I've been working with a baby company. They have a good idea and have been putting together their formation documents and getting their IP straight. No serious conversations yet about raising money.
Then -- BAM -- on Monday I got this email [certain details removed to protect the guilty]:
I'm sending you this email because [Super Cool Company] is raising funds for our new project, the [Super Cool Idea]. Its a really cool project where we're getting people around the world to [Augment their Social Gaming Reality in a Consumer Facing, Location Based, Real Time App].
I'll be posting some project updates on it today and in the coming weeks, but I figured I'd send you an email letting you know this is going on so you can follow the progress as we try to raise $3000 from at least 50 investors by the end of August.
Please share this with anyone you know that might be interested, we're also looking for developers ([Code Ninja], you'll be getting a call from me soon) and future participants!Thanks, hope you have a great week.-[Clueless Founder]Founder, [Super Cool Company]
Congratulations -- you just violated securities law.
To be clear, telling your friends or even investors about your company/idea is not a securities law violation. It is even ok under certain circumstances to email a potential investor and ask for money -- though you need to be careful and should certainly consult with a lawyer before you do so.
But what you should almost certainly not do is send out a blast email asking for money. Even worse, you should NEVER tell people to share your offer with anyone they know who might be interested.
That my friend is a "public offering" of securities. And the SEC has a thing about companies that do public offerings of securities without first registering them.