Many business owners make a mistake: They focus on one source of capital.
They hear about the new thing that other people are doing. Maybe it’s crowdfunding. Maybe it’s Regulation A+. Maybe it’s some other fad. The key for you as a business owner is not the source of the capital. It’s not what type of capital you get. It’s whether you get the right capital for your business and whether it meets your business needs.
The label attached to it doesn’t matter. The securities law exemption you use doesn’t matter — whether it’s Reg A+, Crowdfunding, Regulation D, or some other way of getting the money into your business. You the business owner should focus on: “What money do I need? How much? What will I deploy it for? What is the benefit to the business, and to its customers, and to the investors?” And then, “Which way do I technically get that in there?”
The particular source or way of getting the funds into the company is more about details that are important, but not central to the business. If you make the business case and can figure out what type of money you need and why, and how much and make the business case for it, a good securities lawyer or business advisor can help formulate the way to interface with the investors and get that money into your business. Don’t focus on the source of capital. Focus on the need and use for the capital. As you bring that together, everything will come into focus.
Each case is unique. Past results do not guarantee future outcomes. This posting is intended to be a tool to familiarize readers with some of the issues discussed herein. This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. Each case is unique. Past results do not guarantee future outcomes. This article should not be treated as legal advice to any person or entity. FreeImages Photographer Erik Dungan.
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