Regardless of the source of your financing–family and friends, angels, or venture capital–you will need some vehicle, forms, or set of papers to make it all nice and legal. On the surface, it would seem that if you’re going to sell stock, you could take the investors’ check and give them a stock certificate. Or if it was to be a loan, just take the check and sign a note.
Unfortunately, it’s not quite that simple. And in fact, you don’t want it to be.