Investor regulations · Securities Law

When raising capital, is it mandatory to file a Form-D with the SEC?

Beau D'Arcy Engineer, Manager, and now Entrepreneur

March 19th, 2015

We are wrapping up a $1mm funding round and were advised that we should file a Form-D with the Securities and Exchange Commission (SEC). I did some reading online but cannot tell if we have to file a Form-D or if it's more of a CYA (cover your a$$) move. I've also been reading that you have to file a Form-D with each state your investors live in, which seems crazy to me. Does anybody have experience with this? Any advice or insights would be hugely helpful! Thanks in advance...

Neil Gordon Board Member, Corporate Finance Advisor and Strategy Consultant

March 25th, 2015

If I was "wrapping up a $1mm funding round" I'd be following the advice of counsel. I often serve as Purchaser Representative when an offering involves non-accredited investors. On occasion I get a call from an attorney who is trying to clean up the mess resulting from a funding round that didn't quite comply with the rules. I recommend getting it right the first time.

Beau D'Arcy Engineer, Manager, and now Entrepreneur

March 24th, 2015

After doing some digging and talking to a few folks, it seems like the most concise answer is, "Yes," you must file a Form-D if you sell any type of securities, including convertible-notes and equity. The best source of information, surprisingly, comes straight from the SEC website - . The size of a raise determines how significant the disclosures, financials, etc. that must be given to each potential-investor so they can make a "smart" decision as to investor or not invest. They reference the laws ("Rules") that dictate the requirements at different thresholds: Rule 504 (up to $1mm), Rule 505 (up to $5mm), Rule 506 (> $5mm). It seems like "accredited investor" is a critical term, too, and if you only sell to accredited investors, you can advertise your offering publicly. Pretty interesting stuff, actually.

I'll keep digging into the individual state laws / filings, but at least this is a start. Please feel free to chime-in if you have experience with this!

Thank you...

[I should disclose that I am an engineer and NOT an attorney - consult a securities attorney before using any advice I share on this thread]