What is a Form D? And why do I, the entrepreneur, care?
Starting with the basics, a Form D is a very basic, errr… well, form that contains the names and addresses of your company’s executive officers, stock promoters, and — as of March, 2009 — a disclosure that includes the date of the first sale in your offering — i.e., your funding.
Chances are, if you just raised a big round, someone, somewhere in your organization is about to file Form D paperwork (it’s actually done electronically over computers now, who woulddya thunk it? If you’re feeling up to it, read the official explanation on the SEC’s website.)
So why do you care again?
Filing your Form D — which is the same as making the details of your funding public knowledge — is like signaling to the world — and more specifcally PRESS — that you’ve just received a sizable chunk of change.
You care because if your PR team is tipped off early, and the funding is handled with care, there’s a LOT of upside to be had. You also care because if this ellusive little form gets past you, you’ll lose control of how your company is talked about, likely for the first time.
Keep reading for a full explanation of the timing trickiness that is lost on most, even PR firms.
Do press care about funding news?
OMG, YES, they do. In fact, getting in with press on the ground level at your funding event is one of the best ways to make a splash for the first time.
When do I need to file my Form D?
Great question, the devil in the details…
A Form D must be filed with the SEC within approximately two weeks after a deal closes. This not a polite ask of SEC. You do not have an option, unless jail is an option.
If you read into the fine print, you’ll find you have exactly 15 days from the moment you’re “irrevocably contractually committed” to file a Form D before you’re in violation of the law — in layman’s terms this means the moment you shake hands the clock starts ticking.
What often ends up happening is that your lawyer files the Form D without your knowledge, or you give him or her consent without recognizing that you’re leaving PR opportunity on the table.
How do journalists scoop my funding news?
Reporters are a bunch of very smart, sophisticated folks. We’ve known this for some time, but given you probably haven’t dabbled with this particular breed of hound, you should know they’re very savvy and on to Form D’s.
Some reporters — like one of our favorites, Dan Primack — typically have newsfeeds running at all times or employ applications to scrape for keywords against the EDGAR database, where filings are publicly retained. Other scrappier bloggers, such as TechCrunch, have diligent teams of interns conducting real-time searches for Crunchbase companies (they also tend to flag interesting filings to editors when they surface, too).
Basically, assume the press are paying attention at all times. Deep down you may not believe that’s possible, but in our experience, we’ve learned they have a remarkable ability to discover the tiniest of tells.
What’s the down side? Can’t I hope it just doesn’t get found?
Sure, but in today’s competitive reporting not a lot slips by. And what’s worse, the Form D is vague — and leaves way too much to a healthy imagination.
And from a PR perspective, the Form D doesn’t do an adequate job of telling the story of your offering. If your funding news is forced to be made public, you should retain the right to tell how it really went down; and more importantly, what your funding really means to your company. Great entrepreneurs want to tell thier own story.
Shape the narrative before it’s shaped for you.
What’s the upside of looping in the PR team early?
Funding news, at a high level, is often misunderstood.
Funding is not all about the money. Or who gave it to you. It’s best to think of it as an opportunity to explain who you are, what you do and talk about why you got the money and what you plan to do with it.
You want that opportunity. Funding news can give you a leg up, and an opportunity to set the agenda.
What’s the the perfect scenario to maximize PR value?
Pro Tip #1: The right name
Well, for starters — besides hiring us — name your company something different than your product. Think something absolutely ridiculous, super vague or simply insane that can’t be traced back to you.
Your official company name should not resemble your “Doing Business As” (DBA) name. They do not have to be the same. When you separate company, brand and product, the work needed to uncover funding news becomes signifcantly more difficult.
Protip #2: Avoid the fiasco altogether
In some cases you may have an exemption from the securities laws registration requirements which would allow your company forgo filing a Form D altogether.
How can that be? The act of filing of a Form D is a step to ensure you have a “safe harbor” exemption, but it’s not the only way to skin a cat — meet the alternative, the 4(2) notice, a manually signed notice filed at the state level..
If you’re really wanting to be stealthy, and you feel good enough about your exemption, you may opt not to do one at all — but before you get too bullish, we should absolutely insist you consult your lawyer, of course. Ask him or her about filing a 4(2) transaction as an alternative. If you choose to go this route you’ll likely have to take on some semi-burdensome state-level filings, but as long as your people are all accredited, and your exemption house is in order, you might be able to avoid the disclosure issue altogether.
Before we go…
Reporters don’t typically have the time or resources to monitor ALL of the filings at the state level as religiously as they do with Form D’s at the national level. It’s our little secret (shhh), and we’ll let you figure out what to do with that one.