Start Up Funding (Seed, Venture, Angel) & marketing - SEC Rules/Restritions

Thanks for a great website and for the help in advance.

In crowd funding, there's a list of investment opportunities(shoes funding target & percentage of ownership of that target) and people invest in whatever they choose. However, offering ownership for investments through equity is impossible due to the SEC which requires registration (IPO) before the issuance of shares(ownership) and publicly advertising and its restricted to accredited investors.

However, can we overcome this by just dividing ownership while forming a new entity (in the case where the entrepreneur hasn't incorporated yet) or refiling/filing a new entity-owning the previous one's assets ( in the case its an established company seeking funding)?

This way, won't it be considered just finding partners to start a business/fund a business rather than seeking investors?

Best,
Zak

I only know a little bit about crowd financing but my feeling is that it's something that really needs to be researched properly and reviewed by an experienced attorney. It's even more important in this situation because all you need are a handful of dissatisfied "investors" to cause you a whole lot of trouble.

I'm not sure what you're trying to do. Are you trying to ask whether you can continuously roll over the assets of a company into a new company as more investors come into the picture? My thoughts are also on SEC limitations on the number of unaccredited investors you'd have as part of your company, which I'm guessing will be the case here.

Thanks a lot for the reply.

My idea is to restructure the whole process so that it doesn't fall under SEC rules which govern stock issuance and advertising.

So if we structure the process as just allowing users to select entrepreneurs who have good business ideas and then form an entity who's ownership is divided between them. Here the entrepreneur sets his initial ownership & the ownership left for any other user who wants to join in(by pledging money for initial capitol of the firm). If we make it a process of finding partners rather than investors.

In this case,
1)should we still make it non-public marketing?Is restricting access to registered users enough?
2)Should there be mention of an entity beforehand at all? or should there be just discussion of the idea & future ownership? (so that we're completely away from the investor regulations?
3)By allowing the entrepreneur to set ownership %s, does that tie us to the SEC regulations since its offering ownership equity?

Hope this is clearer, I'm gonna try to consult a lawyer once my uncle comes back from vacation.