How Entrepreneurs Can Raise Capital, Navigate Securities Laws, and Scale Confidently with Gilbert J. Bradshaw

Gilbert J. Bradshaw is a securities attorney, managing partner of Corporate Securities Legal LLP, and advisor to startups and public companies on capital raising, SEC compliance, mergers, acquisitions, and growth strategies. Top 3 Value Bombs 1. Successful entrepreneurs lead with kindness and generosity, building relationships that create opportunities. 2. A strong legal foundation builds investor confidence and long-term business value. 3. Accountability builds trust, transparency, and more investable companies. Check out Gilbert's website to learn more about his legal practice - Corporate Securities Legal LLP https://www.securitieslegal.com/ Sponsors HighLevel https://highlevelfire.com - The ultimate all-in-one platform for entrepreneurs, marketers, coaches, and agencies. Learn more at HighLevelFire.com https://highlevelfire.com. The Foundation http://thefoundation.com/ - The Foundation has coached 2,000 plus students to find painful problems and turn them into software businesses. Their 12-week cohort takes you from no idea or software experience to finding a real problem and preselling the solution. The next cohort launches January 2027. Join the waitlist at TheFoundation.com http://thefoundation.com/. Incogni https://incogni.com/fire - Your personal privacy advocate, handling removal requests across 420 plus data broker sites. They can't harm you if they can't find you. Take back control of your personal data today. It's completely risk-free with a 30-day money-back guarantee. Go to Incogni.com/fire https://incogni.com/fire and use code FIRE for 60 percent off an annual plan.

• 0:01Speaker 00

  Boom. Shake the room, Fire Nation. JLD here, and welcome to Entrepreneurs on Fire, brought to you by High Level, the all-in-one sales and marketing platform. And today, we'll be breaking down how entrepreneurs can raise capital, navigate securities laws, and scale with confidence. And to drop these value bombs, I brought Gilbert J. Bradshaw in the EFR Studios. Gilbert is a securities attorney, managing partner of corporate securities, legal, and advisory startups and public companies on capital raising, SEC compliance, mergers, acquisitions, and growth strategies. So today, we'll talk about avoiding costly legal mistakes, making securities laws simple, going public, is that the right move, and oh, so much more. And a big thank you for sponsoring today's episode goes to Gilbert and our sponsors.

• 0:43Speaker 00

  The Foundation has coached over 2,000 students to find painful problems and turned them into software businesses. Their 12-week cohort takes you from no idea or software experience to finding a real problem and pre-selling the solution. No idea, no coding, no technical co-founder. The next cohort launches January 2027. Join the waitlist at thefoundation.com. If you are building a real business, you need real infrastructure. High Level gives you website hosting, funnels, email marketing, automation, calendar booking, payments, and course hosting, all on one platform, plus award-winning 24/7 support. Get a 30-day free trial and my full bonus stack that includes a 15-minute private call with me and much more at highlevelfire.com. Highlevelfire.com.

• 1:29Speaker 00

  Gil, say what's up to Fire Nation, and share something that you believe about becoming successful that most people disagree with.

• 1:38Speaker 01

  Been a fan of Fire Nation for a long time. Appreciate the opportunity to join. Been a corporate securities lawyer for a long time, like you just said. So, look, one thing that I believe about becoming successful that a lot of people disagree with is people read these... You know, I've worked with entrepreneurs. I work with CEOs. And people read these books or see the movies about Steve Jobs, Elon Musk, and they think they gotta be these dictators, right? But most of my uber-successful clients are the kind of people who are kind and loving, and everybody rallies around them and just goes with them

• 2:17Speaker 01

  on their journey. It takes clients and customers and colleagues and, you know, everybody that they work with will like, will raise them and make them better and give them breaks. When I say breaks, I mean like, their big break, right? Because we're in the business of finding entrepreneurs that are starting businesses and then helping them launch and helping them scale. So, when I say a break, every single entrepreneur has had one or many big breaks in their careers. And you gotta, you know, the people, the people that they least expect it are sometimes the ones responsible for giving them their big break.

• 3:02Speaker 01

  So that is, and that's because they're kind. They're usually people that are gregarious and generous, and, you know, they're not the miserly people you would think. So, you know, I think that, yeah, a lot of billionaires, maybe like half the Steve Jobs or Elon Musk personalities, but, you know, the deck of millionaires and the successful people that we see all over the business place are the kinds of people that everybody loves and wants to see them succeed, and they help them.

• 3:33Speaker 00

  I mean, Fire Nation, what a great way to start the episode, as we talk about how entrepreneurs can do what? Raise capital, navigate securities laws, and scale with confidence. Since, let's just start off by talking about how we can avoid costly legal mistakes. Because let's be real, raising capital, it's exciting, Gil. You know it, I know it. But it's also where a lot of founders make really expensive mistakes. So, what are the most common legal pitfalls that you see around raising capital? And how can we avoid those mistakes?

• 4:06Speaker 01

  Yeah. So, what I see a lot is a company will come to me, maybe they've raised 100,000 bucks, maybe they raised 500,000, some small amount of money, maybe they're just starting their raise. But like, they get their friend to, you know, a friend who's an attorney or an accountant or something like that, but isn't like the right kind of attorney. They'll form their company, and then they won't have the right classes of stock. Like, they won't have, and so they're formed incorrectly. They'll have 1,000 shares of common stock, and they issue all 1,000 shares to the founder. So suddenly, you're like, oh, now we gotta like, you know, we gotta recapitalize, we gotta make it so that there's shares to give.

• 4:51Speaker 01

  So I'd say incorrect capitalization is one of the biggest problems I see when people come to me. So, consider this. I've had so many companies, just dozens of them, come, they'll be like, I have a million shares of common stock. And by the way, I'm a California corporation or some other jurisdiction. That's like a terrible idea, because the shareholders have so much power in some of these states. And so they'll have a million shares outstanding, and they only have a million shares authorized. And then the founder is like giving their shares to the investors. And then that causes all sorts of tax problems, because, you know, the investor comes in at 10 bucks a share, and the founder got his shares for nothing, you know, then he's selling shares at 10 bucks a share, and that's a straight-up tax

• 5:35Speaker 01

  hit for them. So, we want to make sure that the company's issuing shares. I know that sounds super basic, but I, you know, look, the people that I love to work with are people who are like scientists in their basement, or coders, or people who are not like MBAs. And a lot of these people, you know, they've never done this. And so, this is a trap that we see a lot. It's incorrect capitalization. Let me just give you like a 30-second overview of a great company that's capitalized. And you'll see a bunch of tech companies that are capitalized like this. They'll have three classes of common stock, and then they'll have a class of preferred stock. And the Class A common stock, Class B common stock,

• 6:18Speaker 01

  Class C common stock. And typically, and you can have more, there's more sometimes, and sometimes there's like only two. But the point is, you'll have multiple classes of different types of stock. So, Class A common stock, typically that's where investors come in. Class A sounds the best. And, you know, Class A, right? It's like the, that's sounds like the best stock. So, the investors will get one vote per share. Class B is typically the founder's stock. Sometimes we'll call it Class F for founder. And they'll get two or three votes per share. Sometimes they get 10 or 11, depending on the company. It's a very highly backed intensive concept. And then there's a Class C stock. That will be for employees, right? You'll put the equity incentive plan there. All the employees can

• 7:01Speaker 01

  get favorable tax treatment. And they usually have no votes per share. And the reason we do that is because some employees, you know, they wield their vote like a sword or a sledgehammer. And so, you know, we'll just go ahead and give a bunch of the employees no votes per share. So, that's kind of a capitalization we would see. And you could set yourself up for future success, whether you're going to acquire companies with the preferred stock, whether you're going to have the preferred stock, you know, venture capitalists come in with the preferred stock. You know, we're going to set it up like that in the beginning.

• 7:31Speaker 00

  How do we know if going public's the right move? Because for a lot of entrepreneurs, going public is often viewed as like this ultimate milestone, this dream come true. It's like, this is what we're aiming for. But what would you say are the realities behind taking a company public? And when does it actually make strategic sense to do that?

• 7:51Speaker 01

  Yeah, it doesn't make sense for everybody. So, I'm going to counsel people in like three different classes of companies when they go public. The first one I would say is when you already have a stable of investors and they want an exit. At that point, they're demanding an exit. You know, obviously, market timing conditions have to be optimal. So, you know, there are a few companies that can go public in the middle of a down economy, and that works for them. But most companies have to kind of wait for the right time. But when, if the investors want an exit, then that's a great opportunity. A founder can take some of the cards off the table, meaning sell some of their equity. But the reason

• 8:36Speaker 01

  that companies need to go public is when you're in the kind of industry where slow growth is impossible. So, let's like biotech companies, right? There's going to be fast followers. There, you know, a lot of times, these scientific breakthroughs happen, and everybody simultaneously, like there will be a paper coming out of Harvard or something, and then everybody's reading the same literature, and that, you know, study will make it, like, make an obvious thing possible. And so, you will create, or, you know, one of the founders will create this breakthrough in biotech, and they realize that everyone's right around the corner. And so they are the kind of company that needs to go public because they can do several

• 9:20Speaker 01

  rounds. They can just raise hundreds of millions of dollars over several rounds and help them create their their concept, right? So that's, that's the kind of thing, you know, a lot of tech companies will go public because, you know, it's just takes too, they have to, they have to have no revenue for such a long time until their technology can, you know, satiate the market. That's another time, mining companies, right? Because they're raising so much capital, they're digging so much, so capital intensive. That's another, you know, so there's a bunch of companies that need to go public in, depending on the industry. But then, once you're a really big company and pretty mature, like you used to have to go public a lot earlier than you do now. So I would say that there's a lot of companies

• 10:05Speaker 01

  that are private, that can stay private a lot longer than they used to be able to. And that's because we have so much information on the internet now. And so there's not this lack of information. So the public disclosures that the, that the public companies make are not as, as important. But I will have a warning. I'm not a big fan of putting a ton of investments into private companies. I know I have a lot of private company clients and they're private for certain reasons. You know, the costs of going public are ridiculous. But, you know, when, I, I think there's a lot of institutional money that should be investing in public companies, and instead they're investing in private companies. And that's, that's a mistake on

• 10:47Speaker 01

  an economy-wide level. I think that we're going to have, you know, after the next market crash, I think we're going to have this like resurgence of companies going public because, you know, the reality is, there's a lot of portfolio companies that, that these, you know, big private equity firms and venture capital firms hold. And, and they're not being audited correctly, or they're not like, really being scrutinized like they should. And so I think we're gonna have a reality and wake up call. And I think that everyone's gonna go back to public markets here in the next, you know, 10 years or so, especially if we can blockchain a bunch of the securities, like blockchain a bunch of the shareholders. And so, so I, yeah, they're, they're, they're, they're starting to trade, you know, instead of trading traditional stock, you're gonna, you're gonna have like a, a distributed ledger.

• 11:30Speaker 01

  And, you know, you'll be, and which is great. I think, I think that, that that's, you know, the blockchain technology is going to revolutionize the stock market. I think it's going to revolutionize things like real estate title, things like that, right? So I'm excited for the future.

• 11:44Speaker 00

  I could not agree more. When it comes to the blockchain tokenizing, I mean, it's happening as we speak. I mean, the Clarity Act's about to be passed, you know, by the Senate. If the Senate doesn't do it, then I mean, we're just gonna have the SEC do it on their own anyways to figure things out. I mean, this is coming, Fire Nation, be prepared. And we're gonna talk about attracting investors the right way, navigating growth transactions, and more when we get back from thanking our sponsors. Goldman Sachs says AI could disrupt 300 million jobs. Here's a question. Will AI replace your income or help you build something you own? AI has destroyed the old barriers to building software. You don't need millions in capital. You don't need to code. You don't need a technical co-founder. But AI can't tell you what people will pay for. And that's

• 12:27Speaker 00

  where the foundation comes in. The foundation teaches you to find a painful problem, pre-sell the solution, and build software customers pay for every month. Build it once, sell it again and again. Create recurring revenue. The foundation has coached more than 2,000 students. Before Sam Evans built consulting.com and school, Dane Maxwell mentored him through Snap and Spect, his first seven-figure software business. Dan Corkill built Follow Up Boss and sold it to Zillow. Dave Rogan Moser went on to build Jasper AI. They didn't start with a perfect idea. They learned how to find one. The foundation's 12V cohort takes you from no idea, experience, or technical skills, to pre-selling a software product people want. The next cohort launches January 2027. Ready to use AI to build something you actually

• 13:09Speaker 00

  own? Join the foundation waitlist today at thefoundation.com. Fire Nation, when was the last time you Googled yourself? It's pretty wild how much personal information can be floating around online. Your phone number, address, even information about your family. A lot of that comes from data brokers, companies that collect and sell your information. I've personally had someone contact me pretending to be a tax agency, and experiences like that make me want as little personal information online as possible. That's where Incogni comes in. Incogni acts as your personal privacy advocate, handling removal requests across over 420 data broker sites, and continuously checking back to help keep your information from being relisted. Could you do this yourself? Sure. But you want to spend hours tracking down hundreds of sites, figuring out their

• 13:52Speaker 00

  opt-out processes, and making sure your info stays gone? Probably not. With Incogni's unlimited plan, their exposure scanner can also find your information beyond traditional data brokers, and their privacy experts can help handle the removal. They can't harm you if they can't find you. Take back control of your personal data today. It's completely risk-free with a 30-day money-back guarantee. Go to incogni.com/fire and use code FIRE for 60% off an annual plan. That's I-N-C-O-G-N-I.com/fire. Promo code FIRE. Fire Nation, if you are building a real business, you need real infrastructure. That is why High Level is Entrepreneur on Fire's featured partner. High Level gives you a website builder and hosting, funnels and landing pages, email marketing, appointment

• 14:36Speaker 00

  scheduling, payment processing, course and membership hosting, and so much more. Everything you need to succeed, all under one roof. No duct tape, no juggling five platforms, just one clean system for your business. And their award-winning 24/7 support has your back when you need it most. When you sign up at highlevelfire.com, you also get my exclusive bonus stack, a 30-day free trial, a private 15-minute call with me, JLD, access to my weekly live office hours, a digital copy of my book, The Common Path to Uncommon Success, my 50 Days to Something Execution Roadmap, and more. Visit highlevelfire.com and start building your something today.

• 15:17Speaker 00

  Gil, we're back. And I want to talk about attracting investors the right way. So how can startups raise capital and market their opportunities to investors while staying compliant with SEC regulations? Because we know you don't want to run afoul with the SEC.

• 15:33Speaker 01

  So here's the thing. There's actually lots more ways than there was in the past to get investors. The SEC basically allows general solicitation, meaning, you know, what the securities industry has had for a long time and still has this like type of offering, which is the most popular offering. It's called the 5000B. And basically, when you go out and you, you can get people with whom you have a substantive pre-existing relationship. And, you know, there's a lot, that's, that's where you need an attorney to figure out, does this person have a substantive pre-existing relationship? You know, they're, they need to be just, just a little more than a LinkedIn contact, right? Kind of thing. You have to have some demonstrable history with them. But if you do have that history

• 16:18Speaker 01

  with them, then you can, they can invest, and they don't have to disclose that they're actually accredited. And accredited investor is a standard that was put, put in place in 1986. And we have this, this, you know, this prohibition on allowing non-accredited investors from, from, from investing in private companies. It's, it's a general prohibition. Now, recently, we've had a bunch of different ways to break through that barrier. The SEC in 2012 passed the Jobs Act. The rules were promulgated in 2016. And, and basically, now we can solicit generally on the internet. And many of those investors have to be what's

• 17:00Speaker 01

  called accredited. So they come in and they have to have this, you know, million dollars in net worth, and that kind of thing. Now, if you get them, if you get people on the internet that are accredited, that, and you don't know them, then you actually have to make them prove that they're accredited. And that's a big barrier, right? It's a tough sell when you find somebody on the internet, and then you say, all right, now send me your tax returns, or a letter from your accountant saying you're, you're, you know, you're accredited. You know, sophisticated investors who've done this before, like, they know the drill. But some people, if this is the first time they're investing in a private company, that's a real turnoff for them. So now there's like Reg A and Title III crowdfunding that, that

• 17:43Speaker 01

  is there, where you can actually go to a portal and invest. And it's, it's almost like a mini public offering. And there's a bunch of information on the company that they have to, have to publish. There's message boards that they can, you know, that people are talking about the company on. And, you know, message boards are actually robust. These message boards actually contain a lot of information about the company. So, you know, I, if, if you're gonna invest in a company like that, read the message boards. Check them out. They're not, obviously, they're not always true, because there's haters. But, you know, in general, that's a, that's an interesting way that, thing that we have now from the, from the SEC with the rules.

• 18:18Speaker 00

  Let's talk about building a business that investors actually trust. I mean, beyond protecting a company from legal risk, which of course you do fantastically well, how does a strong legal foundation increase business value and actually give investors greater confidence?

• 18:34Speaker 01

  You know, we just had a really interesting company called Dolce Glow, right? And they, they have been building the company for a long time. The founder is this super inspirational woman. You know, her name's Isabel Bia. So she grew up in foster care, right? And if you know anything about foster system, like, somebody, you know, building a, you know, $100 billion business, coming from foster care doesn't happen all the time. This is a really rare occurrence. So she, she has, she collects all these advisors, and she listens to them, and then builds a company that is valuable. And how does she do it? Well, you get agreements with everybody. So your company...

• 19:21Speaker 01

  You know, there's, I've seen 800 million dollar companies literally never have an agreement with their customers or suppliers or manufacturing partners. They just work on purchase orders. And like, that works for them until you have to sell that business, right? So, so having, you know, internal financial controls, building your business, having agreements with everybody that, that are long-term agreements, all of those things build value. And so, you know, many people in Fire Nation have these companies that are, you know, really big and thriving. I've seen them, I've seen the message, whereas I've seen the comments, like, there's some really interesting people that, that are, you know, big businesses that

• 20:02Speaker 01

  are in Fire Nation. And, you know, some of them don't realize that doing a proper agreement with, you know, your suppliers, your management, your customers and all these people, actually makes your business far more valuable, even though it seems like it's unnecessary expenditure. Well, at the time, because yeah, that month's revenues will be lower if you delay working with some of these parties until you get an agreement in place. Over the long run, though, it creates so much value to have agreements with all your partners, things like that, right? Then, then you have internal financial controls. And another thing is have communication with your investors, like communicate with your investors. You know, a lot of investors sometimes will complain. I mean, investors complain, it's like, as old as the hills, right?

• 20:48Speaker 01

  There's, you know, death, taxes, investors are going to complain about management, right? So it's the kind of thing where when the investors are complaining, take the time, respond to them. And I know that sometimes they are insufferable, but you, you know, this communication will build trust, even if it doesn't seem like so in that, in that moment. So that's another thing. It's just, it's just being inspiring with your, your employees, right? Inspiring your employees and then working and having those tough conversations with investors.

• 21:19Speaker 00

  Gil, what's one legal lesson that Fire Nation should embrace early if they want to build a business that's both investable and built to last?

• 21:31Speaker 01

  You know, one thing that I really like, I do a lot of business in Japan and Korea and, you know, international businesses. And I will say that one of the differences that, that we have in the US is humility among the executives. And, you know, it's because we have in our US law, we've developed this doctrine where there's so much accountability from executives. You know, in Korea, or Japan, for example, or China, you know, businesses don't have this accountability to government, or to their shareholders, or to their boards, right? So, so I would say, structure your company so that all the executives and everybody

• 22:16Speaker 01

  involved has accountability. How do you do that? You put, you get a board of directors, you, you involve your attorneys. Sometimes your board will have different committees, like a compensation committee to make sure that the executives are being paid fairly, you know, and not paid excessively. You know, these different kinds of committees, an audit committee to make sure that even if you don't have a formal audit, because a lot of companies can't go through an audit process, but they do have external accountants still. So form an audit committee and have people review the financials periodically, make, and review expenses, things like that. Have checks and balances within the company. I know it's painful. I run my own business and I don't always love when my accountant

• 23:00Speaker 01

  is having the hard conversations with me and be like, yo, did you really need to go to that nice restaurant with your, you know, for your whole team, that kind of thing? But those conversations are important and they're going to make your business so much stronger. Like, just make sure that you, you involve accountability, that you're not drinking your own Kool-Aid, and that you're keeping yourself humble somehow.

• 23:21Speaker 00

  Fire Nation, Gil is here dropping value bombs to protect you from moving in the wrong direction, from making mistakes that he's seen his clients make time and time again, when they've come to him too late before preparing the correct way. So Gil, if Fire Nation doesn't want to repeat mistakes of others, if they want to do things the right way, what's the best way to connect with you? How can they learn more?

• 23:44Speaker 01

  I'm super available. LinkedIn, or you go to my websites, right? Securitieslegal.com. You know, I've been around, I'm super easy to contact. You know, we, we can't always help everybody because we do kind of restrict our practice to securities. But, you know, we, we do, we help a lot of people. And usually, you know, I've got a big network. And if you have a legal issue that I can't help you with, I can usually find, find it. One thing I want to say, JLD, been listening a long time. I'm a trained tenor, like I sing in choirs. You have a tenor voice. And I'm telling you, if you wanted to be a great tenor, like you got the voice, you got the chops, I'm telling you.

• 24:25Speaker 00

  Okay, Gil, I just kind of got shivers a little bit, I'm not going to lie. I don't even know why, because I've never like had the desire to be a tenor. But I've now done, as of today, you are my 5,864th interview that I've done in 14 years. Never once in those 14 years, in 5,000 plus episodes, has anybody ever said those words to me. And I love them. I don't know why.

• 24:46Speaker 01

  You got it. I'm telling you, JLD, like, JLD the tenor, you know, you're gonna go sing in Rome and, you know, go, go do it. If you want to have a second career, man, that's it.

• 24:57Speaker 00

  Listen, I'm gonna have a conversation with Chat, GPT, after this, just about this. I just want to have a conversation back and forth with Chat about what you just brought up, because I think it's really interesting. And I'll never forget that I watched this woman one time. She was, she, she had this great YouTube channel where she was a terrible singer. She, you know, she just had, was off key. She didn't know how to sing. But she was trained by a professional over the course of 365 days. And she just documented her process via video. And she became this unbelievable singer. So it's just like, for those people out there that want to become a singer, I've always been like, you can do this. Like, you literally can train your voice, you can improve, just like putting

• 25:39Speaker 00

  in the reps with everything you do. Gil, you've given me some food for thought. I appreciate you, Fire Nation. I hope you appreciate hanging out with Gil, because you're the average of the five people you spend the most time with. You've been hanging out with who? G, J, B, and JLD today. So keep up the heat. And for links to everything we talked about, visit EOFire.com, type Gil, G I L in the search bar. Just type out Gilbert in the search bar. The show notes page will pop right up. And Gil, thank you for sharing your truth, your knowledge, your value, your thoughts of me as a potential tenor with Fire Nation today. For that, we salute you. And we'll catch you on the flip side.

• 26:13Speaker 01

  Awesome. Thank you.

• 26:15Speaker 00

  Hey, Fire Nation, a huge thank you for sponsoring today's episode goes to Gil and our sponsors. And question, are you an entrepreneur on fire who wants to share your amazing message with the world? If yes, you're now accepting guests for EOFire. So to learn more about becoming a guest, visit EOFire.com/guest. And I'll catch you there or on the flip side. Want to build something you actually own? The Foundation's 12-week program teaches you to find real problems people will pay you to solve and pre-sell your software before you build it. No idea, coding experience, or technical co-founder required. The next cohort launches January 2027. Join the Foundation waylist today at thefoundation.com. If you are building a real business, you need real infrastructure. High Level gives you website hosting, funnels, email marketing, automation, calendar booking, payments,

• 26:59Speaker 00

  and course hosting, all on one platform, plus award-winning 24/7 support. Get a 30-day free trial and my full bonus stack that includes a 15-minute private call with me and much more at highlevelfire.com. Highlevelfire.com.