There are at least three important considerations about understanding selling your shares in a startup. There are risks, and these are really significant risks.
Does anybody want to buy them?
Can you find somebody who wants to buy them?
Maybe somebody wants to buy them, but how do you know that? That’s where stock markets and exchanges come into play.
Are you allowed to sell them?
This is tricky, and one of the great points about the JOBS Act. Normally, people who invest in startups receive stock that is restricted in a lot of ways. Those restrictions almost always include a restriction on your ability to sell your stock. You probably can’t sell it to just anybody. You probably can’t sell whenever you want to.
Under Tier IV / Title 2 of the JOBS act, your stock is, by definition, tradeable. Not restricted.
Once you own some stock in a Reg. A+ startup, you probably want to know how to sell it.
There are three possibilities, depending on the particular company in which you’re an investor.
Your company has listed its stock on the NYSE or NASDAQ stock exchanges.
This is mostly done by companies that are interested in having lots of institutional investors as shareholders. Generally an institutional investor (think an insurance company or college endowment fund) isn’t allowed to invest in a company unless the stock is listed on an exchange.
Usually, this also results in a larger number of interested buyers and sellers, making it easier to sell your stock at a price you find acceptable.
Having a listing on a stock exchange is very expensive, so many companies are very cautious before they go to this expense. Being listed on an exchange requires the company to undergo much more regulatory oversight from the SEC, which is part of the expense.
If your company has a listing, then you contact your broker, and instruct them to sell your stock.
Your company is quoted on a market, like the OTC QB.
This is the most likely scenario. Markets are a way for buyers and sellers to find each other. Perhaps the most well known is the OTC (over the counter) market.
Being quoted on a market is much less expensive for the company. One downside is that there are usually fewer people wanting to buy or sell, making it harder to get a price you consider fair for your stock.
One big benefit is that you can see what people are willing to buy your stock for. That’s the quote.
To be quoted on a market also requires regulatory approval. In this case, it is FINRA that makes it possible for a company to be quoted on a market. Amongst other things, they’re the ones who issue the ticker symbol.
iConsumer is currently in the process of seeking FINRA approval to be quoted on the OTC QB.
To buy or sell stock that is quoted on a market, you contact your broker. Not every broker will help you buy or sell stock that is quoted.
Your company isn’t listed or quoted anyplace.
Most companies and startups fall into this situation. Most companies do NOT allow you to sell your stock ownership to just anybody. Lots of rules and restrictions.
That’s not true for Reg. A+ companies. You ARE allowed to sell to anybody, at any time, for any price that you can negotiate. It’s part of the Reg. A+ rules.
All you need to do is find somebody who wants to buy your stock, which may not be easy. Making it easier for you to sell is one of the reasons why many companies want to have their stock quoted or listed.
NO MONEY OR OTHER CONSIDERATION IS BEING SOLICITED, AND IF SENT IN RESPONSE, WILL NOT BE ACCEPTED.
NO OFFER TO BUY THE SECURITIES CAN BE ACCEPTED AND NO PART OF THE PURCHASE PRICE CAN BE RECEIVED UNTIL AN OFFERING STATEMENT FILED BY THE COMPANY WITH THE SEC HAS BEEN QUALIFIED BY THE SEC. ANY SUCH OFFER MAY BE WITHDRAWN OR REVOKED, WITHOUT OBLIGATION OR COMMITMENT OF ANY KIND, AT ANY TIME BEFORE NOTICE OF ACCEPTANCE GIVEN AFTER THE DATE OF QUALIFICATION.
AN INDICATION OF INTEREST INVOLVES NO OBLIGATION OR COMMITMENT OF ANY KIND.
YOU MAY OBTAIN A COPY OF THE RECENTLY CLOSED OFFERING CIRCULAR AT
A NEW OFFERING STATEMENT WILL BE FILED WITH THE SEC SHORTLY.