Regulatory Around the Fundraising Process

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

There are regulations around startup funding.

These regulations provide an exemption from the securities laws.

Here's a list of key regulatory terms to know:

Rule 506b

Founders or issuers of a stock can raise an unlimited amount of capital.

They can raise from an unlimited number of accredited investors.

They are allowed up to 35 non-accredited investors such as family and friends.

They must not use general solicitation.

Rule 506c

Founders can raise from general solicitation.

They can raise an unlimited amount of capital.

They can raise only from accredited investors

They must verify that every investor is accredited.

FormD

Founders raising funding under 506b or 506c must file a Form D with the SEC in less than 15 days after the first close.

Blue Sky Filings

Funds raising funding under Regulation D will most likely have to file with states under the Blue Sky law.

These are state requirements for filing a notice.

Consider these regulations for your fundraise.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

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