Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back

Know the Law: What Are My Current Options for Raising Capital?

Written by: John Bentas

Published in the Union Leader (7/4/2016)

Q:  My small business has been doing very well recently and I would like to expand my operations.  I would prefer to fund my expansion without adding debt.  What are my current options for raising capital?

A:  Congratulations on the success of your business.  With the passage of fairly recent laws and regulations, now is a great time to look for investors and raise additional capital to fund your business expansion.

I will start with some of the newer alternatives for raising capital, as those are getting all the press recently.  In the last few years, some enterprises have been raising capital without issuing ownership interests.  This is generally called crowdfunding.  Think of kickstarter.com or Indiegogo.com.  In short, an enterprise raises money through a website and gives those donors some “token of appreciation.”  It can be something like a sample or just donor recognition, but not any ownership in the enterprise. 

More recently, the SEC has adopted rules that will allow companies to raise capital by selling ownership interests through the Internet.  This is a big shift from traditional crowdfunding, and some have called it “equity crowdfunding.”  It allows your company to raise money via the Internet, but it comes with a very complex set of requirements and certain limitations.  Therefore it may be right for only very particular circumstances.

In addition to the new methods mentioned above, the traditional methods of raising capital still exist.  Those include private capital raises that are exempt from registration with the SEC as well as registration with the State of New Hampshire Bureau of Securities Regulation.  Raising capital privately can be accomplished through discrete capital raises from friends and family members or a non-public subset of particular investors who are sophisticated and relatively wealthy (often called “accredited investors”).  These traditional forms of capital raising also come with their own limitations and rules, including a prohibition on general advertising (such as on the Internet).   Since these methods have been around for quite a bit longer though, they are better understood and have been somewhat streamlined in practice.

Lastly, the SEC has modified one of the most popular traditional offering methods to allow for a general solicitation, including on the Internet.  Much like the newer methods of capital raises, that also comes with further limitations and compliance requirements beyond the traditional method.

As with any capital raise, whether it is done in the traditional fashion or by the newer methods, you should consult with accounting and legal advisors.

John Bentas can be reached at [email protected].

Know the Law is a bi-weekly column sponsored by McLane Middleton, Professional Association.   We invite your questions of business law.  Questions and ideas for future columns should be addressed to:  McLane Middleton, 900 Elm Street, Manchester, NH 03101 or emailed to [email protected].  Know the Law provides general legal information, not legal advice.  We recommend that you consult a lawyer for guidance specific to your particular situation.

Integrity and trust

At McLane Middleton we establish and maintain long-standing relationships with our clients to help us better achieve their unique goals over time. This approach to building trust requires that our esteemed lawyers and professionals use their broad, in-depth knowledge and work together with integrity to ascertain sound resolutions to legal matters for their clients.

Strength in numbers

McLane Middleton is made up of more than 105 attorneys who represent a broad range of clients throughout the region, delivering customized solutions. As a firm we are recognized as having the highest legal ability rating. The firm is rated Preeminent by Martindale Hubbell and is recognized as one of the nation's leading law firms in Chambers USA. Our attorneys are distinguished leaders in their respective practice areas.

Meet Our People

Commitment and collaboration

McLane Middleton's versatile group of attorneys and paralegals become trusted authorities on each case through collaboration. We work with our clients to learn their individual needs first and foremost and, together, we develop comprehensive solutions to their specific legal matters. This approach helps us exceed our clients' expectations efficiently and effectively, client by client, case by case.

Practice Areas

A history of excellence

McLane Middleton was established in 1919 in New Hampshire, and has five offices across two states. However, deep historical roots don't allow you to become innate. Our firm is organized, technological, and knowledgeable. Our history means we are recognized. But our reputation is built on the highest quality of service and experience in very specific areas of law.

The Firm

Intelligence paired with action

Our team continuously seeks opportunities to enhance their professional development and put key learnings to action. The pursuit of further insight guides us to volunteer service opportunities, speaking engagements, and teaching roles. Our lawyers are sought after thought leaders across their industries, and recipients of leadership awards throughout the region.