Private Placement

A private placement is the raising of capital by a startup without registering the offering with the United States Securities and Exchange Commission (SEC).

Under the Securities Act of 1933, any offer by a startup to sell securities (debt or shares) must either be registered with the SEC or have an exemption from such registration. The most commonly used method to obtain a private placement exemption when conducting a private placement is Regulation D, which contains two exemptions in Rule 504 and Rule 505 and one safe harbor in Rule 506.