Is a ‘Prequalification Questionnaire’ all I need to have completed by an investor before I can ask them to invest in my Rule 506(b) Offering?

Most of our clients start out doing Regulation D, Rule 506(b) Offerings that allow them to bring in an unlimited number of Accredited and up to 35 Non-Accredited investors, all of whom must be Sophisticated. For your first few deals, you are much more likely to raise money from people you know, and many of your family and friends who will invest in your first few deals may not be Accredited. You will need to develop a track record before you can successfully do a Regulation D, Rule 506(c) offering that can be advertised to strangers – and advertising will preclude admitting any Non-Accredited investors. For a pre-qualification questionnaire that includes accredited and non-accredited investors, click here.

But in addition to getting this form filled out, there is more that you must do to establish the substantive, pre-existing relationship and to determine suitability such that an investor can be solicited for an investment. Read the articles entitled “Soliciting Investors for a Rule 506(b) Private Placement Offering” and “Determining Investor Suitability for 506(b) Offerings” for a deeper understanding of this topic. Both articles can be found under the “Free Info” tab on our website and the dropdown heading “Articles.” We also have two podcast recordings about developing investor relationships: “Dating for Dollars” and “Determining Investor Suitability and Establishing Pre-Existing Relationships.” Those and other recordings can also be found under the “Library” tab, and the dropdown heading “Our Podcasts.”