Exempt Offerings Resources

        Sponsored by Private Placement Advisors LLC 

Why So Many Fail

Why do others fail?

There are many reasons but often it is pretty simple. Too many small businesses do not professionally engage prospective investors and give them the means to properly execute an appropriate set of documents. While a business plan may disclose certain information about current and planned activities, it will not adequately address all the risk disclosures necessary to satisfy securities law. Even with only one or two investors you have created a security that requires an exemption from registration.


Regulation D is a government program created under the Securities Act of 1933 to provide two things: the needed exemption to sell unregistered securities in a private transaction and the appropriate framework for documentation. There are several programs that are available under SEC Regulation D. The most popular is Rule 506(c. It allows general advertising and online solicitation and enjoys compliance efficiencies with state regulators. 

Why should you bother with all this? 

Many startups and small businesses do not use SEC- and state-compliant offering documents. They instead rely on a business plan or executive summary to serve as the basis of the investment. This is not only unprofessional but can be very risky if things turn south (see Reg D Reporter for examples). 

Most startups choose the Regulation D exemption program. With enactment of the JOBS Act with its SEC 506(c exemption, companies can now execute a “public offering” of their investment opportunity and securities offering while still retaining the low execution cost and straightforward compliance benefits of a traditional exempt offering.

What will a Regulation D offering give you?

1. The ability to solicit investors for equity or debt securities in an compliant format and process. 

2. An investment structure, with mandated SEC disclosure, to professionally execute the subscription of investment funds into your company.

Who should use a Regulation D offering? 

Even with only one or two investors, you need to provide the transaction framework, related disclosure documentation and investment agreements in conformity with state and Federal law.  A Regulation D Offering can provide the proper transaction structure and documentation for raising debt or equity capital. 

Most companies raise $100,000 to $20,000,000 in early-stage capital. Regulation D offerings have been used for a variety of transactions, including seed capital, business expansion, film production capital, real estate equity, and debt fund capitalization.

The JOBS Act now allows an issuer to engage in general advertising and solicitation. The Regulation D 506(c exemption enjoys many of the characteristics of the 506(b program with these exceptions:

  • Advertising and general solicitation of investors is allowed;
  • Accredited investors must provide a third party verification that they meet the accredited standard for income and/or net worth; [Private Placement Advisors LLC writes verification letters];
  • The SEC filing process incorporates a “pre-filing” of Form D with a 15 day waiting period prior to advertising being allowed for the offering.  It is important to note that the current 506(b program is still available for issuers who do not need to engage in general solicitation. The 506(c exemption allows a public offering of securities while retaining the benefits of a Regulation D exempt private placement, with lower preparation costs and less onerous interaction with the SEC and state regulators.   

To get started or just to ask questions, email [email protected]

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Douglas Slain can be reached directly at 415-317-6130.