No.
I will not simply “raise money” for you. Why? There are two good reasons…
Reason #1 – You’re not ready.
Nothing personal, but, in all probability, you are grossly unprepared to raise money from prospective investors. I build businesses for a living, and that process often includes some form of capitalization exercise. Properly capitalizing a business requires a great deal of preparation, and a great deal of effort – one doesn’t get to skip ahead to the part where they summarily cash somebody else’s check. I would be happy to explain further when you have some free time; but there is frankly too much information to publish here. In this context, rest assured that if that giant pile of investor money suddenly explodes, you are likely quite safe, and probably won’t even hear it happen from where you are standing.
Reason #2 – The SEC doesn’t want me to. BTW, they don’t want that “other guy” to do it either.
I find it morbidly fascinating that so many people still offer to “raise money” for others, given that so few people are both capable and licensed to do so. If you spend any time in entrepreneurial circles, you will consistently find an abundance of random people who offer to “raise capital” or “find investors” in exchange for a finder’s fee, success fee, commission, percentage of funds, etc. I propose that you ask these individuals two questions:
1. Are you currently registered with FINRA?
2. When was the last time you actually raised money for somebody?
If the answer to question number one is “no”, run away. If the answer to question number one is “yes”, you will probably still need to run away – but that is a separate discussion (e.g., retainers and such). Most people won’t be able to answer question number two anyway.
There is a severe misconception about the exercise of raising money in the absence of registration with state and federal authorities. Many people think that this matter of compliance is a grey area. They are absolutely wrong – I know this not because I studied law extensively, but because I was once licensed as a registered representative with the NASD (now FINRA). I can assure you that the SEC has long since lost its sense of humor about “grey areas”, as indicated by these excerpts from a Denial of No-Action Request dated May of 2010 (layman’s translation = if you do certain things, they will bust you). Please read carefully:
“Section 3(a)(4)(A) of the Exchange Act generally defines the term ‘broker’ as any person engaged in the business of effecting transactions in securities for the account of others.”
“A person may be 'engaged in the business,' among other ways, by receiving transaction-related compensation…”
"A person may 'effect transactions,' among other ways, by… helping an issuer to identify potential purchasers of securities, or by soliciting securities transactions.”
“Section 15(a)(l) of the Exchange Act generally provides that any broker effecting transactions in securities, or inducing or attempting to induce the purchase or sale of securities, must be registered with the Commission pursuant to Section 15(b) of the Exchange Act. A person's receipt of transaction-based compensation in connection with these activities is a hallmark of broker-dealer activity. Accordingly, any person receiving transaction-based compensation in connection with another person's purchase or sale of securities typically must register as a broker-dealer or be an associated person of a registered broker-dealer.”
An unlicensed/unregistered person cannot legally “raise capital” or “find investors” for you. So, you either need to find somebody (1) registered with FINRA, and (2) competent enough to get the job done – or do it yourself. In any case, I would strongly recommend engaging a qualified securities attorney so nobody gets sued, fined, or arrested in the process.
I will not simply “raise money” for you. Why? There are two good reasons…
Reason #1 – You’re not ready.
Nothing personal, but, in all probability, you are grossly unprepared to raise money from prospective investors. I build businesses for a living, and that process often includes some form of capitalization exercise. Properly capitalizing a business requires a great deal of preparation, and a great deal of effort – one doesn’t get to skip ahead to the part where they summarily cash somebody else’s check. I would be happy to explain further when you have some free time; but there is frankly too much information to publish here. In this context, rest assured that if that giant pile of investor money suddenly explodes, you are likely quite safe, and probably won’t even hear it happen from where you are standing.
Reason #2 – The SEC doesn’t want me to. BTW, they don’t want that “other guy” to do it either.
I find it morbidly fascinating that so many people still offer to “raise money” for others, given that so few people are both capable and licensed to do so. If you spend any time in entrepreneurial circles, you will consistently find an abundance of random people who offer to “raise capital” or “find investors” in exchange for a finder’s fee, success fee, commission, percentage of funds, etc. I propose that you ask these individuals two questions:
1. Are you currently registered with FINRA?
2. When was the last time you actually raised money for somebody?
If the answer to question number one is “no”, run away. If the answer to question number one is “yes”, you will probably still need to run away – but that is a separate discussion (e.g., retainers and such). Most people won’t be able to answer question number two anyway.
There is a severe misconception about the exercise of raising money in the absence of registration with state and federal authorities. Many people think that this matter of compliance is a grey area. They are absolutely wrong – I know this not because I studied law extensively, but because I was once licensed as a registered representative with the NASD (now FINRA). I can assure you that the SEC has long since lost its sense of humor about “grey areas”, as indicated by these excerpts from a Denial of No-Action Request dated May of 2010 (layman’s translation = if you do certain things, they will bust you). Please read carefully:
“Section 3(a)(4)(A) of the Exchange Act generally defines the term ‘broker’ as any person engaged in the business of effecting transactions in securities for the account of others.”
“A person may be 'engaged in the business,' among other ways, by receiving transaction-related compensation…”
"A person may 'effect transactions,' among other ways, by… helping an issuer to identify potential purchasers of securities, or by soliciting securities transactions.”
“Section 15(a)(l) of the Exchange Act generally provides that any broker effecting transactions in securities, or inducing or attempting to induce the purchase or sale of securities, must be registered with the Commission pursuant to Section 15(b) of the Exchange Act. A person's receipt of transaction-based compensation in connection with these activities is a hallmark of broker-dealer activity. Accordingly, any person receiving transaction-based compensation in connection with another person's purchase or sale of securities typically must register as a broker-dealer or be an associated person of a registered broker-dealer.”
An unlicensed/unregistered person cannot legally “raise capital” or “find investors” for you. So, you either need to find somebody (1) registered with FINRA, and (2) competent enough to get the job done – or do it yourself. In any case, I would strongly recommend engaging a qualified securities attorney so nobody gets sued, fined, or arrested in the process.
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