Funding Your Growing Business

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  Attorney Daniel DiCicco  

Litigator and Business Counsel

I love helping businesses find success. It's a joy to simplify complicated concepts like startup financing that can feel impenetrable to small business owners. Watching your business grow after working together is a great reward.


Businesses thrive in cash-rich environments

Great joy can be found in sharing the risks and rewards of business ownership with like-minded individuals. We assist companies with Private Placements, Convertible Notes, and Preferred Stock capital financing efforts.

Avoid SEC Registration with a Private Placement

A private placement is the non-public sale of securities to passive investors. For smaller capital raises of up to $5 million, a streamlined process exists ("Rule 504"). For multi-state, larger capital raises, a more common but more somewhat more intensive process ("Rule 506") exists.

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Bring in Angel & Venture Capital with Convertible Notes

When your company is prepared to offer equity and control in exchange for the capital it needs to grow, you might considering offering convertible notes. A convertible note is a loan to your company that is intended to covert to equity in your company during a later capital round.

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  • Convertible Notes (coming soon)

Raise Capital in Rounds with Preferred Stock Offerings

A successfully growing company can raise capital by offering preferred stock in rounds of financing called Series (i.e. Series A, Series B, etc). Owners of preferred stock generally have more rights and privileges than owners of common stock. 

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  • Preferred Stock Offerings (coming soon)

Private Placements - Generally

The Federal Securities Act of 1933 requires companies selling securities to file registration statements with the Securities and Exchange Commission unless an exception to that requirement exists. "Regulation D" is a set of rules promulgated by the SEC setting forth the guidelines to qualify for the private offering exemption. The private placements described below all qualify for the federal exemption.

Debt Offering vs. Equity Offering

In any private placement, the issuer can sell either equity (ownership) in the company or it can offer debt securities such as promissory notes. In a Corporation, equity securities are called shares whereas in LLCs or partnerships, these securities are called interests or units.

The owners of equity securities are entitled to receive a share of a company's profits. The owners of debt securities are entitled to receive a guaranteed rate of return over a pre-defined time period. Both debt and equity securities can have limitations set on their liquidity as a condition of the offering.

Rule 504 Private Placement Overview

Rule 504 is a pro-business regulation meant to shift the obligation of regulating small offerings to the state "blue sky" administrators. As such, it does not preempt State laws and requires careful compliance with state rules as well as Federal rules. Under this rule, a company can raise capital from any number of investors of any sophistication provided that the total capital raise is less than $5 million in any 12-month period. Except in limited circumstances, purchasers under Rule 504 receive restricted securities that cannot be sold for at least six months or a year without registering them.

Rule 506 Private Placement Overview

Rule 506(b) private placements are more common vehicles for private capital raises because the rule completely preempts state "blue sky" laws, reducing the administrative burden when multiple states are involved in the transaction. Under this rule, an issuer can can sell securities to an unlimited number of accredited investors and up to 35 non-accredited investors. The rule does not place a limit on the amount of money that can be raised but the securities are issued with certain restriction on the resale limiting their liquidity. These placements cannot be generally advertised to the public to qualify for registration exemptions.

Oregon Blue Sky Registration Requirements 

A business based in Oregon that wishes to issue securities under rule 504 must comply with Oregon blue sky laws as well as the blue sky laws of any state in which the security will be offered. Oregon requires the registration of all security sales unless a specific exception exists. Two exceptions can apply in Rule 504 offerings: (1) Sales to accredited investors in cases where there was never a public offering or advertising, and (2) Sales to no more than 10 individual investors, whether accredited or not, during any 12-month period. The relevant statutes provide more details, but suffice it to say that with a small private placement, it is likely that one of these exceptions will apply. 

Federal Filing Requirements Under Rules 504 and 506

The only Federal Filing Requirement for a private placement is a "Form D" filing that can be completed electronically and must be filed with the SEC within 15 days of the first security sale. Some states also require a courtesy copy of the Form D to be filed when an investor resides there.

Documentation & Disclosure Requirements

Private placements offerings are documented in the form of a Private Placement Memorandum, or PPM. A PPM is a lengthy and complicated document describing, at its core, what an investor is buying and how the issuing company intends to use the funds to grow. The PPM is not technically required in Rule 504 offerings but we strongly recommend creating one anyway because it can help shield you from future claims of misrepresenting your business during the offering.

subscription agreement is the actual contract with the explicit terms of the sale.

For Rule 506 offerings, an accredited investor questionnaire will accompany the PPM. These documents confirm the investor's status as a sophisticated investor, which is important to keep track of and insulates you from some liability.



205 SE Spokane St, Suite 337
Portland, OR 97202
Phone: 503-967-3996
Fax: 503-926-9103
Email: dan@diciccolegal.com


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Daniel DiCicco