Among the myriad of issues an entrepreneur or business founder faces when starting a business is how to raise capital for the company. Some of the options available include bank financing, owner contributions, and private securities offerings. However, no matter how small the company or how small the amount of money being raised, a company desiring to raise capital through the sale of debt or equity securities (collectively referred to in this article as “securities”) must register the securities with the Securities and Exchange Commission (“SEC”) under the Securities Act of 1933 (the “Act”), as well as with the applicable state securities administrators, and provide a prospectus to purchasers of the securities – unless the company offering the securities can find an exemption from the registration requirements.
Some exemptions are described.