You have indicated that you believe your business can raise the money it needs from those with whom you have a significant pre-existing business or personal relationship. Since you will not need to advertise to find investors, you may wish to utilize one of the private offering exemptions available in Washington.
Washington has adopted private offering exemptions that correlate with exemptions from registration that are available at the federal level. These exemptions are known as Rules 504 and 506 of Regulation D. The availability of these exemptions is subject to various requirements.
One requirement that varies among these private offering exemptions pertains to the information and financial statements that must be provided to any non-accredited investors who purchase securities in the offering.
A non-accredited investor is an individual or entity that does not satisfy the definition of “accredited investor.” An individual is an “accredited investor” if the individual has a net worth, or joint net worth with that individual’s spouse, of $1,000,000, excluding primary residence, or if the individual has a net income of $200,000, or $300,000 with the individual’s spouse, for each of the last two years. Please be aware that companies that sell securities to non-accredited investors may be subject to increased information disclosure requirements and potential liability.
Will you be selling securities in your business to any non-accredited investors?
Yes, I would expect my company to sell securities to non-accredited investors.