Safeguard your cap table and stay compliant from day one.
Equity and Securities
Raising money from investors is a regulated activity. Every time a company sells equity, takes convertible debt, or issues any instrument representing a financial interest in the business, it’s operating inside a framework of federal and state securities laws. The framework has exemptions that make it workable for most private companies — but the exemptions have requirements, and the requirements matter.
The SEC’s anti-fraud provisions apply regardless of whether you’ve registered the offering. Material misstatements to investors in a legitimately exempt Regulation D raise can still constitute securities fraud. Rescission rights — an investor’s ability to demand their money back if the offering wasn’t properly conducted — can be triggered by procedural errors that seem technical at the time. These issues come up later, usually in the context of a different dispute, at exactly the worst moment.
Smart Equity Structures for Scalable Growth
Most startup fundraising from venture capital firms and angels is conducted under Regulation D, Rule 506(b) or 506(c). Rule 506(b) allows up to 35 non-accredited investors with no general solicitation. Rule 506(c) allows general solicitation but requires all investors to be verified as accredited. Form D must be filed with the SEC within 15 days of the first sale. SAFEs and convertible notes are securities, not merely contractual instruments — they’re subject to federal and state securities laws, with legal implications that founders often don’t fully appreciate when signing.
Employee equity under Rule 701 exempts certain compensatory grants from registration requirements, but the exemption has limits. Companies granting more than $10 million in equity in any 12-month period must provide enhanced disclosure to recipients. 409A valuations need to be defensible. Early exercise elections have real and irrevocable tax consequences. Getting these right at formation is dramatically cheaper than correcting them later.
What We Offer
We advise startups and growth companies on securities law compliance across the capital formation lifecycle — from the first SAFE through Series A and beyond. We work in Texas, DC, Colorado, and California, with affiliated counsel nationally.
Related: Business Agreements · Entity Structure · Fundraising and Storytelling
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