Preparing for Startup and Smaller-Business Capital Raising

Summary

This practice note discusses three primary ways in which startup and other early stage companies may engage in private and alternative (rather than registered, public) securities offerings in the U.S. One of many critical challenges that startup ventures confront is capital raising, including the manner of acquiring capital, determining which type of capital (e.g., debt, equity, convertible securities) to utilize, how much capital to raise, how to target investors, and the overall fund raising (or securities offering) process. We will consider several of the most common types of private and alternative fund raising authorized under U.S. federal securities laws, including their respective issuer and investor eligibility requirements, maximum offering amounts, key documents and forms, and applicable state law requirements.