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May 12

How To Legally Raise Funds for Your Startup and Early Stage Business

Before you start telling the world you’re raising money and before you accept a cent from an investor, make sure you seek sound legal advice from an experienced knowledgeable securities attorney. This blog is not intended to be legal advice in any way.

In the US after the 1930s depression the Securities and Exchange Commission implemented laws (Securities Act of 1933) that required companies to register with the SEC in order to offer and sell securities (equity, shares, stock) in their business or meet certain qualifications to exempt them from registration. These exemptions, which are covered by Regulation D (aka Reg. D), were designed to help the startup and small business raise funds while avoiding SEC registration which is prohibitively expensive for small companies. Reg. D contains rules (501 through 508) that must be followed or you could find yourself in very hot water.

As this is a complicated topic and the 33 Act isn’t exactly bed time reading, KENOVA took it upon itself to put the requirements into simple English for startups to understand:  How To Raise Money Legally

 

 

This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law.”

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