In “Equity Crowdfunding Under Title II of the JOBS Act: The First Year,” OfferBoard reveals many interesting findings regarding offerings under Regulation D. The white paper finds that offerings under Rule 506(c) of Reg. D (“506(c)”) have the lowest percentage of funds committed at the time of filing—15.9% as compared to 73.2% for Rule 506(b) (“506(b)”) offerings. Possible explanations include the gradual nature of the publically-advertised fundraising process or the fact that issuers are registering these offerings earlier in the process because they collect funds immediately, rather than waiting to collect funds once there is a critical mass, as is typical in the 506(b) process.
The paper also finds that companies using the 506(c) exemption more frequently disclose the amount of revenue they are earning than companies utilizing other exempt offerings, with 78% of 506(c) offerings disclosing revenue, compared to 70% of companies disclosing revenue under other exemptions. The public nature of 506(c) offerings is a likely explanation for this discrepancy in revenue disclosure, as a greater amount of information must be available to the public to allow for general solicitation.
Also, the paper finds that the average number of investors per offering varies widely by industry; however, certain industries seem to be experiencing a surge in the number of investors they attract due to the 506(c) exemption. Biotechnology, business services and telecommunications companies had more investors under 506(c) than other exemptions. According to OfferBoard, possible explanations for this include these industries being better served by investment platforms and intermediaries than others or that market conditions have made certain industries more desirable to investors than others.
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