California Business, Corporate, Securities & Startup Company Lawyer

David P. Horne, Attorney at Law

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Financings

We assist entrepreneurs, companies and investors in the negotiation, documentation and completion of a variety of forms of financing, including:

  • self-funding
  • friends-and-family financing
  • angel investment
  • seed funding
  • venture capital financing
  • private placements
  • public offerings
  • bank lines of credit

Obtaining equity capital from professional investors usually requires the creation of preferred stock which carries various preferences and protections in favor of investors. Preferred stock is usually issued in separate series, such as Series A, Series B, Series C, and so forth, for financings completed at different times based on different valuations of your company. For each round of funding, investors will typically present a term sheet to the company containing a summary of key features of the financing. After the term sheet is finalized, much lengthier agreements will be drafted to fully document all aspects of the financing. You need experienced counsel throughout this process. See Raising capital for your business for examples of financing topics we will address with you.

Your goal when raising capital for your company is to complete the transaction quickly so that you can pursue your business venture. We share your goal and work to close the deal as promptly as possible, while also complying with applicable securities laws.

Raising funds for a business venture is subject to strict regulation under state and federal securities laws. It is critical that you confer with counsel before beginning any fundraising efforts. For instance, advertising for investors is prohibited in almost all cases, including interviews or articles in which you mention that you’re raising funds. This prohibition on general solicitation extends to communication through websites, blogs, seminars, newspapers, magazines, trade publications, radio, television and other forms of wide distribution. If you seek investor leads through these or similar channels, you will generally be prohibited or restricted from completing the financing as planned and you may be subject to penalties from state and federal securities authorities. We will discuss with you what means of communication are permitted when you are raising capital.

The financing process is also subject to specific disclosure requirements relative to your business. Failing to disclose material information (or providing false or misleading information) concerning your business can subject you and your company to cease-and-desist orders, civil penalties and criminal prosecution for securities fraud under the U.S. Securities Exchange Act of 1934. We help companies prepare offering materials intended to satisfy these requirements.

In general, it is advisable to approach and obtain funding only from “accredited investors” who meet specific financial suitability requirements under Regulation D of the U.S. Securities Act of 1933. Limiting your offering to accredited investors reduces compliance costs during the offering and avoids unnecessary complications in connection with future transactions. See Raising capital for your business.

In addition, the issuance of securities by a company based in California always requires a filing with the California Department of Corporations and may also require a filing with the U.S. Securities and Exchange Commission. If you are issuing securities to investors or employees in other states, filings may be required in those states as well. We can assist you with the preparation and filing of these required securities law notices. See Securities law compliance for additional information about this aspect of our practice.

“David Horne has been an immense help in the start of my business. He has helped me network with contacts needed to develop the company by providing valuable introductions and has been extremely helpful with legal instructions. I’m very lucky to have found David. If you’re looking for someone to help you with your startup, look no further. David’s the best!”
Startup Founder
San Francisco, CA

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