Securities
Offering

Regulation D provides SEC exemptions for private offerings. Rule 506(b) allows up to 35 non-accredited investors receiving appropriate disclosure, but prohibits general solicitation. Rule 506(c) allows general solicitation but requires that all investors be accredited, verified through documented evidence. Rule 504 allows raises up to $10 million subject to state law. Choice of exemption affects who you can approach, how, and what documentation you need. We match exemption to fundraising plan at the start.

Related: Capital Raising

A Simple Agreement for Future Equity (SAFE) gives the investor the right to equity in a future priced round, typically at a valuation cap and/or discount. It has no interest, no maturity, and no repayment obligation. A convertible note is debt — it bears interest, has a maturity date, and must be repaid or converted. SAFEs are simpler and faster for the earliest stages; convertible notes are sometimes required by more conservative investors who want the fallback of a debt claim. Terms that matter most are the valuation cap, the discount, and the conversion triggers.

Form D must be filed electronically with the SEC within 15 days of the first sale in a Regulation D offering. In addition, most states require a parallel notice filing in each state where an investor resides, typically within 15 days of the first sale in that state. Failing to file Form D does not generally invalidate the federal exemption but can bar use of Rule 506 for future offerings for one year and creates state-level compliance issues that can trigger rescission rights.

A 409A valuation is an independent appraisal of a private company's common stock, required to set the exercise price of stock options at fair market value. Issuing options below fair market value has significant adverse tax consequences for the recipient under IRC 409A. Most companies obtain a 409A before their first option grants and update it annually or after significant financing events. The cost is modest and the alternative — tax consequences for every option recipient — is severe.

The economic terms that matter most are valuation, liquidation preference (preferred returns on exit), and anti-dilution protection. The governance terms that matter most are board composition, protective provisions (investor veto rights over specified actions), information rights, and participation rights in future rounds. A term sheet can have reasonable economics with governance terms that make the company difficult to operate — or vice versa. We review term sheets for market-range posture on both dimensions before the company signs.

Related: Capital Raising

Post-close obligations depend on the offering and the investor agreement, but typically include information rights (financial statements, updates), compliance with protective provisions, honoring preemptive and participation rights in future rounds, and meeting any board representation commitments. Many preferred rounds require ongoing 409A valuations before subsequent option grants, updated cap table reporting, and fulfilment of registration rights if and when the company pursues an IPO. Building the investor-relations cadence at first close is far easier than reconstructing it later.