How We Screen and Don't Screen Startups (Issuers)
SEC regulations require us to:
- Have a “reasonable basis” for believing that every Issuer on our Platform is eligible to offer its securities on our Platform and is complying with Title III. We might perform our own due diligence, but the SEC allows us to rely on the representations of the Issuer.
- Have a “reasonable basis” for believing that every Issuer on our Platform has established means to accurate records of the holders (owners) of its securities. We might perform our own due diligence, but the SEC allows us to rely on the representations of the Issuer.
- Deny access to the Platform to any Issuer if:
- We have a reasonable basis for believing that an Issuer or any of its officers, directors, or beneficial owner of 20% or more of its outstanding voting securities is subject to disqualification under the rules discussed in Disqualification of Startups. We are not allowed to rely solely on the Issuer’s representations to form this reasonable belief, but must conduct background checks with third parties.
- We have a “reasonable basis” for believing that the Issuer or the offering presents the potential for fraud or otherwise raises concerns about Investor protection, or we can’t effectively assess the risk.
We will comply with all those requirements. But – and this is very important – we are not required to conclude that Issuers on our Platform represent good investments for Investors. In fact, we are not even allowed to tell you if we think that one Issuer is a better investment than another Issuer. You have to make those decisions on your own.
