Advertised Private Placements – Insight from the Form D Data on 506(c) offerings

Now that it has been over two months since Rule 506(c) has been enacted allowing for advertised private placements to accredited investors, we at CrowdInspect wanted to explore what insights can be learned from these equity raises so far.  The current rules provide that any issuer relying on 506(c) must file a Form D notice filing within 15 days after the first sale of securities in the offering.  As of December 4th, there were 512 Form D filings made where the issuer indicated that they were relying on Rule 506(c). To put this into context during this same period 5,500 filings were made using the 506(b) exclusion.  Focusing just on the 506(c) Form D filings, here are some of our findings:

  • 60% are offering an equity security and 19% are offering a debt security.
  • 79% of the issuers were formed in the last five years.
  • 37% of the issuers have not made their first equity sale yet.
  • 24% of the issuers categorize themselves as some sort of pooled investment fund (i.e. hedge fund, private equity fund).
  • 10% of the offerings include non-accredited investors (for a total of 109 non-accredited investors).
  • There are roughly nine 506(c) filings by issuers each day.
  • 6,825 investors to date have participated in these offerings!

Percentage of 506(c) issuers by industry group

506(c) minimum investment amount
A closer look at the distribution of 506(c) issuers by industry group identifies concentrations in Pooled Investment Funds, Real Estate, and Technology.

A review of the minimum investment amount that issuers are requiring shows that 38% of the issuers are allowing a minimum investment of $25k or less.  On the other end of the spectrum, 13% of issuers are requiring a minimum investment of greater than $100k.

Looking at the breakdown of Issuers by state, not surprised to see that most issuers are based in California.  New York and Texas are second and third respectively.

States with most 506(c) Issuers

We will continue to review this data and issue regular reports updating our analysis.   In addition, if there are any questions or trends that you would like us to explore please do not hesitate to reach out to us at Info@crowdinspect.com.

 

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