The Myth of Form D Requirements for VC-Backed Startups
Earlier this month, I expressed disapproval over a proposed repeal to the federal preemption of state laws regulating securities offerings under Regulation D. Basically, I said that the current system works fine, and the proposed change would make it more difficult for startups to raise capital across state lines. In response, a reader sent over the following: “But shouldn't you mention that you have a conflict of interest, since a centralized repository of filings helps the press (but most particularly you and VentureBeat) to report on financings that used to be hidden from public view? You question Dodd's motivation for repealing the Reg D requirement but don't mention your motivation for wanting that centralized repository?” First, my objection was not based on self-interest. As you may (or may not) recall, I actually supported the creation of the centralized electronic depository, even though it was better for peHUB that the Form D filings remain in paper form (since my corporate overlords had someone at SEC HQ who scanned them into a fire-walled database, thus giving us near-exclusive access). But my goal this morning is not to reply to a single reader. Instead, it’s to share a secret with you that is so outside of my self-interest that it could cause consternation among my peers. Here goes: Many VC-backed startups do not need to file Form Ds with the SEC.
