Finding investors has never been an easy task, especially prior to the passing of the JOBS Act. Before the JOBS Act was passed, entrepreneurs were limited to three main paths to contact investors.
- Closed investor groups. Because the Securities Exchange Commission (SEC) previously banned publicly solicitng investors, entrepreneurs were limited in whom and how they could approach for investment capital. One way around this ban was to interact within closed investor groups. Interested investors had to opt in to closed groups, and postings were not publicly available to anyone.
- Personal & professional networks. While the general solicitation ban prevented prevented entrepreneurs from soliciting investors in a public manner, it didnot prevent them from contactingknown investors within their personal and professional networks. This option isproblematic for founders that don'talready have investors in their personal networks.
- Introductions. In the past, entrepreneurs lacking investors in their own network would often ask for introductions to investors in their friends' and families' networks.
After the JOBS Act is reviewed and final regulations are in place, there will be several additional methods of finding and contacting investors to look forward to.
- Advertising. Though the SEC regulates the content of advertisements from entrepreneurs to investors, with the revocation of the general solicitation ban comes the ability to post advertisements aimed at investors. This includes online, print, radio, and television advertisements.
- Public Relations. Companies will be able to leverage the power of the press to share newsworthy information about their company in publications that their ideal investors may read. Companies will also be able to share that they are raising funds to expand their business.
- Social Media. Social media posts centered around investment deal terms and offerings were previously not permitted. However, social media will be an incredible tool for gaining visibility and getting in front of investors in the future.