As private equity regulation fans (come on, don’t try and pretend that’s not you) will have noted with interest, the US Securities & Exchange Commission introduced some new rules this summer that eased the ‘general solicitation’ restrictions on private equity firms (inter alia) marketing their wares to investors.
There’s only one teeny flaw. Because of all the caveats attached, it’s still not entirely clear what you can and can’t do. The general consensus is that you’re now allowed to promote yourself publicly, but only if you register with the SEC in advance, target accredited investors, add a ton of disclaimers and can sing The Star-Spangled Banner backwards. Not surprisingly, this has led most firms to conclude that it’s more trouble than it’s worth.
However, First Round is delighted to report that one firm has finally risen to the challenge: viz. New York-based ff Venture Capital, which proclaimed in October that it was the “first institutional venture capital firm” to publicly announce that it’s raising capital. In a blogpost, partner John Frankel bemoaned the fact that the previous rules ensured that “capital has flowed to players with brand and ego, based on tales around pretty much anything other than return on capital (or even return of capital).” ff wants to strike a blow for “transparency”, “creativity”, “passion” and “results”, he said.
All very admirable – although as solicitations go, it’s pretty skinny. Tellingly, the ‘Invest’ page of its website features a 92-word exhortation for investors to get in touch, followed by 400-odd words of disclaimers. It doesn’t even say how much they’re trying to raise (apparently somewhere between $50 and $70 million).
Now First Round recognises that these are early days, and it could take some time to feel the regulator out. But if firms really want to test the boundaries, they need to try something a bit more eye-catching. How about sending a man with a sandwich board to Times Square? Or running a prime-time TV ad featuring one of the Kardashians? Or getting all your existing LPs to walk down Wall Street in single file wearing identical clothing, to illustrate the principle of alignment?
Marketers: First Round is only a phone call away.