"Matchmaking sites," also referred to as "matchmaking platforms," have come to play a more significant role in capital formation in recent years. A matchmaking site generally relies on the Internet in order to "match" or introduce potential investors to companies that may be interested in raising capital. However, in order to avoid the requirement to register with the SEC as a broker-dealer, a matchmaking site generally will limit the scope of its activities. The determination as to whether an entity is acting as a "broker" is complex. The SEC closely considers many criteria and the specific facts and circumstances. Generally, though, the SEC has attributed great significance to whether the entity receives transaction-based compensation. For more information about matchmaking sites, how they work, current regulations and key considerations, see our client alert, "Matchmaking Basics: How it Works, Current Regulations and Key Considerations," available at http://www.mofo.com/~/media/Files/UserGuide/2015/150129MatchMakingGuide.pdf.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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