My recent post on family and friends financing generated a few comments and questions, mainly off-line.  One reader commented on how the blog really zeroed in on what he perceived was a really under-served area of financing for start-ups.  To think about it, he's absolutely correct - the most common form of financing is the family and friends kind, of which only a very few will make it to an Angel round and even fewer to a VC round (just the way it is), and it's the one round of financing that founders generally shy away from legal counsel.

One question that did come up - what's the treatment of these financing rounds by the SEC and the state securities authorities?  Well - I have to say that I will have to give you the maddening answer of "it depends" on this one, here's my response from a comment to the blog:

"Security law questions though seemingly banal are quite complex below the surface and answers can be incredibly fact specific. You not only have to worry about the federal securities law but also "blue-sky" securities law in each state. My fellow bloggers article on this issue (see http://www.emergingenterprisecenterblog.com/2010/05/articles/startup-issues/thinking-about-selling-securities-consider-this/) might be a good starting place. Feel free to contact me or any of the other lawyers at the emerging enterprise center if you want to have a more detailed discussion on your particular situation."

Apart from this, Scott Edward Walker's recent article in Venture Beat also sheds some light on this issue and the dangerous notion of advertising that you are raising capital via facebook/twitter (one word....DON'T!)

If there's one thing I hope you all do take away from these blog entries, and the links.....please talk to a corporate lawyer before you go down the path of raising capital, even if the source is friends or family.