Private Placement Insights and Other Startup Wisdom
I just read an interesting post about Top Legal Mistakes Entrepreneurs Make When Launching Startups. The author makes a number of savvy points about common pitfalls that can hurt a startup or new firm. I recognize many of the issues she raises, and we offer solutions to many of them here at Private Placement (PPM, www.ppm.net).
The post points out that these mistakes are typically easy to avoid if the entrepreneur or founder is careful early on. Indeed, simple fixes in structuring the company can ensure that a world-changing idea or potential high-growth business has the room to get on its feet and flourish.
The blog’s advice begins with properly organizing the business, especially if the startup plans on raising private placement funds or going after venture capital backing when seeking to raise capital. She recommends against forming an LLC if private placement or venture capital raising is the goal, because SEC regulation prohibit VCs and others from investing in certain LLCs. Instead, she recommends setting up a Delaware C Corporation, the favored format to secure private placement funds or venture backing.
The rest of the post is about securities and intellectual property. The author writes about the risks of raising capital from unaccredited investors, as opposed to accredited investors, if the eventual goal is to bring on “smart money” investors, like venture capitalists. She recommends getting a private placement memorandum (PPM)—available from us here at Private Placement (PPM)—if the firm does raise private placement capital. While this protects the firm by meeting regulatory requirements to disclose risks to investors, it can also be a challenge to create the complicated offering memorandum or offering document.
Here at PPM, we offer better than industry standard private placement memorandum and private placement documents at a solid value, which will help entrepreneurs avoid the traps that Turczyn warns about. Contact us to learn more about our services, including private placement memorandum, 144A offerings, initial public offerings (IPO), Euro bond services, Business plans, Valuations, and more.