Forex

If you are approached to invest in a start-up venture, the most prudent step you can take is to obtain an offering memorandum from the company and review it carefully. This is a legal document about the investment that must contain specific information, including a detailed explanation of the company’s business, its audited financial statements, the risks of the investment and how the company plans to use the money it raises from investors.

An offering memorandum is an important means of obtaining information about an investment. However, it is prepared by the company, so you should evaluate and verify the information it contains.

For example, you can use the information provided in the offering memorandum to further investigate the company and its key people (you can do background checks to see if they have been disciplined for securities violations in the past), and to review the investment with an adviser. An offering memorandum must be accompanied by a risk acknowledgment form. This form, which must be signed by you if you decide to invest, states that you are aware of the risks posed by the investment.

An offering memorandum is an important means of evaluating an investment. However, in certain situations, a private company selling its securities is not obligated to provide you with one