Capital Raising

Problems We Solve

• —Raising money informally without proper documentation or disclosure
• —Offering securities without understanding which exemption applies
• —Cap table structure that discourages or complicates future investment
• —Investor agreements that create unexpected obligations or control provisions
• —State securities laws that apply in addition to federal requirements

Regulation D (504, 506(b), 506(c)) private placement structuring

Private placement memoranda and investor disclosure documents

SAFE agreements and convertible note documentation

Preferred equity term sheet review and negotiation

State securities compliance (Blue Sky) filings

Equity incentive plans, option grants, and 409A compliance

Ongoing investor relations documentation and governance

Q.What is Regulation D and why does it matter?

Regulation D is a set of SEC exemptions that allow companies to raise capital from investors without registering the securities offering with the SEC. Rule 506(b) allows up to 35 non-accredited investors and prohibits general solicitation. Rule 506(c) allows general solicitation but requires all investors to be accredited and verified. Choosing the right exemption affects who you can approach and how.

Q.What is a SAFE agreement?

A Simple Agreement for Future Equity (SAFE) is an instrument that gives investors the right to receive equity in a future priced round, typically at a discount or with a valuation cap. SAFEs are popular for early-stage fundraising because they are simple, fast, and avoid the need to set a valuation at the earliest stage. We draft and review SAFEs with terms that are fair to both founders and investors.

Q.Do I need to file anything with the state when I raise money?

Yes. In addition to federal securities laws, every state has its own securities laws (commonly called Blue Sky laws). Most Regulation D offerings require a Form D filing with the SEC within 15 days of first sale, plus state-level notice filings in each state where investors reside. Failures to file can result in rescission rights for investors.

Q.What is a 409A valuation and when do I need one?

A 409A is an independent valuation of your company's common stock, required by the IRS before you can grant stock options to employees. It sets the exercise price for options. Issuing options below fair market value has significant adverse tax consequences for employees. Most companies obtain a 409A before their first option grants and update it annually or after significant financing events.

Q.What should I watch for in a term sheet?

The key economic terms are valuation, liquidation preference, and anti-dilution provisions. The key control terms are board composition, protective provisions (veto rights), and information rights. We review term sheets to identify provisions that are standard versus those that are investor-favorable in ways that will affect you at exit or in future rounds.