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“Lucy got paperwork on top of paperwork…
I want you to know that Lucy got you…
All your life I watched you…
And now you all grown up then sign this contract
if that's possible…"
For Sale? - Interlude - Kendrick Lamar

Startup companies that launch campaigns on various investment platforms are also regulated by the SEC, and must remain compliant if they hope to successfully raise money from Non-Accredited Investors. These businesses must file what's called a Form C with the SEC, which makes the fundraise a public offering of securities (via equity or debt)— it's like a mini IPO.1

Each company has to put the legal paperwork together to offer a deal with specific investment terms, and the SEC has guidelines on what communications the startup can have as they publicly raise funds from private-market investors. This is important because the SEC wants to ensure there are no bad actors seeking to defraud investors, whether you’re “sophisticated” or not.

When a company files its Form C, it will include the specific deal terms of its investment offering. The deal terms are an agreement made between the company and its investors. It’s a legally binding contract where a business sets a price on its shares through a valuation, outlines an interest rate for a loan, and/or the potential investment multiple to be expected.

Investors have the power to decide
whether they enter an agreement or not.

The Ghetto VC

Chapter 2.1 | Form C's & "Testing The Waters"

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