Investor pitch · Fundraising

When can you discuss Kickstarter campaign?

Candice Hughes, PhD, MBA

October 25th, 2013

I am doing a pitch at a competition. One of the common elements in a pitch has been to address what your company needs or how can the audience help. However, the competition organizers suggested that due to new regulations on investor solicitation, one had to be extremely careful what was discussed in public (ie: don't mention anything about funding plans). I checked with an attorney who also indicated I should not mention crowdfunding in the pitch.

I am fine with leaving out the crowdfunding in the pitch, but I have postcards printed up that I was going to leave on the table (each finalist has a table with a poster and various handouts they can offer). The attorney didn't address if I could hand these out. But, I am wondering how can one promote a crowdfunding campaign if one could not hand out information cards and discuss the campaign in general?

I was planning to hand out the information cards at another conference as well to people in my target market.

Has anyone else encountered any information about regulations affecting discussion of crowdfunding?

As a founder, you’re always in fundraising mode (whether active or passive). In this course, we’ll teach you how to successfully raise follow-on capital, establish a valuation for your company, build an investor pipeline for your next round, and more...

Eric Rogness Technical Product Manager

October 25th, 2013

You can promote your Kickstarter campaign to anyone and everyone, by any means at your disposal. You're not promoting equity investments in your company -- that would be subject to regulation. Instead you are receiving money as preorders, donations, and in exchange for perks. So shout it from the rooftops! Or at least hand out your postcards.

Also, if you are not already aware, there are several pharmaceutical companies that like to be seen doing something for ADHD beyond pharmaceuticals, that have funded hackathons and other initiatives -- more PR than  anything else, bear in mind. You might be able to get a bit of sugar out of one or more of them.



James Bond CTO at SupplyBetter

October 25th, 2013

Sounds like you and/or your attorney are mixing up two different things. A Kickstarter campaign simply asks for donations and/or pre-purchase of product, services, or ancillary perks. There is no equity being offered, therefore no investor solicitation or disclosure requirements involved. If this is what the attorney who indicated you shouldn't mention crowdfunding was referring to, I believe they are misinformed -- as another poster mentioned, perhaps they aren't familiar with Kickstarter and other such crowdfunding platforms, or the status of the JOBS Act, which has not yet gone into effect for unaccredited investors.

You also say the competition organizers said not to mention anything about funding plans. If this is in reference to any equity investment you're also seeking, that may be good advice (nothing new about it, though). It may be possible to finesse this by discussing what you expect you'll need to spend to launch your business in general terms (without asking for anyone to provide that as a capital investment); but you should be careful.

p.s. have I mentioned, IMNAL?

Paul Travis Multifaceted Online Executor: Product Marketing to Program Mgmt. to Business Development

October 25th, 2013

I think the underlying thread here is that there is (and always has been) a difference between 
A) taking money for product (sales/revenue)
B) taking money for stock in your company (equity).

AFAIK, crowdfunding does not yet (legally) apply to equity -- KickStarter income is (A) or "seed donations".  

John was giving you good input on traditional capital funding (B).

Bruce Leban Software developer, inventor, innovator

October 25th, 2013

You got bad advice from the organizers and your lawyer because the words you used have multiple meanings.

Kickstarter campaigns are product crowdfunding not equity crowdfunding. Kickstarter explicitly prohibits selling equity - see For good reason, as it's been illegal to do that.

Don't talk about selling equity, crowdfunding or otherwise. It's OK to talk about product crowdfunding.

What you're doing on kickstarter is effectively selling your product before you've got it manufactured. Kickstarter calls these pledges and rewards rather than sales because sometimes things go wrong and rewards are not delivered and sometimes the rewards are small compared to the pledge (like public radio pledges). Other product crowdfunding sites actually talk about it as pre-selling product. While there are certainly laws you can run afoul of doing that (e.g., offering rewards that are illegal or planning to take the money and disappear), securities laws are not relevant.

The competition organizers do not want you to talk about selling equity in your company. The rules surrounding that are very complex and easy to screw up. However, selling equity is not related to soliciting customers. It's even possible that one company talking about selling equity might screw something up for another company. Notwithstanding this, It may be that they don't want you to talk about selling your product or soliciting customers but that would be weird.

The confusion comes up because the JOBS act changed the rules for selling equity and soliciting investors and the SEC just released proposed rules for equity crowdfunding - but they just call it crowdfunding - ee and It would help if the SEC and journalists used more precise language but I doubt that's going to happen.

Disclaimer: IANAL

Travis Brodeen Technical Marketing Expert, Business Coach, Founder and CTO at ENVOKEN

October 25th, 2013

There is no point in doing a kickstarter if you can't mention it.

I'm not a legal expert but I would tell you that I'd personally ignore my lawyers advice, because they typically aren't keeping up with technology at the pace I am.


Robert Clegg

October 25th, 2013

Optimally, you would already have your Kickstarter campaign up and running. You close the pitch by saying you can fund this initiative NOW by "pledging" at Kickstarter and go to the live page. I would really pitch this close with an evening goal of $5,000 from the room (something like that). "Only $50 from each person here tonight will help us reach our goal."

1. it shows you know how to sell
2. you better win the competition cause it will create a buzz as you actually raise money!

ABC. Always Be Closing ; )

John Sechrest

October 25th, 2013

The fundamental decision you need to address is if you are being invested by crowdfunding (Unaccredited investors) or by accredited investors with 506(b) or with accredited investors with 506(c)... The choice will answer the question. If you are 506(c), you can talk about finance and you can hand out cards to accredited investors, but you have to do extra work and take on extra liabilities. The crowdfunding is fresh of the presses (10/23) and so we are still trying to wrap our head around them. If you mean Crowd SOURCING instead of Crowd FUNDING, IE product pre-sales instead of equity / security sales, then that is a totally different matter. Get clear with your attorny which path you are taking and why.

Yanni Fyssas Sound Designer and Audio Professional

October 25th, 2013

I would think investors value transparency, and if you dance around the issue, and they find out in a few months (as they likely will) your reputation won't be that great. 

Juston Brommel Growth Strategist & Advisor to CEOs

October 25th, 2013

Are you concerned about breaking the law or jeapordizing your attractiveness to investors? Business happens in grey areas and if it benefits you, you should get scrappy and push the limits up to a point that the risk of negative reprocutions are too high. I look forward to learning where the lines are on this topic. Juston

Michael Barnathan

October 25th, 2013

I agree with Eric - if it's not investment in exchange for equity, the ban on general solicitation shouldn't apply and you should be in the clear to announce it widely. Moreover, there's a precedent set by every company that has done a kickstarter and then gone on to raise funds from investors (FormLabs may be the most recent example I can point to). It's a fairly common practice.