Use the gray menu on the right side of this page to find information on the programs available, advantages of an offering, and a detailed description of the offering process.

Background Information on The Regulation D Programs

"Regulation D" is a government program created under the Securities Act of 1933, instituted in 1982, that allows companies the ability to raise capital though the sale of equity or debt securities. The programs were designed to provide two main things - the needed "exemption" to sell unregistered securities in a private transaction (something that happens in any transaction involving investors) and the appropriate framework and documentation for doing so properly.

There are several programs that are available under the Regulation D Exemption. Of the available Regulation D Programs we support the 504, 506 and SCOR programs. Most companies typically use the 504 and 506 programs - which program you utilize is based primarily on transaction size. Detailed information on each program can be found in the gray menu on the right.

Offering Types - Debt or Equity

There are 2 basic types of Regulation D Offerings that can be structured; an "equity" offering where the company is selling partial ownership in the company (via the sale of stock or a membership unit) to raise capital - or a "debt" offering where the company raises debt financing by selling a note instrument to investors with a set annual rate of return and a maturity date that dictates when the funds will be paid back to investors in full.

An equity offering is where the subject company sells an ownership stake in the company to investors. Equity is usually preferred by early stage companies that need flexibility regarding capitalization. In an equity situation investors profit as the company profits since they are partial owners. This provides the advantage of not having a debt service payment draining revenue from the company in its early stages of growth. Most companies sell 10-30% of their company for a first round funding - obviously there are exceptions but this is the average. We recommend using either a "C" Corporation (where you would sell stock to investors) or a Limited Liability Corporation LLC (where you sell a membership unit to investors). Investors typically profit in two ways from an equity deal; via their proportionate "per share" percentage of company profit (called a dividend) and via the final sale of the security through an exit strategy (example: the company buying the securities back from the investors, the company and its issued and outstanding securities being bought out by another company, going public and selling on the open market, etc.)

A debt offering functions much like a private business loan where the company sells a promissory note to investors. The note sets forth the terms and conditions of the loan arrangement between the company and the investor. Thus a note would provide a certain interest rate typically paid annually to investors with a maturity date that dictates when the principal is paid back in full to investors. The notes are sold in fractional amounts providing flexibility for accommodating investors - thus a typical debt offering for $100,000 would be the sale of 20 notes at $5,000 per note. An investor investing $10,000 would get two notes. If the interest rate was 12% then he would get $1,200 paid to him annually based on the $10,000 investment. If the maturity date was 36 months then at the end of the 36 months the company would pay back the $10,000 to the investor. Many early stage companies that lack the required equity or operating history for conventional bank financing will use private debt from investors for a short period of time (12-36 months) to establish a credit and operating history. They then have the capability to take out the private debt loan from the investors with a standard bank business loan at a lower interest rate.

Who Should Use A Regulation D Offering?

Any company or entrepreneur that is seeking to raise equity or debt capital from investors. Even if you plan on only having one or two investors in your transaction you need to provide the transaction framework, related disclosure documentation and investment agreements necessary for raising capital. A Regulation D Offering provides the proper transaction structure and documentation for raising debt or equity capital from investors. Trying to raise private capital of any amount without these fundamentals in place is almost impossible.

Most companies use the programs to raise from $25,000 to $50,000,000 in capital. Regulation D Offerings have been used for a wide variety of transaction and industry types: corporate seed capital, corporate expansion capital, film production capital, real estate equity funding (acquisitions, development projects, golf courses, rehab), capitalization for early to pre-IPO stage Internet and technology companies, expansion funding for retail companies, and product development and distribution funding.

Use the gray right side page menus at the top of this page to find specific information on the available Regulation D Programs, the advantages of a Regulation D Offering, and details on the offering preparation process.