you whole.

If you’re the SAFE holder, you hold your ground or, if you really want the investment, you negotiate with the existing stockholders.

If you’re the existing stockholders, you try to talk reason to the SAFE holders. That’s not how it’s supposed to work!

If you’re the unlucky founder and own only a chunk of the 1,000,000 shares already outstanding, you’re squeezed. To make the new investors whole on your own, you’ll have to give up 5,042 more shares to the new investors, on top of the shares you’ve already transferred to the SAFE holders because of the structural flaw in the SAFE.

What Do We Do in the Future?

If you’re the company or funding portal, you correct the standard SAFE.

If you’re the new investor and see such a SAFE, you don’t spend a lot of time until the existing stockholders and the SAFE holders figure something out.

If you’re investing in a startup and are offered such a SAFE, you say, Sure! 

Questions? Let me know.

Markley S. Roderick
Lex Nova Law
10 East Stow Road, Suite 250, Marlton, NJ 08053
P: 856.382.8402 | E: mroderick@lexnovalaw.com

Choosing The Right Security For Your Crowdfunding Offering

Choosing The Right Security For Your Crowdfunding Offering

On By crowdfundattnyIn Crowdfunding Offerings, SAFE2 Comments

A company trying to raise capital is faced with a lot of decisions. One of the first is the type of security the company will issue to investors. To newcomers, that decision can seem daunting. In this post I’ll try to make it less so.

I’ll describe the most common types of securities in broad terms. As you read, bear in mind that within each category are an endless number of possible permutations. For example, the preferred stock used by one company might be very different than the preferred stock used by a second company.

Each type of security has advantages and disadvantages and some types might be better for your business than others. You will choose the security that’s right for your offering after speaking with your professional advisors.

Common Stock

Common stock represents the most basic kind of equity ownership of a company. You probably own common stock in your own company.

All other things being equal, the owners of common stock have the right to share in any dividends paid by the company and the right to receive the proceeds if the company is sold or liquidated, after all the company’s creditors have been paid.

A company can have more than one class of common stock – for example, one class could be entitled to vote while another class is not entitled to vote.

Investors almost never want common stock. They want something with economic rights superior to the rights of the company’s founders, i.e., your rights.

Preferred Stock

Preferred stock gets its name because it is usually “preferred” as compared to common stock.  That usually means that holders of preferred stock have a right to receive dividends and the proceeds of a liquidation before holders of the common stock receive anything.

EXAMPLE:  Company X raises capital by selling $1M of preferred stock. Three years later Company X is sold and after paying creditors there is only $900K left. Typically, the holders of the preferred stock would get the whole $900K and the holders of the common stock (typically the founders) would get nothing.

The holders of preferred stock usually have the right to convert their preferred stock into common stock if the common stock becomes valuable.

Sometimes, but not always, the company needs the consent of the holders of the preferred stock to take major corporate actions like amending the Certificate of Incorporation or issuing more securities.

Sometimes, but not always, the holders of preferred stock have the right to vote along with the holders of common stock. 

Preferred stock can come with all kinds of other rights, including these:

  • Preemptive Rights:  The right to participate in any future offering of securities.
  • Anti-Dilution Rights:  The right to receive more shares for free if the company sells shares in the future with a lower price.
  • Participation Rights:  The right to receive more than you invested when the company liquidates, before holders of the common shares receive anything.
  • Dividend Rights:  The right to receive annual dividends.
  • Control Rights:  The right to appoint Directors or otherwise exercise control.
  • Liquidity Rights:  The right to force a sale of the company, or to force the company to buy back the preferred shares.

LLC or Limited Partnership Interests

The ownership interests of limited liability companies and limited partnerships go by all kinds of names, including units, interests, percentage interests, membership interests, and shares. Giving a name to the ownership interests is really up the lawyer who writes the governing agreement for the entity.

Whatever name you use, these are all equity interests, just like the stock of a corporation. And just as a corporation can have common stock and preferred stock, an LLC can have common units and preferred units or common membership interests and preferred membership interests. And the common and preferred ownership interests of an LLC or limited partnership can have exactly the same characteristics as the corporate counterparts, described above.

In fact, an LLC or limited partnership can issue all the other types of securities described here, too.

In fact, another choice facing a startup is whether to use a corporation or an LLC in the first place. I talk about that choice here and explain why Silicon Valley prefers corporations here.

SAFEs

“SAFE” stands for Simple Agreement for Future Equity.

Investors in Silicon Valley grew tired of arguing about the value of a startup where the amount of the investment was small (for them). So they invented the SAFE. A SAFE bypasses valuation, or rather postpones valuation until the company raises a lot more money in the future. The idea is that when the company raises a lot more money in the future the new investors and the company will negotiate the value of the company, and the SAFE investors will piggyback on that. This makes SAFEs faster and simpler than common stock or preferred stock.

EXAMPLE:  A company raises $100,000 by selling SAFEs. Two years later the company raises $2M by selling stock for $10 per share. The SAFEs would convert into 10,000 shares, i.e., the same price paid by the new investors.

Nothing stays that simple for long. Today SAFEs come in in many shapes and varieties. Among other possibilities:

  • Discount:  Sometimes the SAFE investors are entitled to a discount against the price paid by the new investors. If SAFE investors had a 15% discount in the example above, the SAFEs would convert at $8.50 per share, not $10.
  • Valuation Cap:  Sometimes the SAFE includes a maximum conversion price. If the SAFE in the example above included a valuation cap of $1.5M, then the SAFEs would convert at $7.50 per share, not $10.
  • Delayed Conversion:  Sometimes the company can stop the SAFE from converting, even if the company raises more capital.
  • Right to Dividends:  Sometimes the holders of the SAFEs have the right to participate in dividends even before they convert.
  • Payment on Sale:  If the company is sold before the SAFE converts, the holder typically is entitled to receive the greater of the amount she paid for the SAFE or the amount she would receive if the SAFE converted just before the sale. But sometimes she’s entitled to more, e.g., 150% of what she paid.

A Silicon Valley SAFE probably isn’t the best for Crowdfunding. Read about it here.

Convertible Note

When a company issues a Convertible Note, the holder has the right to be repaid, with interest, just like a regular loan, but also has the right to convert the note into equity when and if the company raises a lot more money in the future.

EXAMPLE:  A company raises $100,000 by selling Convertible Notes. The Convertible Notes are due in three years and bear interest at 8%. Two years later the company raises $2M by selling stock for $10 per share. The Convertible Notes would convert into 10,000 shares, i.e., the same price paid by the new investors.

If you’ve already read the section about SAFEs, you’ll see that the conversion of a Convertible Note into equity is exactly the same as the conversion of a SAFE into equity. That’s not a coincidence. A SAFE is really just a Convertible Note without the interest rate or the obligation to repay. 

Convertible Notes were once the favored instrument in Silicon Valley but were replaced when SAFEs came along. The idea is that interest is immaterial in the context of a startup investment and that the obligation to repay is illusory because the startup will either be very successful, in which case the Convertible Note will convert to equity, or it will go bust. Today Convertible Notes are rare in the startup ecosystem.

Not surprisingly, all the features of SAFEs described above are also available with Convertible Notes:  conversion discounts, valuation caps, and so forth.

Revenue Sharing Note

A Revenue Sharing Note gives the investor the right to receive a portion of the company’s revenue, regardless of profits.

EXAMPLE:  A company issues a Revenue Sharing Note giving investors the right to receive 5% of the company’s gross revenue for three years or until the investors have received 150% of their investment, whichever happens first. If investors haven’t received 150% of their investment at the end of the third year the company will pay the balance.

For investors, a Revenue Sharing Note offers liquidity, assuming the company is generating revenue. In return, they give up the “grand slam” returns they might get with an equity security.

For the company, a Revenue Sharing Note is less dilutive than equity because the investors will soon be gone – in no more than three years in the example above. Plus, because investors have any interest only in gross revenues and not profits, there should be no disputes over expenses, including the salaries of management. But the company is using valuable cash to pay investors.

Some Revenue Sharing Notes convert to equity, just like SAFEs.

EXAMPLE:  Suppose that, in the example above, investors purchased Revenue Sharing Notes for $100,000. At a time when they have received total distributions of $50,000, the company raises $2M by selling stock for $10 per share. The Revenue Sharing Notes would convert into 10,000 shares, i.e., the same price paid by the new investors.

Revenue Sharing Notes make a lot of sense for early-stage companies. I’m surprised they aren’t used more.

Simple Loan

The simplest security of all – simpler than a SAFE, simpler than a Revenue Sharing Note – is a plain vanilla promissory note, where the investor lends money to the company and the company promises to pay it back with interest.

A simple loan is good for the company in the sense that there is no dilution of ownership. On the other hand, the company is obligated to pay the money back on a date certain.

A simple loan is good for the investor in the sense that he or she has the right to repayment, unlike an equity investment. On the other hand, the company might not be able to repay the loan. And if the company is a startup the investor might wonder whether the interest rate on the loan is adequate for the risk of non-payment.

******

Don’t be fooled by labels. You can do anything you want. Just make sure you choose a security that’s right for you and your company.

Questions? Let me know.

Markley S. Roderick
Lex Nova Law
10 East Stow Road, Suite 250, Marlton, NJ 08053
P: 856.382.8402 | E: mroderick@lexnovalaw.com

Title III Crowdfunding

When Should A Crowdfunding SAFE Or Convertible Note Convert?

On By crowdfundattnyIn Convertible Note, SAFELeave a comment

Convertible notes and SAFEs often make sense for startups because they don’t require anyone to know the value of the company. Instead, the company and early investors can piggyback on a later investment when the value of the company might be easier to determine and the size of the investment justifies figuring it out.

Which raises the question, when should the convertible note or SAFE convert?

In the Silicon Valley ecosystem that’s an easy question. Per the Y Combinator forms, a convertible note or SAFE converts at the next sale of preferred stock, which necessarily involves a valuation of the company.

That works in the Silicon Valley ecosystem because (i) in the Silicon Valley ecosystem investors always get preferred stock, and (ii) the Silicon Valley ecosystem is largely an old boy network where founders and investors know and trust one another.

As I’ve said before, the Crowdfunding ecosystem is different. There are at least two reasons why the Y Combinator form doesn’t work here:

  • For a company that raises money with a SAFE in a Rule 506(c) or Reg CF offering, the next step might be selling common stock (not preferred stock) in a Regulation A offering. The SAFE has to convert.
  • Say I’ve raised $250K in a SAFE and think my company is worth $5M. If I’m clever, or from Houston*, I might arrange to sell $10,000 of stock to a friend at a $10M valuation, causing the SAFEs to convert at half their actual value. All my investors are strangers so I don’t care.

Which brings us back to the original question, what’s the right trigger for conversion?

Half the answer is that it should convert whether the company sells common stock or preferred stock. 

Now suppose that I’ve raised $250K in a SAFE round. The conversion shouldn’t happen when I raise $10,000 because that doesn’t achieve what we’re trying to achieve, a round big enough that we can rely on the value negotiated between the investors and the founder. What about $100,000? What about $1M?

In my opinion, the conversion shouldn’t be triggered by a dollar amount, which could vary from company to company. Instead, it should be triggered based on the amount of stock sold relative to the amount outstanding. So, for example:

“Next Equity Financing” means the next sale (or series of related sales) by the Company of its Equity Securities following the date of issuance of this SAFE where (i) the Equity Securities are sold for a fixed price (although the price might vary from purchaser to purchaser), and (ii) the aggregate Equity Securities issued represent at least ten percent (10%) of the Company’s total Equity Securities based on the Fully Diluted Capitalization at the time of issuance.

You might think 10% is too high or too low, but something in that vicinity.

Finally, the conversion should be automatic. Republic sells a SAFE where the company decides whether to convert, no matter how much money is raised. In my opinion that’s awful, one of the things like artificially low minimums that makes the Reg CF ecosystem look bad. You buy a SAFE and the company raises $5M in a priced round. The company becomes profitable and starts paying dividends. You get nothing. You lie awake staring at your SAFE in the moonlight.

*Go Phils!

Questions? Let me know.

Using A SAFE In Reg CF Offerings

On By crowdfundattnyIn Crowdfunding, Reg CF, Regulation CF, SAFE, Title III, Title III CrowdfundingLeave a comment

The SEC once wanted to prohibit the Simple Agreement for Future Equity, or SAFE, in Reg CF offerings. After a minor uproar the SEC changed its mind, and SAFEs are now used frequently. I think prohibiting SAFEs would be a mistake. Nevertheless, funding portals, issuers, and investors should think twice about using (or buying) a SAFE in a given offering.

Some have argued that SAFEs are too complicated for Reg CF investors. That’s both patronizing and wrong, in my opinion. Between a SAFE on one hand and common stock on the other, the common stock really is the more difficult concept. As long as you tell investors what they’re getting – especially that SAFEs have no “due date” – I think you’re fine.

The reason to think twice is not that SAFEs are complicated but that a SAFE might not be the right tool for the job. You wouldn’t use a hammer to shovel snow, and you shouldn’t use a SAFE in circumstances for which it wasn’t designed.

The SAFE was designed as the first stop on the Silicon Valley assembly line. First comes the SAFE, then the Series A, then the Series B, and eventually the IPO or other exit. Like other parts on the assembly line, the SAFE was designed to minimize friction and increase volume. And it works great for that purpose.

But the Silicon Valley ecosystem is very unusual, not representative of the broader private capital market. These are a few of its critical features:

  • Silicon Valley is an old boys’ network in the sense that it operates largely on trust, not legal documents. Investors don’t sue founders or other investors for fear of being frozen out of future deals, and founders don’t sue anybody for fear their next startup won’t get funded. Theranos and the lawsuits it spawned were the exceptions that prove the rule.
  • The Silicon Valley ecosystem focuses on only one kind of company: the kind that will grow very quickly, gobbling up capital, then be sold.
  • Those adding the SAFE at the front end of the assembly line know the people adding the Series A and Series B toward the back end of the assembly line — in fact, they might be the same people. And using standardized documents like those offered by the National Venture Capital Association ensures most deals will look the same. Thus, while SAFE investors in Silicon Valley don’t know exactly what they’ll end up with, they have a good idea.

The point is that SAFEs don’t exist in a vacuum. They were created to serve a particular purpose in a particular ecosystem. To name just a couple obvious examples, a company that won’t need to raise more money or a company that plans to stay private indefinitely probably wouldn’t be good candidates for a SAFE. If it’s snowing outside, don’t reach for the hammer.

If you do use a SAFE, which one? The Y Combinator forms are the most common starting points, but in a Reg CF offering, you should make at least three changes:

  1. The Y Combinator form provides for conversion of the SAFE only upon a later sale of preferred stock. That makes sense in the Silicon Valley ecosystem because of course the next stop on the assembly line will involve preferred stock. Outside Silicon Valley, the next step could be common stock.
  2. The Y Combinator form provides for conversion of the SAFE no matter how little capital is raised, as long as it’s priced. That makes sense because on the Silicon Valley assembly line of course the next step will involve a substantial amount of capital from sophisticated investors. Outside Silicon Valley you should provide that conversion requires a substantial capital raise to make it more likely that the raise reflects the arm’s-length value of the company.
  3. The Y Combinator form includes a handful of representations by the issuer and two or three by the investor. That makes sense because nobody is relying on representations in Silicon Valley and nobody sues anyone anyway. In Reg CF, the issuer is already making lots of representations —Form C is really a long list of representations — so you don’t need any issuer representations in the SAFE. And dealing with potentially thousands of strangers, the issuer needs all the representations from investors typical in a Subscription Agreement.

The founder of a Reg CF funding portal might have come from the Silicon Valley ecosystem. In fact, her company might have been funded by SAFEs. Still, she should understand where SAFEs are appropriate and where they are not and make sure investors understand as well.

Questions? Let me know.

SEC Proposes Major Upgrades To Crowdfunding Rules

On By crowdfundattnyIn Accredited Investor, Angel Fairs, Crowdfunding, Crowdfunding Articles, Crowdfunding Laws, Crowdfunding Portals, Crowdfunding Real Estate, Demo Days, Equity Crowdfunding, General Solicitation, Integration, JOBS Act, Raising Money, Regulation A, Regulation A Plus, Regulation A Plus Primer, Regulation D offerings, Rule 506, Rule 506(b), Rule 506(c), SAFE, SEC, SEC Proposals, SPV, Title II, Title II Crowdfunding, Title III, Title III Crowdfunding, Title IV of the JOBS Act, UncategorizedLeave a comment

The SEC just proposed major changes to every kind of online offering:  Rule 504, Rule 506(b), Rule 506(c), Regulation A, and Regulation CF.

The proposals and the reasoning behind them take up 351 pages. An SEC summary is here, while the full text is here. The proposals are likely to become effective in more or less their existing form after a 60-day comment period.

I’ll touch on only a few highlights:

  • No Limits in Title III for Accredited Investors:  In what I believe is the most significant change, there will no longer be any limits on how much an accredited investor can invest in a Regulation CF offering. This change eliminates the need for side-by-side offerings and allows the funding portal to earn commissions on the accredited investor piece. The proposals also change the investment limits for non-accredited investor from a “lesser of net worth or income” standard to a “greater of net worth or income” standard, but that’s much less significant, in my opinion.
  • Title III Limit Raised to $5M:  Today the limit is $1.07M per year; it will soon be $5M per year, opening the door to larger small companies.

NOTE:  Those two changes, taken together, mean that funding portals can make more money. The impact on the Crowdfunding industry could be profound, leading to greater compliance, sounder business practices, and fewer gimmicks (e.g., $10,000 minimums).

  • No Verification for Subsequent Rule 506(c) Offerings:  In what could have been a very important change but apparently isn’t, if an issuer has verified that Investor Smith is accredited in a Rule 506(c) offering and conducts a second (and third, and so on) Rule 506(c) offering, the issuer does not have to re-verify that Investor Smith is accredited, as long as Investor Smith self-certifies. But apparently the proposal applies only to the same issuer, not to an affiliate of the issuer. Thus, if Investor Smith invested in real estate offering #1, she must still be verified for real estate offering #2, even if the two offerings are by the same sponsor.
  • Regulation A Limit Raised to $75M:  Today the limit is $50M per year; it will soon be $75M per year. The effect of this change will be to make Regulation A more useful for smaller large companies.
  • Allow Testing the Waters for Regulation CF:  Today, a company thinking about Title III can’t advertise the offering until it’s live on a funding portal. Under the new rules, the company will be able to “test the waters” like a Regulation A issuer.

NOTE:  Taken as a whole, the proposals narrow the gap between Rule 506(c) and Title III. Look for (i) Title III funding portals to broaden their marketing efforts to include issuers who were otherwise considering only Rule 506(c), and (ii) websites that were previously focused only on Rule 506(c) to consider becoming funding portals, allowing them to legally receive commissions on transactions up to $5M.

  • Allow SPVs for Regulation CF:  Today, you can’t form a special-purpose-vehicle to invest using Title III. Under the SEC proposals, you can.

NOTE:  Oddly, this means you can use SPVs in a Title III offering, but not in a Title II offering (Rule 506(c)) or Title IV offering (Regulation A) where there are more than 100 investors.

  • Financial Information in Rule 506(b):  The proposal relaxes the information that must be provided to non-accredited investors in a Rule 506(b) offering. Thus, if the offering is for no more than $20M one set of information will be required, while if it is for more than $20 another (more extensive) set of information will be required.
  • No More SAFEs in Regulation CF:  Nope.

NOTE:  The rules says the securities must be “. . . . equity securities, debt securities, or securities convertible or exchangeable to equity interests. . . .” A perceptive readers asks “What about revenue-sharing notes?” Right now I don’t know, but I’m sure this will be asked and addressed during the comment period.

  • Demo Days:  Provided they are conducted by certain groups and in certain ways, so-called “demo days” would not be considered “general solicitation.”
  • Integration Rules:  Securities lawyers worry whether two offerings will be “integrated” and treated as one, thereby spoiling both. The SEC’s proposals relax those rules.

These proposals are great for the Crowdfunding industry and for American capitalism. They’re not about Wall Street. They’re about small companies and ordinary American investors, where jobs and ideas come from.

No, the proposals don’t fix every problem. Compliance for Title III issuers is still way too hard, for example. But the SEC deserves (another) round of applause.

Please reach out if you’d like to discuss.