When you need capital for a deal, you only have three legitimate lanes:
1. Borrow the money
2. Partner with someone who has money
3. Raise funds through an SEC-approved securities process
Each has pros and cons—but here’s the critical rule: you cannot blend them.
A common mistake is offering a “participating note,” promising someone a fixed interest rate plus a share of the profits. That mixes lending and partnering into one structure, and legally, that crosses into securities territory without proper compliance.
If you raise money the wrong way, you’re not just breaking rules—you’re exposing yourself to lawsuits, rescission demands, and regulatory penalties. Pick one lane and stay in it.
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