nickgallick SKILL 79: Pitch Deck Legal Review
Purpose
Know what you can and cannot say when fundraising. Securities law governs fundraising communications. Violations can invalidate your raise and create personal liability.
Securities Law Constraints
Regulation D 506(b) — No General Solicitation
Cannot:
- Post pitch deck publicly on website
- Tweet or post on social media "we're raising $X"
- Email people you don't have a pre-existing substantial relationship with
- Make presentations at public conferences that include investment pitch
- Issue press releases about the funding round
Can:
- Share deck with people you ALREADY know (warm introductions, existing contacts)
- Present at angel group meetings where members are pre-screened as accredited investors
- Use AngelList syndicates (where investors have pre-registered)
- Share through VC firm introductions (firm knows the investor — "pre-existing relationship")
The rule: no "general solicitation or general advertising" (17 C.F.R. §230.502(c))
Regulation D 506(c) — General Solicitation Allowed
Can: advertise publicly, tweet the raise, post on websites Must: verify EVERY investor is accredited (third-party verification required, not self-certification)
- VerifyInvestor, Parallel Markets, or attorney/CPA letter confirming accredited status
- Self-certification alone is NOT sufficient under 506(c)
When to use 506(c): if you want to tweet and post about the raise. Trade-off: more verification work.
What the Pitch Deck CANNOT Contain
| Statement | Why Problematic | Legal Theory |
|---|---|---|
| "Guaranteed returns" | Fraud | SEC Rule 10b-5; state securities fraud |
| "Risk-free investment" | Fraud | Same |
| "We WILL generate $10M" (certainty) | Misleading forward-looking statement | SEC Rule 10b-5 |
| "Better investment than AAPL" | Misleading comparison | FTC Act §5; securities fraud |
| "SEC approved" | False statement — SEC doesn't approve startups | Securities fraud |
| "CFTC approved" | Same | Same |
| Claimed team credentials that are inaccurate | Fraud | SEC Rule 10b-5 |
What the Pitch Deck SHOULD Contain
Required elements for compliance:
- Risk factors: at least one slide acknowledging business and regulatory risks
- Forward-looking statement disclaimer: "This presentation contains forward-looking statements. Actual results may differ materially from projections due to risks including [regulatory uncertainty, competition, market adoption]."
- Regulatory status: disclose any pending regulatory issues honestly (omitting material risk = securities fraud)
- Use of funds: how the investment will specifically be deployed
- Accredited investor only notice: "This presentation is for accredited investors only and does not constitute a public offering."
- No guarantee language: ALL projections must be framed as projections, not guarantees
Projection framing:
- Bad: "We will hit $1M ARR in 12 months"
- Good: "Based on our [assumptions], we project $1M ARR in 12 months. Actual results will vary."
- Include assumptions slide: what conversion rates, user growth, pricing did you assume?
Iowa-Specific Fundraising
Iowa Uniform Securities Act (Iowa Code Chapter 502)
- Iowa requires: notice filing with Iowa Insurance Division (Securities Bureau) for federal Reg D offerings to Iowa residents
- Iowa accepts: federal Form D as the notice filing (no separate Iowa application)
- Cost: Iowa notice filing fee (verify current fee at iid.iowa.gov)
Iowa Crowdfunding Act (Iowa Code §502.202B)
- Intrastate alternative to federal Reg D:
- Iowa-based company raises from Iowa residents only
- Up to $1M total raise
- Individual investors: up to $5,000 each (or 10% of income/net worth)
- File notice with Iowa Insurance Division
- No general solicitation to non-Iowa residents
- When useful: community-based fundraise from Iowa early adopters and supporters
- Limitation: $1M cap is too low for serious seed/A rounds; good for initial friends-and-family
Investor Confidentiality
- Pitch deck should include: "CONFIDENTIAL — FOR ACCREDITED INVESTORS ONLY — DO NOT DISTRIBUTE"
- Use DocSend: track who views it, revoke access if needed, know if they forwarded it
- NDA from investors: not standard practice (VCs rarely sign NDAs for initial pitches); acceptable to request from angels
- If investor forwards your deck to a competitor: you have limited legal recourse without an NDA, but DocSend's tracking shows the breach
This is legal research and intelligence, not legal advice. Consult qualified legal counsel before taking action.