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Raising Capital? 3 Tips for Entrepreneurs

Scott Edward Walker

Introduction I’ve been helping entrepreneurs raise capital as a securities lawyer for 17+ years, and there are certain fundamental legal mistakes that I’ve seen entrepreneurs make over and over again. Accordingly, I thought it would be helpful to share three basic tips for entrepreneurs in connection with raising capital.

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Raising Capital? 3 Tips for Entrepreneurs (Part 3)

Scott Edward Walker

I’ve been helping entrepreneurs raise capital as a corporate lawyer for 17+ years, and there are certain fundamental legal mistakes that I’ve seen entrepreneurs repeatedly make. Accordingly, I thought it would be helpful to share three tips for entrepreneurs in connection with raising capital.

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Early stage money: The problem with PPMs

Berkonomics

The sale of equity in private companies is regulated by the Securities Act of 1933, which requires that the company either register with the SEC or meet one of several exemptions (Regulation D). A Private Placement Memorandum (PPM) is a special business plan defined to meet an SEC exemption.

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Beware the “dirty cap table.”

Berkonomics

Investors love to see entrepreneurs who have used their own money to ignite their businesses. But often, entrepreneurs turn to others for initial capital. Since many small investors in a young business do not meet that standard, there is a chance that the company has taken money that it should not have taken, according to SEC rules.

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Could you have created a “dirty cap table?”

Berkonomics

Investors love to see entrepreneurs who have used their own money to ignite their businesses. But often, entrepreneurs turn to others for initial capital. What would the SEC say about your investors? Describing that capital using the phrase “friends, family and fools,” or “FFF,” has become as common as to be just plain trite.

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Does your company have a “dirty cap table?”

Berkonomics

Investors love to see entrepreneurs who have used their own money to ignite their businesses. But often, entrepreneurs turn to others for initial capital. To compound the problem, often stock is issued by the entrepreneur without filing any report of such issuance with the state of issue. The legality issues.

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Is crowdfunding legal?

Startup Company Lawyer

Crowdfunding: Its Practical Effect May Be Unclear Until SEC Rulemaking is Complete. Despite the buzz among entrepreneur communities, various restrictions may make crowdfunding impractical for companies raising money and the intermediaries that facilitate the process. Crowdfunding Prior to the JOBS Act.

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