Japan is cracking down on SoftBank’s revenue

First, a couple of quick follow-ups to our coverage of Form Ds yesterday, and then a deeper dive into the challenges SoftBank is facing with regards to its revenue in Japan. Finally, some notes on recent articles we have read.
We are experimenting with new content forms at TechCrunch. This is a rough draft of something new – provide your feedback directly to the authors: Danny at or Arman at if you like or hate something here.

Form D(isappearing)

Form Ds are (usually) filed by startups to the SEC when they take on venture capital. However, there appears to be an increasing pattern of startups foregoing the filing, which has implications for both reporters (we have less info about what’s happening in the venture world) as well as with aggregate VC stats, which often rely at least partially on filings to determine the state of venture capital.
A number of readers emailed us with their views on the matter. One lawyer and multi-time startup founder wrote to say that:
Some additional considerations are cost: the Form D can be expensive with all of the associated state blue sky filings, especially if you have participation from a number of angels or smaller funds.
When you file a Form D, that generally pre-empts any equivalent state filing. HOWEVER, we were wrong yesterday when we said that “the form pre-empts most state securities laws so that startups don’t have to file in state jurisdictions.” Startups DO have to file in state jurisdictions, but usually just to point out that they have filed with the SEC.
Beyond cost, one issue with filing is when the round is smaller than the ultimate intended size. One reader reported in:
I was CFO at a startup and after consulting legal counsel, we didn’t file Form D for a Series C capital raising. Why? Because we didn’t want some investors to see how much is left in the round and defer funding
You might have convinced an investor to put in say $30 million into a round, and then they are shocked to find out that the round is really intended to be $50 million when the Form D hits the presses. Obviously, this is something that should be transparent to all parties, but I actually could see this happening more commonly at the seed stage, where some rounds almost certainly fundraise continuously and investors are more skittish.
Finally, it’s not just the finance and legal folks pushing for less filings, but also PR firms. One notable PR firm head told me that:
We’ve pushed a bunch of our clients to pursue [a 4(a)(2) exemption], but they were raising / had raised money from Tier One VCs.
That exemption allows startups to avoid a Form D filing, which “protects our launches from getting scooped.” The same PR head told me that this has been a policy for the past 18 months or so.
The data is still early, but the norms for filing do seem to be changing, and we are still doing more work on this. Reach out directly with your thoughts.

Japan is going after carrier revenue

Japan is cracking down on SoftBank’s revenue
See also:
Leave a comment
  • Latest
  • Read
  • Commented
Calendar Content
«    Август 2022    »