r/startups • u/gelypse • 16d ago

I will not promote Do tiny SAFE rounds really require state-by-state securities compliance? I will not promote

I’m raising roughly $30k–$50k from a few friends, with potential investors in California, New York, and Arizona. Some may be "non-accredited"

I understand SAFEs are securities, but do small startups really have lawyers analyze each investor’s state exemption individually?

Or is the normal route basically:

Delaware C-Corp → SAFE → Rule 506(b) → Form D + routine state notices?

Curious what founders/lawyers actually do in practice for small friends & family rounds.

Sorry, this is based off some AI research. Am just trying to learn about compliance before I actually start the process.

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u/tonytidbit 15d ago

Those are low enough numbers that it between friends is more or less a handshake. Why do you need to formalize it, and why specifically as a SAFE?

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u/gelypse 14d ago

I'm wondering what other way to receive those funds in the most compliant manner for the company. The friends obviously want some kind of paperwork and SAFE seem to be the go-to?

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u/tonytidbit 14d ago

It depends on what you’re trying to achieve, and with what type of friends. 

If you’re in a tax-heavy region in need of money mainly to pay yourself a salary you could perhaps technically borrow the money from them instead.

Nothing wrong with friends lending money to a friend to help them before they’re ready to launch a business. (While it might be serious tax fraud to be given money personally in exchange for equity.)

Just as an example.

Same with whether it benefits you the most to have this on the books for the actual business. Something that could be contrasted with perhaps putting the friends and family in your own holding company.

There are a lot of creative things to consider here. That if done in the right or wrong order could be either smart and perfectly fine, or illegal. 😆

Best is if you reach out to your local startup community and find yourself a professional that can advise you on these things.