Private placements come with a great deal of administration and have normally been sold through financial institutions such as investment banks.
New FinTech companies now offer an automated, online process making it easier to reach potential investors and reduce the administration.
[4] Private placements may typically consist of offers of common stock or preferred stock or other forms of membership interests, warrants or promissory notes (including convertible promissory notes), bonds, and purchasers are often institutional investors such as banks, insurance companies or pension funds.
Generally, accredited investors are those with a net worth in excess of $1 million or annual income exceeding $200,000 or $300,000 combined with a spouse.
[6] In most cases, all investors must have sufficient financial knowledge and experience to be capable of evaluating the risks and merits of investing in a company.