One of the easiest ways to raise money for a venture is to structure the raise in such a way that the securities laws do not apply.  To do this, it is necessary to be very familiar with the definition of a security.  If an instrument does not meet the definition, there is no need [...]

The recently passed federal Small Business Jobs Act allows a taxpayer to exclude from taxable income any gain realized on small business stock acquired after September 27, 2010 and before January 1, 2011 and held for at least five years.  This applies even to those taxpayers subject to the Alternative Minimum Tax. The business must [...]

Before a company can solicit investments from the public, it must register the offering in the states where the offering will be made (and must also complete federal securities compliance).  Most states in the United States accept the SCOR (also known as U-7) form as fulfilling this state level registration requirement.  The SCOR form was [...]

Rule 504 is known as an exemption from the requirement of federal registration of a securities offering under Regulation D. In its more familiar incarnation, it is an exemption that allows a company to offer up to $1 million in a private placement (assuming state law compliance) – which means that the company cannot do [...]

Please check out what I wrote for the SOCAP1o Impact Challenge.  Please “like” it if you like it! Here is an excerpt: “The securities laws were put in place for a good reason – to protect average investors from losing their life savings in unregulated investment schemes. Well, didn’t investors lose their life savings in [...]

A private placement is a fundraising strategy that is exempt from the full securities registration process and therefore much simpler and cheaper to do within the law.  The basic rule of private placements is that you may not solicit investment from the general public – you can only solicit people you already know.  Generally, you [...]

Excerpted from a memo authored by Kathleen Kenney, U.C. Davis School of Law third year student and Sustainable Economies Law Center summer intern Under the intrastate exemption (Section 3(a)(11) of the Securities Act of 1933), an issuer is exempt from the federal securities registration requirements.  To be eligible for the exemption, all investors must reside [...]

Equal Exchange is a worker-owned cooperative business based in Massachusetts that has created an amazing model for fulfilling its mission while simultaneously making money for its investors. Equal Exchange purchases coffee and cacao from farmer cooperatives throughout the world and processes it into products that it sells to retailers.  All products meet rigorous standards for [...]

For those of you in need of financing, Investors’ Circle is now accepting applications for their Spring venture fair in April 2010.  From all the applicants they will select around 20 companies to present to their members at the fair.  And even if you are not selected your information will be available to their members, [...]

When I first heard about 40billion.com I was surprised.  It claimed to provide a platform for entrepreneurs to solicit investment in their businesses.  How could a small business use a web site to solicit investments without first registering the offering with the federal Securities and Exchange Commission and all 50 state securities regulators?  40billion.com’s strategy [...]