Comments on: Life is Too Short to Deal with Non-Accredited Investors http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors Startup Law, Incorporation, Convertible Notes, Preferred Stock, Stock Options, Venture Capital Sun, 22 Jan 2012 19:35:50 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Rustin http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors#comment-11416 Rustin Sun, 22 Jan 2012 19:35:50 +0000 http://www.thestartuplawyer.com/?p=170#comment-11416 Phil - I know it's rather too late. Answer I found was to add them as co-founders as convertible note, further coupled by vest founders shares, which is common stock. This should be a positive reflection as it does not present any conflicts against any preferred stock options or similar equity. Then again, I'm no lawyer and just how I approached this problem. Best of luck with your new adventure. Have fun with it! Phil -

I know it’s rather too late. Answer I found was to add them as co-founders as convertible note, further coupled by vest founders shares, which is common stock.

This should be a positive reflection as it does not present any conflicts against any preferred stock options or similar equity.

Then again, I’m no lawyer and just how I approached this problem.

Best of luck with your new adventure. Have fun with it!

]]> By: I am a non-accredited investor and one private company has just purchased the private company that I hold shares can I force them to buy me out? - Quora http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors#comment-10898 I am a non-accredited investor and one private company has just purchased the private company that I hold shares can I force them to buy me out? - Quora Wed, 12 Oct 2011 16:32:53 +0000 http://www.thestartuplawyer.com/?p=170#comment-10898 [...] they may want to "buy you out", this blog post has a nice summary of the "why" http://startuplawyer.com/preferr.... Depending on where the company is located and/or incorporated you may have dissenters' [...] [...] they may want to "buy you out", this blog post has a nice summary of the "why" http://startuplawyer.com/preferr…. Depending on where the company is located and/or incorporated you may have dissenters' [...]

]]> By: The Checklist Every Entrepreneur Should Read Before Launching a Startup http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors#comment-10763 The Checklist Every Entrepreneur Should Read Before Launching a Startup Mon, 12 Sep 2011 14:37:45 +0000 http://www.thestartuplawyer.com/?p=170#comment-10763 [...] Capital 1. Length of NDA: 0 pages 2. Fees Paid to Pitch my Startup: $0 3. Investors: Accredited Investors 4. Structure of First Capital Raise up to $1MM: Convertible Notes By Ryan Roberts, a startup [...] [...] Capital 1. Length of NDA: 0 pages 2. Fees Paid to Pitch my Startup: $0 3. Investors: Accredited Investors 4. Structure of First Capital Raise up to $1MM: Convertible Notes By Ryan Roberts, a startup [...]

]]> By: Quora http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors#comment-10480 Quora Thu, 04 Aug 2011 23:13:24 +0000 http://www.thestartuplawyer.com/?p=170#comment-10480 <strong>What are the best online resources (blogs, podcasts, articles, etc.) on startups and entrepreneurship?...</strong> Incorporation * Startup Company Laywer: What type of entity should I form? (http://www.startupcompanylawyer.com/2009/03/12/what-type-of-entity-should-i-form/) * Startup Company Lawyer: What state should I incorporate in? (http://www.startupcompanylawye... What are the best online resources (blogs, podcasts, articles, etc.) on startups and entrepreneurship?…

Incorporation * Startup Company Laywer: What type of entity should I form? (http://www.startupcompanylawyer.com/2009/03/12/what-type-of-entity-should-i-form/) * Startup Company Lawyer: What state should I incorporate in? (http://www.startupcompanylawye…

]]> By: Chris http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors#comment-4061 Chris Sat, 20 Nov 2010 22:41:00 +0000 http://www.thestartuplawyer.com/?p=170#comment-4061 Phil, did you ever recieve an aswer to this question? is it posted ro can you ahsre the answer? Phil, did you ever recieve an aswer to this question? is it posted ro can you ahsre the answer?

]]> By: Chris http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors#comment-4062 Chris Sat, 20 Nov 2010 22:41:00 +0000 http://www.thestartuplawyer.com/?p=170#comment-4062 Phil, did you ever recieve an aswer to this question? is it posted ro can you ahsre the answer? Phil, did you ever recieve an aswer to this question? is it posted ro can you ahsre the answer?

]]> By: Phil http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors#comment-2057 Phil Thu, 26 Aug 2010 20:18:10 +0000 http://www.thestartuplawyer.com/?p=170#comment-2057 Does Qualifed 401 or IRA money exempt the Investor from the accredited Investor Rule? ie - If someone making say 100K per year wants to pull 150K out of their 300K Retirement Accounts to invest, do they have to meet Regulation D’s Rule 501 of the federal securities laws as an Accredited Investor to invest this money even thought their Net Worth is not $1,000,000 and/or they don't make over $200K annually? Does Qualifed 401 or IRA money exempt the Investor from the accredited Investor Rule? ie – If someone making say 100K per year wants to pull 150K out of their 300K Retirement Accounts to invest, do they have to meet Regulation D’s Rule 501 of the federal securities laws as an Accredited Investor to invest this money even thought their Net Worth is not $1,000,000 and/or they don't make over $200K annually?

]]> By: Phil http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors#comment-2434 Phil Thu, 26 Aug 2010 20:18:00 +0000 http://www.thestartuplawyer.com/?p=170#comment-2434 Does Qualifed 401 or IRA money exempt the Investor from the accredited Investor Rule? ie - If someone making say 100K per year wants to pull 150K out of their 300K Retirement Accounts to invest, do they have to meet Regulation D’s Rule 501 of the federal securities laws as an Accredited Investor to invest this money even thought their Net Worth is not $1,000,000 and/or they don't make over $200K annually? Does Qualifed 401 or IRA money exempt the Investor from the accredited Investor Rule? ie – If someone making say 100K per year wants to pull 150K out of their 300K Retirement Accounts to invest, do they have to meet Regulation D’s Rule 501 of the federal securities laws as an Accredited Investor to invest this money even thought their Net Worth is not $1,000,000 and/or they don't make over $200K annually?

]]> By: Ross http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors#comment-1707 Ross Sat, 19 Jun 2010 02:43:36 +0000 http://www.thestartuplawyer.com/?p=170#comment-1707 Can anyone come up with a legal structure under which unaccredited investors can pool funds together for the purpose of investing in early stage companies? What requirements would the "pool" need to meet to be able to take money from unaccredited investors and invest it in unregistered companies? Can anyone come up with a legal structure under which unaccredited investors can pool funds together for the purpose of investing in early stage companies? What requirements would the “pool” need to meet to be able to take money from unaccredited investors and invest it in unregistered companies?

]]> By: Ross http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors#comment-2433 Ross Sat, 19 Jun 2010 02:43:00 +0000 http://www.thestartuplawyer.com/?p=170#comment-2433 Can anyone come up with a legal structure under which unaccredited investors can pool funds together for the purpose of investing in early stage companies? What requirements would the "pool" need to meet to be able to take money from unaccredited investors and invest it in unregistered companies? Can anyone come up with a legal structure under which unaccredited investors can pool funds together for the purpose of investing in early stage companies? What requirements would the “pool” need to meet to be able to take money from unaccredited investors and invest it in unregistered companies?

]]> By: Matt http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors#comment-1630 Matt Wed, 12 May 2010 12:47:28 +0000 http://www.thestartuplawyer.com/?p=170#comment-1630 Ryan - I've heard there is a "business relationship" test that allows a company to raise capital from a non-accredited investor without providing all of the disclosure information only if the non-accredited investor has intimate knowledge of the business he or she is investing in. Do you know anything about this test? Thanks a lot. Ryan – I've heard there is a "business relationship" test that allows a company to raise capital from a non-accredited investor without providing all of the disclosure information only if the non-accredited investor has intimate knowledge of the business he or she is investing in. Do you know anything about this test? Thanks a lot.

]]> By: Matt http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors#comment-2432 Matt Wed, 12 May 2010 12:47:00 +0000 http://www.thestartuplawyer.com/?p=170#comment-2432 Ryan - I've heard there is a "business relationship" test that allows a company to raise capital from a non-accredited investor without providing all of the disclosure information only if the non-accredited investor has intimate knowledge of the business he or she is investing in. Do you know anything about this test? Thanks a lot. Ryan – I've heard there is a "business relationship" test that allows a company to raise capital from a non-accredited investor without providing all of the disclosure information only if the non-accredited investor has intimate knowledge of the business he or she is investing in. Do you know anything about this test? Thanks a lot.

]]> By: Wendy http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors#comment-1378 Wendy Tue, 23 Mar 2010 03:35:25 +0000 http://www.thestartuplawyer.com/?p=170#comment-1378 Ryan - thanks so much for getting back to me. I guess I'm trying to reconcile a) Rule 506's general information requirements (specifically, 502(b)) and b) a start-up that has low or no information about itself yet and is essentially raising money. Any thoughts? Thanks! Ryan -

thanks so much for getting back to me. I guess I'm trying to reconcile a) Rule 506's general information requirements (specifically, 502(b)) and b) a start-up that has low or no information about itself yet and is essentially raising money. Any thoughts?

Thanks!

]]> By: Wendy http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors#comment-2431 Wendy Tue, 23 Mar 2010 03:35:00 +0000 http://www.thestartuplawyer.com/?p=170#comment-2431 Ryan - thanks so much for getting back to me. I guess I'm trying to reconcile a) Rule 506's general information requirements (specifically, 502(b)) and b) a start-up that has low or no information about itself yet and is essentially raising money. Any thoughts? Thanks! Ryan -

thanks so much for getting back to me. I guess I'm trying to reconcile a) Rule 506's general information requirements (specifically, 502(b)) and b) a start-up that has low or no information about itself yet and is essentially raising money. Any thoughts?

Thanks!

]]> By: Ryan Roberts http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors#comment-1305 Ryan Roberts Wed, 17 Mar 2010 22:51:32 +0000 http://www.thestartuplawyer.com/?p=170#comment-1305 Wendy - Senator Dodd's bill would ruin a bunch of things for startups and investors. Rule 506 (in it's current, pre-Dodd Bill state) has the benefit of pre-empting state securities law. Essentially, if you comply with Rule 506, the startup only has to make a notice filing with the state(s). Wendy – Senator Dodd's bill would ruin a bunch of things for startups and investors.

Rule 506 (in it's current, pre-Dodd Bill state) has the benefit of pre-empting state securities law. Essentially, if you comply with Rule 506, the startup only has to make a notice filing with the state(s).

]]> By: Ryan Roberts http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors#comment-2430 Ryan Roberts Wed, 17 Mar 2010 22:51:00 +0000 http://www.thestartuplawyer.com/?p=170#comment-2430 Wendy - Senator Dodd's bill would ruin a bunch of things for startups and investors. Rule 506 (in it's current, pre-Dodd Bill state) has the benefit of pre-empting state securities law. Essentially, if you comply with Rule 506, the startup only has to make a notice filing with the state(s). Wendy – Senator Dodd's bill would ruin a bunch of things for startups and investors.

Rule 506 (in it's current, pre-Dodd Bill state) has the benefit of pre-empting state securities law. Essentially, if you comply with Rule 506, the startup only has to make a notice filing with the state(s).

]]> By: Wendy http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors#comment-1304 Wendy Wed, 17 Mar 2010 22:23:14 +0000 http://www.thestartuplawyer.com/?p=170#comment-1304 Ryan - I think you are dead on for points 2. and 3. Regarding 1., although Rule 506 provides safe harbor for 4(2), can't one just claim an exemption under 4(2) and by-pass requirements for 506? Also, Senator Dodd's bill will kill accredited investor financing in the short-term if the SEC has 120 days to sit on everything. If a start-up simply doesn't have much financial information in the beginning, it would seem that using 4(2) and raising money from non-accredited investors wouldn't be that bad (taking into account your 2. and 3. above). Thoughts? Thanks, Wendy Ryan -

I think you are dead on for points 2. and 3.

Regarding 1., although Rule 506 provides safe harbor for 4(2), can't one just claim an exemption under 4(2) and by-pass requirements for 506? Also, Senator Dodd's bill will kill accredited investor financing in the short-term if the SEC has 120 days to sit on everything.

If a start-up simply doesn't have much financial information in the beginning, it would seem that using 4(2) and raising money from non-accredited investors wouldn't be that bad (taking into account your 2. and 3. above).

Thoughts?

Thanks, Wendy

]]> By: Wendy http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors#comment-2429 Wendy Wed, 17 Mar 2010 22:23:00 +0000 http://www.thestartuplawyer.com/?p=170#comment-2429 Ryan - I think you are dead on for points 2. and 3. Regarding 1., although Rule 506 provides safe harbor for 4(2), can't one just claim an exemption under 4(2) and by-pass requirements for 506? Also, Senator Dodd's bill will kill accredited investor financing in the short-term if the SEC has 120 days to sit on everything. If a start-up simply doesn't have much financial information in the beginning, it would seem that using 4(2) and raising money from non-accredited investors wouldn't be that bad (taking into account your 2. and 3. above). Thoughts? Thanks, Wendy Ryan -

I think you are dead on for points 2. and 3.

Regarding 1., although Rule 506 provides safe harbor for 4(2), can't one just claim an exemption under 4(2) and by-pass requirements for 506? Also, Senator Dodd's bill will kill accredited investor financing in the short-term if the SEC has 120 days to sit on everything.

If a start-up simply doesn't have much financial information in the beginning, it would seem that using 4(2) and raising money from non-accredited investors wouldn't be that bad (taking into account your 2. and 3. above).

Thoughts?

Thanks, Wendy

]]> By: Reading: Session 8 – Getting Financed — Start Your Business Course http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors#comment-117 Reading: Session 8 – Getting Financed — Start Your Business Course Tue, 15 Sep 2009 19:50:31 +0000 http://www.thestartuplawyer.com/?p=170#comment-117 [...] Life is Too Short to Deal with Non-Accredited Investors [...] [...] Life is Too Short to Deal with Non-Accredited Investors [...]

]]> By: North http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors#comment-116 North Sat, 01 Aug 2009 19:36:59 +0000 http://www.thestartuplawyer.com/?p=170#comment-116 What about friends and family? Aren't people with whom you have a "preexisting relationship" in the same category as qualified investors? Thanks, this site is a big help. What about friends and family? Aren't people with whom you have a "preexisting relationship" in the same category as qualified investors?

Thanks, this site is a big help.

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