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:
*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.