Raising Capital

Any attempt to raise investment capital by the offer and sale of securities in the U.S. market must be made with a publicly filed registration statement pursuant to section 5 of the U.S. Securities Act of 1933 (the “Securities Act”), which governs the initial issuance of securities, unless an exemption from registration is available.  Exemptions from the registration requirement are valuable because the registration process, especially for an initial public offering, is costly, rigorous, and leads to extensive ongoing compliance obligations under the Securities Exchange Act of 1934 (the “Exchange Act”), which regulates both offers and sales of securities after their initial issuance and the reporting obligations of public companies.

Exemptions from the registration requirement fall into two categories:  securities that are always exempt from registration pursuant to section 3 of the Securities Act (for example, government securities and short term commercial paper), and certain transactions in securities that are not themselves generally exempt from registration requirements, but which for that specific transaction are exempted pursuant to section 4 of the Securities Act.

For most companies attempting to raise capital without public registration, the most important section 4 exemption is section 4(a)(2), which exempts from the registration requirement the sale of securities by a company or “issuer” “not involving any public offering,” meaning in practice a “private placement” of the securities.  Section 3(b) provides another route for issuers to offer exempt securities (as opposed to exempt transactions in securities) when the aggregate amount and nature of the offering is limited.  Registration-exempt securities offerings can be made pursuant to the relevant Securities Act provisions themselves, and also pursuant to rules and regulations promulgated pursuant to the Securities Act by the U.S. securities regulatory agency, the Securities and Exchange Commission (“SEC”).

Raising Capital Solutions:

We represent businesses seeking to raise capital to fund growth and operations, and investors and lenders to those businesses, including private equity firms, venture capital firms, hedge funds, family offices and trusts in:

  • Equity and Debt Securities Offerings
  • Private Placements
  • Bridge and Mezzanine Lending
  • Resales of Restricted and Control Securities
  • Private Investment in Public Equity (PIPE) and Reverse Merger Transactions
  • Securities Issuance in M&A Transactions

Raising Capital Representative Transactions

Raising Capital Whitepapers and Advisories:

Raising Capital Through Private Placements: Deal Points

“Raising Capital” compares in detail Regulations D, A, S and Crowdfunding and other principal Securities Act sections, rules, and regulations that may be used for public registration-exempt offers and sales of securities for the purpose of raising capital and discusses their respective uses, requirements, advantages, and disadvantages.  Appendix 1 at the end presents a condensed version of the same information in chart form, which you may also download as a standalone document.  Following the discussion are “Deal Points” to aid the capital raising process:  what to do, and especially what not to do.

Raising Capital Through Private Placements Exemption Chart




Practice Areas