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May 12, 2025 5 mins

Raising capital from friends and family can launch a business or syndication—but it's also a legal minefield if approached casually. This resource walks through the critical legal frameworks and strategies for handling friends and family rounds properly. It explains how Regulation D Rule 506(b) allows you to raise capital from people you already know, including non-accredited investors, as long as you follow strict compliance rules. You'll learn why public solicitation is prohibited, what kinds of disclosures are required, and how key documents like Private Placement Memorandums (PPMs) and subscription agreements can protect both the issuer and investors. Ideal for new syndicators, entrepreneurs, and fund managers, this guide reveals how to raise funds professionally without jeopardizing relationships—or breaking the law.


Read more about Regulation D exemptions: https://www.moschettilaw.com/the-two-types-of-regulation-d-offerings/

Read more about launching a debt fund: https://www.moschettilaw.com/debt-fund-ppm-private-placement-memorandum/


Moschetti Syndication Law Group is a boutique syndication law firm, serving small and growth-bound syndicators, as well as private equity firms. Our attorney, Tilden Moschetti, is determined to keep the firm’s ‘boutique’ size so we can tailor the services to each client’s unique needs without turning the firm into a faceless factory churning out private placement memorandums or passing unnecessary overhead expenses onto our clients. (As our client, you’ll only pay a fixed fee, so no surprises.) As for the client experience, we give real-time answers with Tilden Moschetti without making you book an official appointment or get passed along to associates or paralegals. We’ll work with your ambitions and overall vision to help you close the current deal and fill in that ‘missing’ piece – whatever you need – to keep adding more syndications to your portfolio. We keep syndicators syndicating (TM).


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#Syndication #PrivatePlacementMemorandum #PPM


------Disclaimer------


Also, please note, this video and any content from Moschetti Syndication Law Group, Tilden, or anyone affiliated with either or both, does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information from these online sources may not constitute the most up-to-date legal or other information.


No viewer, user, or browser of content from us should act or refrain from acting on the basis of information on this site without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.

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Transcript

Episode Transcript

Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Raising money from friends andfamily sounds easy until you

(00:03):
realize that you couldaccidentally violate securities
laws and turn your closestrelationships into your biggest
liabilities. Let's break downhow to raise capital legally,
safely and smartly withoutwrecking your future. Hi, I'm
Tilden Moschetti, founder ofMoschetti, syndication law, I
help syndicators fund managersand entrepreneurs raise capital

(00:26):
the right way, especially whenit involves the people closest
to you. Today, we're talkingabout how to unlock the huge
opportunity of friends andfamily fundraising without
stepping into legal quicksand.
You raising capital

(00:52):
from friends and family is how1000s of businesses and funds
get started. It's where a lot offirst time entrepreneurs and
syndicators begin. But justbecause it feels informal
doesn't mean the rules go away.In fact, friends and family
raises can be some of the mostlegally dangerous ones if you
don't handle them properly. Themoment you take someone else's

(01:16):
money for an investment, evenyour parents, your college
roommate, your dentist, you'reselling a security. That means
securities laws apply at thefederal and state level, just
like you are raising fromcomplete strangers, ignoring
that because it's just family isa mistake that has cost people

(01:38):
their businesses, theirreputations and their personal
relationships. Now the good newsis that Regulation D and
specifically Rule 506 B givesyou a clear legal path to raise
money from your network. 506 Ballows you to raise privately
from people you have preexisting relationships with,

(01:59):
including non accreditedinvestors, as long as they're
sophisticated enough tounderstand what risks there are.
That flexibility is huge for newfunds and small businesses,
because many friends and familyinvestors won't meet formal
accreditation standards. Buthere's a catch, you must be
extremely careful not toadvertise it publicly. No

(02:22):
Facebook posts, no Instagramblast, no email blast to mailing
list, no casual mentions atpublic events. Everything must
happen one on one, privatelywithin your established network,
the SEC looks closely at whetheryou truly knew the investor
before you offered them thedeal, and whether you gave them

(02:44):
a full fair disclosure of therisks involved. Full disclosure
matters just as much withfriends and family as it does
with institutional investors. Infact, it may matter more,
because when things go wrong,and sometimes they do, even with
the best deals, emotions runhigh, the last thing you want is

(03:06):
a close friend or relativeclaiming that you didn't explain
the risks, or worse, accusingthem you of misleading them. And
that's why a professionalprivate placement memorandum or
ppm is critical, even for smallraises, it protects you by
laying out the risks, conflictsand terms clearly and formally.

(03:28):
Documentation is another pieceof first time fundraisers miss.
Every investor should fill out asubscription agreement
confirming that they understandthe investment, accept the risks
and have made an independentdecision, even if you're raising
from your best friend sincechildhood, don't skip the
paperwork. It's not aboutdistrust. It's about protecting

(03:51):
both of you. Handling friendsand family raises the right way
actually builds trust. It showsyou take their investment, their
monies and their all of theirtrust seriously, it sets the
tone for how you're going tohandle bigger raises later. It
gives you peace of mind knowingthat no matter what happens, you

(04:13):
did everything right up front.Friends and family can be your
greatest asset when raising yourfirst rounds of capital, they
believe in you personally, butbelief sometimes isn't enough.
You have to respect the law,respect the process, and respect
the responsibility that you'retaking on with their money. When

(04:35):
you do that, you don't justraise capital. You strengthen
relationships that will supportyou across your entire career.
Raising money from friends andfamily is an incredible
opportunity, but only if youtreat it with the
professionalism and seriousnessit deserves. Protect yourself,
protect your investors and buildthe foundation for a lifetime of

(04:57):
successful capital raising. Ifyou. Help setting up your
friends and family round theright way, reach out. I'm Tilden
Moschetti, thanks for watching,and let's build something that
lasts you.
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