Who Should Use a Regulation D Private Placement
Any private company or entrepreneur that is seeking to raise equity capital or private debt financing from investors should have a securities offering in place. Only a securities offering can provide the needed practical framework to accommodate investment.
Even if your transaction will only involve one or two investors - you still need to provide the proper transaction framework, disclosure documentation and investment agreements necessary for raising capital. Raising capital from investors, debt or equity, of any amount requires very specific documentation that far surpasses what a business plan provides. It is imperative that a company seeking capital from investors have in place a Private Placement Memorandum, a Subscription Agreement, and in debt offerings a Promissory Note Agreement. Raising capital without these documents is nearly impossible - they are a necessity. You also need to use an SEC program, like Regulation D, to properly sell your company's securities to the investors. The SEC and States have specific rules concerning how a private company solicits capital from investors - even if very few investors are involved. The Regulation D Offering program is the exemption program designed by the SEC for private business. It is the most widely used program the SEC offers and provides the proper exemption needed to raise capital from investors. Not raising capital properly can provide investors with a "right of rescission" in the future - meaning they can get their investment back regardless of the circumstances. You could also face fines and other penalties resulting from an improper sale of securities to investors.
The Regulation D Offering Programs are typically utilized to raise from $25,000 to $50,000,000 in capital. Regulation D Offerings are used for a wide variety of transaction and industry types: corporate seed capital, corporate expansion capital, film production capital, real estate equity funding (acquisitions, development projects, golf courses, rehab), capitalization for early to pre-IPO stage Internet and technology companies, expansion funding for retail companies, and product development and distribution funding.
A Regulation D Offering provides the fundamentals for raising capital from investors - regardless of your industry type, age of your company, or the size of your organization.