Financing Your Startup with Security: Securities Law Basics

If your company plans to raise money by selling stock or convertible notes (also known as “securities”), then your company must comply with federal and state securities laws. If not, the company and its promoters could become subject to adverse legal consequences. You don’t need to become an expert, but you do need to understand that selling securities is a highly regulated activity and your company should not sell any securities until speaking with a lawyer experienced with capital raising transactions.

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