Conducting an Investment Capital Campaign

Important: A company may not offer or sell securities unless the offering has been registered or falls within an exemption from registration. An offering may need to be registered or fall within an exemption from registration in more than one jurisdiction. Consult and choose legal counsel.

Investment capital campaigns are typically conducted with the advice of professional legal counsel.

Find a licensed attorney – Florida Bar, American Bar Association

Before choosing an attorney, do your research and find someone who will listen to and understand your goals and who specializes in raising capital for your type of business.

Prepare a business plan.

• Articulate your company’s goals, mission, and vision.
• Identify your company’s management structure.
• Include information, including background information, on the company’s officers.
• Consult with entrepreneurial support organizations and take advantage of business development resources to assist you in developing your business plan.

Determine funding goals.

• What will the funds being raised be used for?
• What is the minimum amount of funds needed to finance the company’s intended goal?
• What is your timeline for fundraising?
• Will you need to raise funds again in the future?

Determine if a securities offering is appropriate.

• Would a business loan be more appropriate?
• How will selling securities affect your business’s management structure?
• Will the investors expect a seat on your board of directors?

• Will equity dilution jeopardize your company's efforts to raise additional funds in the future?

Weigh the costs.

• Can your business afford the additional legal and accounting expense of a securities offering?

• Can you and your business afford the extra time and effort required to comply with reporting, solicitation, and disclosure requirements?

Prepare information for disclosure.

• Financial statements
  • Assets
  • Liabilities
  • Income
  • Cash flows
  • Transactions between companies and affiliates
  • Capitalization table that illustrates the comprehensive ownership of the company.
• Do you have an exit plan for your prospective investors?
• How has your company performed in the past?
• How do you anticipate your company to perform in the future?
• How will capital funds be allocated?
• Has an escrow account been established for the funds?
  • Funds are typically required to be held in escrow until the campaign target amount is reached and the funds are released.
• How does your company plan to expand and grow?

There are many types of securities offerings, each with different limitations, and requirements.

• Securities offerings must either be registered with the U.S. Securities and Exchange Commission (SEC) and/or the Office of Financial Regulation (OFR) or exempt from registration.
• Startup companies commonly use private placements offerings which are exempt from registration to offer and sell their securities.
• Check with the SEC or the OFR for information on the types of offering exemptions available.

Determine the type of security to be offered and the terms:

• Does the company wish to sell equity?
  • If so, how much?
  • Will the class of shares be common or preferred?
  • Will the shares pay dividends or have voting rights?
• Does the company want to borrow money from investors?
  • At what interest rate? What will be the term to maturity for the debt?
• Does the company wish to offer hybrid securities?
  • Such as convertible bonds or SAFE notes?
• Does the company wish to offer another type of security?
• When choosing the offering exemption that is most appropriate for your company’s needs, consider the following factors:
• Amount of funds needed.
• Number of investors needed.
• Type of investors you are looking for:
  • Venture Capital Funds/angel investors?
  • Accredited/non-accredited?
  • Family and friends?
  • Business customers?
• Will investors be in different states?
• Do you have connections to investor networks?
• Will you need to publicly solicit your offering?
• How much time can you afford to put into this offering?
• How much can you afford in professional legal and accounting expenses?

Select an offering exemption that best fits your goals.

• Consider consulting legal counsel to determine whether there is an exemption from securities registration for your offering.

• Include all information required to be disclosed by the offering exemption or registration regulations.
• Consult legal or financial counsel to ensure compliance with disclosure requirements.

Depending on the exemption type, you may be required to file a notice or register the offering with the SEC and/or the OFR.

• You may also be required to provide your offering and advertising materials, which may need to be reviewed and filed prior to commencing an offering.

Once your offering notice or registration form has been filed and reviewed, your regulator may issue an approved qualification of the offering statement or acknowledgement receipt.

Depending on the exemption type, you will need to offer and sell your securities to appropriate investors, comply with advertising requirements, and may be required to submit your advertisements to your securities regulator. Additionally, you will need to ensure that the persons selling your securities are registered or exempt from registration and are in compliance with the requirements of any applicable offering exemption.

Depending on your exemption, you may be required to file periodic offering sales and status reports with your regulator. You may also be required to provide periodic financial statements to your investors. Some exemptions may require investor funds to be returned if the minimum offering amount is not reached within the required time frame. You will need to ensure compliance with these regulations set forth in the utilized offering exemption.

U.S. Securities and Exchange Commission – Capital Raising Education for Small Businesses

U.S. Securities and Exchange Commission – Exempt Offerings

In-state Capital Raising Exemptions