Private Placement Contracts: Traditional Startup Fundraising

11 Jul 2024 3:30 PM - By John Wooten

If you're a private company raising money, you might have heard about "private placement memorandums." 💸 These documents exist because of the plethora of securities laws governing how investors give you money. 📜 When it's time to raise your investment round, adhering to these rules ensures smooth growth for everyone. ⛵

Just last year, the SEC reported $2,869,000,000,000 raised through domestic private offerings. 🚀 Including foreign investors, the sum raises to 40% of all the funds raised in America. 🗽 You can capture a share of this massive capital influx by issuing a standard "SAFE," convertible note, or "KISS" agreement. Compared to just selling shares at market prices, these early placement agreements let you raise cash without a company value. 📃 Negotiation between founders and investors depends on your circumstances, the market, and business history📊
SEC Fundraising Webinar

Closing a Placement

In the early days of your business, closing a financing round like a private placement comes down to your ability to imagine, convey, and deliver on a promising venture vision. Once you master these core business skills, it just comes down to the right audience. 💼 An executive of our client said one surefire approach to convince investors:

"Do something that you love, because you'll put in the work behind it."

— Angel Laylor

We are currently streamlining the offering process through smart contracts that put these agreements on Soroban, so that you can raise from any verified users of Stellar. This is just one example of continuing to work steadfastly while racking up momentum, clientele, and experience. When you can just stick with your work, stuff will happen:

Relevant insights, albeit inspired by TVDH.

Pitching your startup can be one of the best ways to quickly understand your value proposition to investors and the market you'll serve. 🗣️ As Min-Liang Tan popularized, this can well start off with building something both "for and by" your community. Once you're off to the races building, it's a very short leap to selling inaugural users.

John Wooten

John Wooten

Chief Compliance Officer