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    1 Reply Latest reply on Aug 13, 2008 6:50 PM by Lighthouse24

    How do I legally seek capital?

    patrickneil Newbie
      I have an opportunity to purchase a lounge and turn it into a sports bar. in Chicago, IL.

      I need $700,000 to do this.

      I sent out an e-mail to family, friends, and some acquantices. I also posted on craigslist.

      Is it illegal to seek passive private investors for something like this? I ask because one of the acquantices I sent the e-mail to is an attorney and cautioned me to "the security implications of soliciting passive private investors." What is the actual law regarding this? If i seek money from private investors do they have to be active partners and not just people giving me money and then they have no say in the operations?

      What's the best way to approach this?


        • Re: How do I legally seek capital?
          Lighthouse24 Ranger

          The SEC (Securities and Exchange Commission) as well as some state securities agencies have regulatory authority over investment solicitations. A private placement offering can be made to family, friends, and prior business acquaintances -- but a general solicitation (like craigslist) is not allowed (the offering must be registered with the SEC and follow very specific procedures, plus your state may have requirements, as well). I'd be astounded if the craigslist solicitation produced any legitimate leads for you anyway, so I don't know that you'd be losing much by dropping it.

          Hope that helps. Good luck with your endeavor.