506b Unaccredited Investors
James Faison of Faison Law Group continues his conversation about raising money from unaccredited investors. There are certain exemptions you can use and here he will discuss 506b specifically.
506b requires you to provide your investors with a private placement memorandum and financial statements. This preempts state law, which means you don’t have to complete registrations and exemptions in each state in which you are raising money from our you are headquartered in. The downside is that the private placement memorandum is a huge undertaking and it is costly. The good news again is that it preempts state law, so for that fundraising route you only have to do it once, you don’t have to do it for each state. It has its advantages over the 504 exemption – stay tuned for more information on that in my next video.