Offering Investment Opportunities + SEC + Internet

**HDFilmMaker2112** · 04-01-2009 11:34 AM

Would I have to register with the SEC in order to publicly offer an investment opporunity on the internet? I can't afford to register with the SEC, so how else could I get my investment opportunity out to other individuals?

**ZingerIntl** · 04-01-2009 03:56 PM

What kind of offer?
Reg D 504/506? PPM
Equity
Joint Venture
Loan or LOC
IPO
More detail will help. There are few, i say few people here that will be able to give you advise, so ask your attorney. Search online, there are some websites where attorneys will let you ask them a few Questions for free.

**mthomas** · 04-01-2009 04:31 PM

Agreed with Zinger, seek an attorney.

Remember, making a public announcement that you are seeking investors in exchange for equity is NOT necessarily the same thing as an Initial Public Offering. It doesn't sound as if you want to be listed on an exchange, correct?

Either way, seek an attorney just to double check. Whether or not you'd have to contact the SEC would depend upon how you are offering it, what type of offer it is (as Zinger asked) and how consideration will be given to the investor.

**HDFilmMaker2112** · 04-01-2009 04:55 PM

This is for a feature film production, in which I would sell up to 49.9% of the company to investors, to raise the required capital for production.

Total capital costs would be 1.5 - 2 million.

Unfourtantely, I personally don't have enough money to afford an attorney.

**StealYourDreams** · 04-01-2009 10:31 PM

If you dont have money for an attorney, how are you going to be able to afford any of the expenses related to seeking investors.

To answer your question what you want to do is defined as "general solicitation" and your investment would be considered a security. As such you would need to register, at minimum for an exemption from registration, with the SEC. Doesnt seem like you'll be able to afford that either.

Also, I understand why you're saying 49.9 percent, but it just shows you dont know how these things work. No investor is is going to provide 100 percent of the financing and suffer 50 percent dillution out of the gates. Save your money or find a partner with either capital or the right connections.

**HDFilmMaker2112** · 04-02-2009 03:40 AM

Originally Posted by StealYourDreams

Save your money or find a partner with either capital or the right connections.

Don't know how I'm going to do that since I'm unemployeed. And I've been trying to find people to partner with for a few years, and can't anybody. Seems as though no matter what I come up with, I always hit a wall.

**HDFilmMaker2112** · 04-02-2009 02:47 PM

What are some alternative funding sources other then selling a stake in the company?

**mthomas** · 04-02-2009 07:26 PM

Originally Posted by StealYourDreams

To answer your question what you want to do is defined as "general solicitation" and your investment would be considered a security.

What constitutes a general solicitation? If a public request is made for investment in exchange for equity, is this considered a public request, no matter what the venue (of the announcement) is?

Originally Posted by HDFilmMaker2112

Don't know how I'm going to do that since I'm unemployeed. And I've been trying to find people to partner with for a few years, and can't anybody. Seems as though no matter what I come up with, I always hit a wall.

What exactly are the problems you are running into when trying to find a partner? Have you had trouble identifying potential partners with the appropriate amount of capital? Have you identified them and contacted them, but for one reason or another, they don't seem interested? Where exactly are you hitting a wall?

**StealYourDreams** · 04-02-2009 10:31 PM

Basically it's soliciting investments through cold calling, advertising, etc. to people that you do not have a pre-existing relationship with. In general any advertising you do offering a security has to come from a licensed firm.

You can legally sell through some of the Reg. D exemptions (U.S. Securities and Exchange Commission (Home Page)) if you are an employee of the company seeking the investment and you are not paid based on the amount of money you recieve from investors (i.e. a comission). Also, the SEC requires that the persons employment lasts after the capital has been raised.

There are also a few state exemptions that allow some forms of advertising. In California one such exemption is a 25102(n). It gives you 255 (last time I looked) days to "test the waters" with your investment and guage investor interest.

That said, most firms that I know of that use any type of advertising attract a lot of heat. Most of the time they're paying their employees a comission above what is legal and breaking a bunch of other rules.

**HDFilmMaker2112** · 04-03-2009 08:39 AM

Originally Posted by mthomas

What exactly are the problems you are running into when trying to find a partner? Have you had trouble identifying potential partners with the appropriate amount of capital? Have you identified them and contacted them, but for one reason or another, they don't seem interested? Where exactly are you hitting a wall?

I really haven't been able to find people locally to work with. The primary problem is finding people with the required capital. I had partnered with another production company (actually was my teacher from high school), but he recently signed with an agent and has told me that legally he can no longer be involved unless there is money involved up front. So before he can be involved again I would have to find at least 65% of the money.

**mthomas** · 04-03-2009 10:12 AM

@stealyourdreams: thanks for the clarification. I never realized that advertising publicly for equities would classify as securitizing them.

@HDFilkMaker: Would your teacher have any contacts for you to look into? Perhaps your teacher knows someone who knows someone?

Maybe just try to network out a little more. I know it isn't easy. Do you have any friends or family that might do business with other businesses looking to invest in smaller upstarts?

**ZingerIntl** · 04-03-2009 02:50 PM

Ok so the way to go about this is here.... Stop trying to jump from rags to riches. If you have a movie idea, pitch it to a network for a 10% of the profits. And then you have to do nothing. But I secured an investor 1 year ago for $60,000 and after 8 months of paying for legal, cpa, due diligence, travel, investor registrations, cell phone bills and day to day expenses, I got 2 letters of credit totalling $1.65 million, which would have been 75% of what I needed. That $60,000 is gone and I am waiting for the market to come back before I try to acquire the business again. So if you cant afford $150/hour lawyer (for one hour) then WTF are you doing? License the script and lease it or sell it or JV the thing to someone that has the means to do something with it.

**HDFilmMaker2112** · 04-03-2009 03:34 PM

Originally Posted by ZingerIntl

Ok so the way to go about this is here.... Stop trying to jump from rags to riches. If you have a movie idea, pitch it to a network for a 10% of the profits. And then you have to do nothing. But I secured an investor 1 year ago for $60,000 and after 8 months of paying for legal, cpa, due diligence, travel, investor registrations, cell phone bills and day to day expenses, I got 2 letters of credit totalling $1.65 million, which would have been 75% of what I needed. That $60,000 is gone and I am waiting for the market to come back before I try to acquire the business again. So if you cant afford $150/hour lawyer (for one hour) then WTF are you doing? License the script and lease it or sell it or JV the thing to someone that has the means to do something with it.

So you're basically saying I should sell the script? Because if I get involved with studio that's all that's going to happen. They'll take the script, credit me as an Associate producer and do with the film as they see fit. Meaning I wouldn't be involved at all.