With all the new laws and regulations surrounding capital raising, one can easily get lost in the sea of information, or worse yet, be left to rely on expensive attorneys for basic information. Rest assured, the old tried and true methods still exist; moreover, they’re as popular as ever among the large corporate fundraisers, fund managers, insurance companies, and even attorneys. Hey, don’t take my word for it, see for yourself (click here to check out all the daily filings with the SEC). Obviously, hundreds of companies are raising billions of dollars using the old-school Regulation D rules; however, it boggles one’s mind that certain attorneys insist on guiding their clients down the path toward Reg A+, and other methods, which obviously requires legal representation to figure out. Regulation D has been around since the 1930’s, and it’s still as simple to use today.
With that said, one should consult with their attorney before raising any amount of capital. Don’t get me wrong, attorneys are worth their weight in gold when they are needed, but they quickly become monetarily burdensome when they are not necessarily required, due to software innovation, databases, etc. I’m not trying to discourage the use of attorneys here, just simply stating that thousands of business owners are raising capital through Do-It-Yourself forms, while saving thousands of dollars in legal fees.
If you’re not familiar with Reg D here it is in a nutshell:
To sell stock in a company, to private investors, one needs to either register that stock with the SEC, or claim an exemption. Simply relying on an exemption is enough, provided one follows the rules (see the rules). Basically, there are nine rules; nevertheless, rules 501, 504, and 506 are the actual rules that pertain to how much capital is being raised, and from whom it is being raised. These rules then point to the other five rules for determining how the capital is raised and what happens if the rules aren’t followed. Rules 504 and 506 have become so ubiquitous that the typical forms are libraried and boilerplated. [Shameless plug: Click here, we sell the form templates.]
FaceBook, Twitter, Tesla, SnapChat, and many other companies, have all raised capital from private investors using Reg D (click here to see FaceBook’s first ever capital raise).
I wish you Happy Capital Raising!
Disclaimer: I am not an attorney, and you should not take anything published on our website as legal advice, nor is anything on our website to be taken as a replacement for an attorney, or the advice of an attorney.