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With the new crowdfunding regulations that went into effect on March 15, 2021, the U.S. SEC introduced something called “testing the waters” (TTW) for Regulation Crowdfunding (Reg CF).
While testing the waters previously existed under Regulation A+ (Rule 255), the updated regulations now permit issuers to test the waters under Reg CF (Rule 206). We’re going to cover what testing the waters is, why investors should care whether an issuer is testing the waters, and how to tell the difference between a testing-the-waters vs. live offering.
What is Testing the Waters (TTW)?
Testing the waters (TTW) is a set of rules that allows issuers (i.e. startups who are raising money) to gauge potential investor interest prior to filing their Form C for Reg CF. This allows the company to assess the amount of potential investor interest before incurring the major expenses associated with an exempt Reg CF offering (e.g. legal fees, audit fees, etc.).
Testing the waters can be done orally or in writing and may be done on a crowdfunding intermediary platform. Because of this, investors may see TTW offerings being made through email, on social media, and on other non-regulated platforms, in addition to being made on regulated funding portals and broker-dealers.
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Important Disclosure
StateCF is a DBA of Sprowtt, Inc., a technology provider facilitating intrastate capital-raising campaigns. StateCF is not a broker-dealer or a registered investment adviser and does not offer investment advice or solicit investments. All securities offerings are conducted by issuers on their own behalf. Sprowtt is a registered intermediary with the Florida Office of Financial Regulation "OFR". The software and/or domain that operates the site is through a site license agreement. Sprowtt may charge the issuer who lists an offering on this site a commission or fee to use the site, which will be disclosed to investors through the issuer offering registration filed with the "OFR".
Investing in private companies involves significant risks. Investors should be aware of the following:
This platform is intended for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities.
Statecf.com is regulated by the Florida Office of Financial Regulation (OFR). Sprowtt has been a registered State of Florida Funding Portal since 2018. Sprowtt.com is a website operated by Sprowtt Inc., which provides compliance software on a subscription basis with tools and technology to a variety of entities within the state of Florida for Florida intrastate offerings, including issuers, broker-dealers, investment advisers, attorneys, and financial institutions.
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The system provides real-time tracking of company shares, investor login activity, and payment status updates. Member firms can monitor their portfolio performance while maintaining secure access to critical business information.
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Join StateCF's dedicated community and help shape the future of our "Invest Local" initiative. As an Ambassador, you will play a pivotal role in identifying and referring impactful businesses, ranging from groundbreaking projects developing cancer-fighting drugs to innovative consumer solutions. You will contribute to our mission and receive exclusive coaching from the Founder and other key StateCF team members. This empowers you to drive our nonprofit 501(c)(3) mission and become part of something truly significant. Apply for our Ambassador Program below and join this transformative journey.
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