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Regulation D

If you are seeking to gain a private investment with your business plan, it is highly recommended that you pursue the completion of a Regulation D securities offering with your corporate or business attorney. The Regulation D Private Placement Offering—also known as a Reg D—is an SEC program that is used to properly sell a company's securities to private investors and conforms with the SEC and state rules governing how private companies solicit capital.

Coupling a properly structured Regulation D with your business plan is integral to most companies seeking investment capital—even if they are only approaching a few investors. The Regulation D differs from the business plan in that it removes the investor's "right of rescission" in the years to come (i.e. the investor cannot force you to return their investment due to circumstances).

It is also important to understand that by itself the business plan does not allow from proper accommodation of multiple investors. A business plan is not typically structured to support fractional investment, resulting in the need for one investor to supply the full amount of funding needed. You must also consider the fundamentals of raising investor capital with both your business plan and your Regulation D.

Your business plan and Regulation D must first have the proper transaction structure in place. Then, you need to have the proper documentation for raising private investment capital (Private Placement Memorandum, Subscription Agreement and/or Promissory Note). Finally, you must have a plan in place to sell the securities to the investor while following the regulations set forth by the SEC.

You must not rely wholly upon your business plan to achieve something it was not designed for. You don't want to end up in hot water with either the SEC or an investor during, what should be, a prosperous and exciting time for your company.

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