Tesla Motors raised $5.2M in their first round, then raised over $300M, using Regulation D Rule 506(b)!

[fb_button]In a series of eleven Regulation D Rule 506(b) private placements, ranging from 2005 to 2009, Tesla Motors, including Elon Musk and crew, raised over $300M before going public.

The company’s first round raised roughly $5.2M. No Broker-Dealer was used in any of Tesla’s private placements. The offerings were sold by Officers and Directors of the company. Also, notice the “legal fees” section on each Form D. This will give you a good idea of how much attorneys charge for a PPM. Tesla’s first Form D states $10,000 for legal fees and $300 for Securities Compliance Filing (Form D Filing). Moreover, according to the appendix in that first filing, they received investments from investors in California and Colorado. So, the attorney charged $10,000 + $300, to prepare a PPM and file the Form D with the SEC and 2 states.

As Tesla raises more capital you’ll notice the legal fees (PPM Prep) start climbing, some as high as $150,000. The more money they raise, the higher the legal fees (PPM Prep).

We haven’t seen the PPM’s developed by the law firm(s) who prepared Tesla’s offerings, but you can bet they look very similar from offering to offering. The only thing that changes is the investment layout, financial statement, dilution ratio’s, and the Law Firm’s invoice.

Moreover, notice how the ‘legal fees’ section has been removed from the Form D in the later electronic filings. This is not the fault of Tesla. Apparently the SEC decided that legal fees are ‘none of the public’s business,’ so they just took that section out of the Form D. Perhaps it would be nice to know what those legal fees are, so we can monitor attorneys and their fees? Just a thought.

We have included links to each filing below:

First 506 Offering for $5.2M

Second 506 Offering for $11.9M

Third 506 Offering for $— Filing unavailable

Fourth 506 Offering for $11.9M

Fifth 506 Offering for $18.5M

Sixth 506 Offering for $44.9M

Seventh 506 Offering for $40M

Eighth 506 Offering for $40M

Ninth 506 Offering for $3.1M

Tenth 506 Offering for $136M

Eleventh 506 Offering for $89M

*Tesla made amendments to some of the above offerings, and as such, this list may or may not be incomplete and/or out of order. However, the purpose of our blog post is to demonstrate how Regulation D is used.

About the Author

506 Docs StaffWilliam D. Kyle, founder and Managing Member, possesses more than 35 years of experience consistently delivering exceptional valuation, market share, profit and business growth within rapidly changing environments. Possessing strong decisive executive leadership, Bill’s experience transcends organizations from start-ups, including Flight Dynamics, Inc. [acquired by Honeywell] and FLIR Systems, Inc. to Fortune 1000 multi-billion dollar international companies including Groupe Bull and Zenith Data Systems. Customer focused and performance driven, Bill’s expertise includes strategic business development, capital acquisition strategies, strategic planning, marketing, sales and business development. As a senior-level executive, Bill has been instrumental in raising private investment capital, multiple IPO’s and P.I.P.E.s, reverse mergers and strategic acquisitions. An accomplished author, Bill has published several articles and was awarded the SAE Award for Technical Excellence for his article entitled, “Holographic HUDs in Commercial Aircraft.” While in the USAF, Bill was a select member of a USAF briefing team responsible for presenting multimedia presentations to Members of Congress and The President of The United States. Bill was a highly decorated USAF F-4 fighter pilot possessing over 2,000 hours in the F-4 including more than 325 combat hours during the Viet Nam War. Bill possesses a Bachelor of Science Degree in Accounting and a Master of Science Degree in Human Resource Management. Bill is also a member of The F-4 Phantom II Society, Order of Daedalians and Red River Valley Fighter Pilot Association.View all posts by 506 Docs Staff