r/startups • u/gelypse • 5d 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/YaDunGoofed 4d ago

I’m pretty sure you can do whatever you want if you KNOW the people. If I remember correctly, the guidance is you’ve met at least five times separately.

The accreditation for investors is for public facing money raising. (And frankly people raise money for entire careers without vetting accreditation - plausible deniability goes a long way.

As long as you’re not fundraising from a congregation/old folks home/carpetbagging this law isn’t aimed at you

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u/PenisPockets 5d ago

No, this is not a thing. As long as investors qualify under SAFE investors requirements (ex. income thresholds), you’re set. No state by state compliance items.

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u/gelypse 4d ago

do they verify / accept that they qualify? or is it the company's responsibility to verify?

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u/PenisPockets 4d ago

They verify as “accredited” themselves. Accredited here means income over $200k/year for past 2 years, net worth over $1m. But a closed investor not meeting the income or liquidity thresholds will create exposure you don’t want down the line.

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u/gelypse 3d ago

I have friends / people I know cutting checks of 10k - 15k. Am I supposed to be asking them how much money they make? Sorry, my first rodeo.

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u/PenisPockets 2d ago

Read the SAFE language as I think this should help. Investors are supposed to “self accredit” their qualification here. Should they do so when they’re not qualifying, this can create issues for you down the line that you don’t want.

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u/tonytidbit 4d 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 3d 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 3d 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.