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Feb 24, 2026 · 25m · we-live-to-build

Most Founders File Nothing Until After the First Check Arrives

Wendy Colbertson · 19m spoken Sean Weisbrot · 3m spoken
0:00 / 0:00
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In this interview, host Sean Weisbrot and a securities legal expert examine the prevalent legal pitfalls startup founders face when raising capital in the United States. They break down key SEC registration exemptions, state Blue Sky requirements, and the severe regulatory risks associated with paying success fees to unregistered broker-dealers.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Sean holds 16.5% of the talking time here. How this is scored →

Sean as informed peer 3.4 Guest teaching 7.2 Guest disagreement 0.2 Sean pushing back 1.6
05100:0010:0020:000:00–6:48 · Sean as informed peer 4/10 Widespread Securities Violations in Startup Fundraising Sean shares a personal fundraising experience where an advisor charged $40,000 in expenses without raising funds, framing the distinction between success fees and consulting fees. Wendy validates his point and delivers a detailed breakdown of Section 15 of the Exchange Act, broker definitions, and safe harbor exemptions.6:49–10:12 · Sean as informed peer 4/10 Legal Compensation Structures for Internal Fundraising Employees Sean tests legal boundaries by posing hypothetical loopholes regarding hiring unpaid fundraising interns or compensating investor relations staff purely in equity. Wendy explains how SEC rules evaluate whether bonus milestones or share issuances functionally mask percentage-based capital commissions.10:13–16:40 · Sean as informed peer 2/10 Fundraising Frameworks: Crowdfunding, Regulation D, Reg A, and IPOs Sean openly admits his unfamiliarity with Regulation D rules and asks when filing triggers occur. Wendy delivers an in-depth regulatory overview explaining Form C for Reg CF, the 15-day Form D post-check deadline under 506(b) versus 506(c), Reg A mini-IPOs, and S-1 filings.16:41–22:36 · Sean as informed peer 5/10 The Foundational SEC Registration Rule and Statutory Exemptions Sean challenges the SEC regulatory structure, arguing that allowing private startups to receive funds prior to filing leaves a dangerous loophole that should be strictly pre-cleared. Wendy explains the historical logic of private placement memoranda and details how state-level Blue Sky laws and investor litigation police compliance.22:39–25:16 · Sean as informed peer 2/10 DIY Filings Versus Engaging Professional Securities Counsel Sean asks practical concluding questions about whether founders can DIY securities paperwork. Wendy explains operational risks and warns that paying unregistered finders can lead to severe civil and criminal aiding-and-abetting penalties.0:00–6:48 · Guest teaching 7/10 Widespread Securities Violations in Startup Fundraising Sean shares a personal fundraising experience where an advisor charged $40,000 in expenses without raising funds, framing the distinction between success fees and consulting fees. Wendy validates his point and delivers a detailed breakdown of Section 15 of the Exchange Act, broker definitions, and safe harbor exemptions.6:49–10:12 · Guest teaching 6/10 Legal Compensation Structures for Internal Fundraising Employees Sean tests legal boundaries by posing hypothetical loopholes regarding hiring unpaid fundraising interns or compensating investor relations staff purely in equity. Wendy explains how SEC rules evaluate whether bonus milestones or share issuances functionally mask percentage-based capital commissions.10:13–16:40 · Guest teaching 9/10 Fundraising Frameworks: Crowdfunding, Regulation D, Reg A, and IPOs Sean openly admits his unfamiliarity with Regulation D rules and asks when filing triggers occur. Wendy delivers an in-depth regulatory overview explaining Form C for Reg CF, the 15-day Form D post-check deadline under 506(b) versus 506(c), Reg A mini-IPOs, and S-1 filings.16:41–22:36 · Guest teaching 8/10 The Foundational SEC Registration Rule and Statutory Exemptions Sean challenges the SEC regulatory structure, arguing that allowing private startups to receive funds prior to filing leaves a dangerous loophole that should be strictly pre-cleared. Wendy explains the historical logic of private placement memoranda and details how state-level Blue Sky laws and investor litigation police compliance.22:39–25:16 · Guest teaching 6/10 DIY Filings Versus Engaging Professional Securities Counsel Sean asks practical concluding questions about whether founders can DIY securities paperwork. Wendy explains operational risks and warns that paying unregistered finders can lead to severe civil and criminal aiding-and-abetting penalties.0:00–6:48 · Guest disagreement 1/10 Widespread Securities Violations in Startup Fundraising Sean shares a personal fundraising experience where an advisor charged $40,000 in expenses without raising funds, framing the distinction between success fees and consulting fees. Wendy validates his point and delivers a detailed breakdown of Section 15 of the Exchange Act, broker definitions, and safe harbor exemptions.6:49–10:12 · Guest disagreement 0/10 Legal Compensation Structures for Internal Fundraising Employees Sean tests legal boundaries by posing hypothetical loopholes regarding hiring unpaid fundraising interns or compensating investor relations staff purely in equity. Wendy explains how SEC rules evaluate whether bonus milestones or share issuances functionally mask percentage-based capital commissions.10:13–16:40 · Guest disagreement 0/10 Fundraising Frameworks: Crowdfunding, Regulation D, Reg A, and IPOs Sean openly admits his unfamiliarity with Regulation D rules and asks when filing triggers occur. Wendy delivers an in-depth regulatory overview explaining Form C for Reg CF, the 15-day Form D post-check deadline under 506(b) versus 506(c), Reg A mini-IPOs, and S-1 filings.16:41–22:36 · Guest disagreement 0/10 The Foundational SEC Registration Rule and Statutory Exemptions Sean challenges the SEC regulatory structure, arguing that allowing private startups to receive funds prior to filing leaves a dangerous loophole that should be strictly pre-cleared. Wendy explains the historical logic of private placement memoranda and details how state-level Blue Sky laws and investor litigation police compliance.22:39–25:16 · Guest disagreement 0/10 DIY Filings Versus Engaging Professional Securities Counsel Sean asks practical concluding questions about whether founders can DIY securities paperwork. Wendy explains operational risks and warns that paying unregistered finders can lead to severe civil and criminal aiding-and-abetting penalties.0:00–6:48 · Sean pushing back 2/10 Widespread Securities Violations in Startup Fundraising Sean shares a personal fundraising experience where an advisor charged $40,000 in expenses without raising funds, framing the distinction between success fees and consulting fees. Wendy validates his point and delivers a detailed breakdown of Section 15 of the Exchange Act, broker definitions, and safe harbor exemptions.6:49–10:12 · Sean pushing back 2/10 Legal Compensation Structures for Internal Fundraising Employees Sean tests legal boundaries by posing hypothetical loopholes regarding hiring unpaid fundraising interns or compensating investor relations staff purely in equity. Wendy explains how SEC rules evaluate whether bonus milestones or share issuances functionally mask percentage-based capital commissions.10:13–16:40 · Sean pushing back 0/10 Fundraising Frameworks: Crowdfunding, Regulation D, Reg A, and IPOs Sean openly admits his unfamiliarity with Regulation D rules and asks when filing triggers occur. Wendy delivers an in-depth regulatory overview explaining Form C for Reg CF, the 15-day Form D post-check deadline under 506(b) versus 506(c), Reg A mini-IPOs, and S-1 filings.16:41–22:36 · Sean pushing back 4/10 The Foundational SEC Registration Rule and Statutory Exemptions Sean challenges the SEC regulatory structure, arguing that allowing private startups to receive funds prior to filing leaves a dangerous loophole that should be strictly pre-cleared. Wendy explains the historical logic of private placement memoranda and details how state-level Blue Sky laws and investor litigation police compliance.22:39–25:16 · Sean pushing back 0/10 DIY Filings Versus Engaging Professional Securities Counsel Sean asks practical concluding questions about whether founders can DIY securities paperwork. Wendy explains operational risks and warns that paying unregistered finders can lead to severe civil and criminal aiding-and-abetting penalties.

speaking balance: gold is Sean, purple is the guest (3 minute bins)

0:00 · Sean 55.6% · guest 44.4%0:00 · Sean 55.6% · guest 44.4%3:00 · Sean 0% · guest 100%3:00 · Sean 0% · guest 100%6:00 · Sean 19.4% · guest 80.6%6:00 · Sean 19.4% · guest 80.6%9:00 · Sean 22.3% · guest 77.7%9:00 · Sean 22.3% · guest 77.7%12:00 · Sean 0% · guest 100%12:00 · Sean 0% · guest 100%15:00 · Sean 10.3% · guest 89.7%15:00 · Sean 10.3% · guest 89.7%18:00 · Sean 19.7% · guest 80.3%18:00 · Sean 19.7% · guest 80.3%21:00 · Sean 4.5% · guest 95.5%21:00 · Sean 4.5% · guest 95.5%24:00 · Sean 19.8% · guest 80.2%24:00 · Sean 19.8% · guest 80.2%
Sharpest disagreement ▶ 2:52 Stepping back to define securities versus promissory notes

In a uniformly collaborative episode, Wendy gently pauses the discussion to correct underlying assumptions by distinguishing pure promissory notes from securities transactions.

 Hardest push from Sean ▶ 18:13 Sean critiques the SEC's delayed Form D requirement

Sean pushes back on SEC policy, arguing that private companies should be forced to file disclosures before taking investor money rather than 15 days after.

 Biggest teaching moment ▶ 12:35 Wendy's masterclass on Reg CF, Reg D, and Reg A

After Sean admits complete unfamiliarity with Reg D, Wendy provides an extensive breakdown of Form C, Form D 506(b)/506(c) accredited rules, and Reg A tiers.

 Sean holds their own ▶ 1:19 Sean details his $40k loss to an unlicensed finder

Sean demonstrates practical founder expertise by articulating the exact financial and legal hazards of paying upfront consulting fees versus unlawful success fees.
the scores for every segment, with the reasoning behind each
ChapterTopicSean as informed peerGuest teachingGuest disagreementSean pushing backWhy
Widespread Securities Violations in Startup Fundraising 4712 Sean shares a personal fundraising experience where an advisor charged $40,000 in expenses without raising funds, framing the distinction between success fees and consulting fees. Wendy validates his point and delivers a detailed breakdown of Section 15 of the Exchange Act, broker definitions, and safe harbor exemptions.
Legal Compensation Structures for Internal Fundraising Employees 4602 Sean tests legal boundaries by posing hypothetical loopholes regarding hiring unpaid fundraising interns or compensating investor relations staff purely in equity. Wendy explains how SEC rules evaluate whether bonus milestones or share issuances functionally mask percentage-based capital commissions.
Fundraising Frameworks: Crowdfunding, Regulation D, Reg A, and IPOs 2900 Sean openly admits his unfamiliarity with Regulation D rules and asks when filing triggers occur. Wendy delivers an in-depth regulatory overview explaining Form C for Reg CF, the 15-day Form D post-check deadline under 506(b) versus 506(c), Reg A mini-IPOs, and S-1 filings.
The Foundational SEC Registration Rule and Statutory Exemptions 5804 Sean challenges the SEC regulatory structure, arguing that allowing private startups to receive funds prior to filing leaves a dangerous loophole that should be strictly pre-cleared. Wendy explains the historical logic of private placement memoranda and details how state-level Blue Sky laws and investor litigation police compliance.
DIY Filings Versus Engaging Professional Securities Counsel 2600 Sean asks practical concluding questions about whether founders can DIY securities paperwork. Wendy explains operational risks and warns that paying unregistered finders can lead to severe civil and criminal aiding-and-abetting penalties.

Statements from this episode (6)

Opinion
Colbertson: Most startup founders accidentally violate securities laws during fundraising
“Probably a lot. It's a very, when it comes to securities and capital raising or raising capital in relation to securities, it's a very easy rule to violate.”
Wendy Colbertson Feb 24, 2026 ▶ 0:07
Disclosure
Sean Weisbrot spent $40,000 on a financial advisor who raised nothing
“40,000 dollars later, I had zero dollars in my bank account through his efforts.”
Sean Weisbrot Feb 24, 2026 ▶ 2:24
Assertion Contradicted
Colbertson: Salaried in-house fundraisers provide a legal safe harbor for startups
“If you hire them and promise them a certain salary, like, because this is your job or something like that that's, One of the safe harbors that's being provided under the Securities Exchange Act. Although that's the only, the key and the pillar that not to, the…”
Wendy Colbertson Feb 24, 2026 ▶ 7:42
Insight
Colbertson: Tying employee equity to capital raised risks serious securities violations
“Is this is the calculation of the shares, or how did the company determine how much shares they're going to issue or award their, this employee? Is it based off of their performance? Then good, but if it's always, and if it, Ultimately ties into how much capit…”
Wendy Colbertson Feb 24, 2026 ▶ 9:38
Assertion Supported
Colbertson: Founders can legally delay Form D filings until after receiving funds
“You don't have to file anything with the SEC until 15 days from the first day, from the first investment that you receive from your investor.”
Wendy Colbertson Feb 24, 2026 ▶ 13:51
Insight
Colbertson: Regulatory scrutiny typically only triggers when unhappy investors complain
“One of the ways that this really bubbles up is when your investors are not happy. They invested the money on you and now they're not happy with how the company's being run, that the company is not making money and so on. And that's when all this could surface …”
Wendy Colbertson Feb 24, 2026 ▶ 22:07
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