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Private Investment Filing Requirements

Raising Angel funding must follow securities laws, make full written disclosure to investors of the terms of the offerings and how risky the investment is (all the things that could go wrong and why the investor may lose their entire investment), and to raise money primarily or solely from sophisticated investors (knows as “accredited investors”). Federal and state registration (and providing the written Private Placement Memorandum containing full disclosure) is critical for a private company raising funding, even small amounts from Angel Investors. Failing to register can result in a) an increase the private company’s retroactive securities filing fees, in some cases doubling them; b) a return of investment capital to its investors, even if already spent; c) a ban on the private company from raising future investment capital.

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