Advertising and Promoting a 506(c) Offering

Regulation D 506(c) offering provides issuers with the capability to engage in general advertising and solicitation of accredited investors while still retaining most of the core benefits of a traditional private placement including;

• limited interaction with the SEC
• greatly reduced preparation and execution expenses
• reduced timeframe for preparation and implementation

While it may be tempting to deploy a large advertising campaign for traditional advertising mediums like television or radio ads, we typically advise a more targeted approach initially.

The staff at Regulation D Resources coined the phrase “the Dartboard Approach” in describing our typical guidance to issuers regarding promotion. The Dartboard Approach is a strategy that focuses promotion efforts on the most likely sources for accredited investors first with subsequent tactics employed from there forward to source investors from other avenues.

The first step in the Dartboard Approach is to analyze any existing assets or promotional channels the client may have available for promotion of the offering. This may include the sphere of influence resources, affiliates, company associates, and the usual “friends and family” channels for promotion. It can also consist of operational assets such as websites, social media campaigns, and customer base resources. This is the “bulls eye” of the dartboard and represents people who are involved or knowledgeable about the company, its operations, and thus would tend to consist of high quality prospects for investment.

The outer “rings” of the marketing approach now focus on promoting to investors that would not be within the issuers immediate sphere of influence. Note the issuer may use some of its existing assets (websites, social media, etc.) to introduce new investors to the company and the offering. At this point the Company may then begin to explore more traditional ”open” advertisement to unrelated individuals in an effort to source accredited investors for the offering.

By focusing effort and energy into the center “ring” the issuer is maximizing its efforts to promote to investors that would be familiar with the company and its operations. This may allow the Company to source most or all of its capital from the center “ring” and reduce advertising costs for a full-scale open advertising campaign.