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healthpellets
08-21-2010, 08:10 PM
just a quick question...

if you were to round up a large number of small investors for a project, and each investor contributed their small amount upfront, what kind of regulations are involved in tracking those contributions and returning them if the stated goal of the project is not reached?

Baconeater
08-21-2010, 08:15 PM
How many people did you scam?

petegz28
08-21-2010, 08:16 PM
just a quick question...

if you were to round up a large number of small investors for a project, and each investor contributed their small amount upfront, what kind of regulations are involved in tracking those contributions and returning them if the stated goal of the project is not reached?

Well, if you start a LLC or corporation you would list the investors, more or less, and the percentage of profits they are entitled too. As far as returning money if things go bust then tht would be something you would want a lawyer to draw up.

healthpellets
08-21-2010, 08:17 PM
How many people did you scam?

none yet. anticipating possible issues.

healthpellets
08-21-2010, 08:19 PM
Well, if you start a LLC or corporation you would list the investors, more or less, and the percentage of profits they are entitled too. As far as returning money if things go bust then tht would be something you would want a lawyer to draw up.

LLC ... corporation ... now we're getting complicated. ugh.

MIAdragon
08-21-2010, 08:33 PM
LLC ... corporation ... now we're getting complicated. ugh.

or just give them an "I O U" I guess/

MIAdragon
08-21-2010, 08:36 PM
LLC ... corporation ... now we're getting complicated. ugh.

An LLC takes 30 mins to setup.

chris
08-21-2010, 08:41 PM
LLC ... corporation ... now we're getting complicated. ugh.

Worse than that......


Are the investors accredited or non-accredited?

How much are you raising from each and total amount?

...are you doing a Reg D?

An LLC or S-corp does not give you as much protection as one may think.

healthpellets
08-21-2010, 09:08 PM
Worse than that......


Are the investors accredited or non-accredited?

How much are you raising from each and total amount?

...are you doing a Reg D?

An LLC or S-corp does not give you as much protection as one may think.

i don't even know what that crap means.

it would be a very large number of investors totaling a large sum of money.

each investor would contribute less than $10.

jAZ
08-21-2010, 09:10 PM
i don't even know what that crap means.

it would be a very large number of investors totaling a large sum of money.

each investor would contribute less than $10.

ROFL

A pyramid scheme isn't an "investor".

healthpellets
08-21-2010, 09:11 PM
ROFL

A pyramid scheme isn't an "investor".

well played, sir.

Fat Elvis
08-21-2010, 11:04 PM
LLC ... corporation ... now we're getting complicated. ugh.

Whoa. You want(ed) that corporate veil of protection. If you screwed folks over without a) the corporate veil, b) a lawyer, and/or c) professional liability insurance, you're likely to lose a lot of personal assets.

healthpellets
08-21-2010, 11:10 PM
Whoa. You want(ed) that corporate veil of protection. If you screwed folks over without a) the corporate veil, b) a lawyer, and/or c) professional liability insurance, you're likely to lose a lot of personal assets.

no no...nothing has even occurred yet. just thinking of things that could go wrong and how to prevent them.

but thankfully, i have no personal assets in my name or technically under my control (see, i do know how to use a lawyer).

healthpellets
08-21-2010, 11:11 PM
and FTR, i have no intention or desire to screw people over.

RJ
08-21-2010, 11:44 PM
i don't even know what that crap means.

it would be a very large number of investors totaling a large sum of money.

each investor would contribute less than $10.




http://i37.tinypic.com/2yulv7m.jpg

Rain Man
08-22-2010, 07:53 PM
Generally you just say, "$10 a head for my fantasy football league" and keep the money in a box.

KC native
08-22-2010, 08:01 PM
How much capital are you looking to raise? What type of business? Also, do all the investors live in the same state?

Form an LLC first and then answer those questions and I will be able to help a little bit.

Depending on how much you're raising and where the investors live is going to drive the registration requirements.

Amnorix
08-22-2010, 10:01 PM
Yeesh. Tough when you see what is likely to be a train wreck coming.

Suffice to say that in the US, there are both state and federal securities laws that regulate the offer and sale of securities. It sounds like you are contemplating an offering, and may be using general solicitation. These words -- "offering" "general solication" "securities", raise a very significant number of issues that you will want qualified counsel to advise you about.

Please note, also, that securities fraud, if committed, may carry criminal as well as civil penalties, so that if you run afoul of the securities laws, it may not be enough to simply be judgement proof.

Tread carefully.

Hog Farmer
08-22-2010, 10:37 PM
If I can get 1 million people to invest just one dollar............

chris
08-22-2010, 10:59 PM
Yeesh. Tough when you see what is likely to be a train wreck coming.

Suffice to say that in the US, there are both state and federal securities laws that regulate the offer and sale of securities. It sounds like you are contemplating an offering, and may be using general solicitation. These words -- "offering" "general solication" "securities", raise a very significant number of issues that you will want qualified counsel to advise you about.

Please note, also, that securities fraud, if committed, may carry criminal as well as civil penalties, so that if you run afoul of the securities laws, it may not be enough to simply be judgement proof.

Tread carefully.

Excellent posting!

Much better than my earlier post. Are you an attorney? If so, what areas do you specialize?

People new to the game think that S-corp or LLC will protect from EVERYTHING. Sad, but wrong.

CrazyPhuD
08-22-2010, 11:10 PM
Ok so you haven't done this before. In the VC/startup world the round of funding you're looking to get seems to me to be the 3F round(Friends, Family and Fools). You may have a whole lot harder to round up enough 'fools', which means you may rely more on the friends and family route. If you do, do your homework and be careful. Afterall the price could be more than just money if you fail.

alnorth
08-22-2010, 11:13 PM
even if you meet every legal hurdle, regulation, license, or whatever needed to pull this off, do not do it unless you are talking serious money. (to bring up an unrelated field) There's a reason why fund managers insist on making 6 figures off even a small $25-50MM fund.

Even if the "investors" say all the rights things about their reasonable expectation, if things go really well, you will get next to nothing for kudos or credit. If things go badly and you lose money, you can be looking at lawsuits.

You want fewer well-informed people with a lot of money who know the risk they are taking going in.