Legal Question in Business Law in California

How to legally seek venture capital

What obligations and/or qualifications are LEGALLY required (if any) for a person or entity to seek venture capital for a third party?


Asked on 8/20/08, 2:55 pm

2 Answers from Attorneys

Terry A. Nelson Nelson & Lawless

Re: How to legally seek venture capital

A good contract between the parties. Feel free to contact me if serious about getting that done.

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Answered on 8/22/08, 1:51 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: How to legally seek venture capital

Your question is pretty vague about what you would in fact be DOING while seeking venture capital for a third party.

For example, you might be sitting in the library, leafing through business periodicals, or surfing the Web under topic headings like venture, capital, angel, investor, first-round, startup, and SBA. No particular obligations or qualifications here, so long as you haven't promised a third-party client success or taken an up-front finder's fee.

On the other hand, if you were printing up, advertising and selling shares of stock in a new company, or cold-calling rich people to make a pitch, it's almost a certainty that you'd be violating somewhere between one and 100 laws relating to the issuance and sale of securities. Some of these would be criminal violations and perhaps felonies.

I would be tempted to say that if you don't know the answer to your own question, they you're unqualified, because part of the qualifications for raising capital is knowing what's legal and ethical and what isn't. This isn't necessarily the case, however, and I would be willing to help you with specific questions if you contact me directly.

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Answered on 8/20/08, 7:49 pm


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