How Entrepreneurs Can Raise Capital, Navigate Securities Laws, and Scale Confidently with Gilbert J. Bradshaw

JLD introduces Gilbert J. Bradshaw as a securities attorney, managing partner of Corporate Securities Legal LLP, and advisor to startups and public companies on capital raising, SEC compliance, mergers, acquisitions, and growth strategies. Asked what he believes about success that many people disagree with, Bradshaw rejects the popular image of the entrepreneur as a Steve Jobs- or Elon Musk-style dictator. In his experience, many of his most successful clients are kind, loving, gregarious, and generous people whom others actively want to support. Bradshaw says entrepreneurs are often lifted by clients, customers, colleagues, and unexpected supporters. By “breaks,” he means the major opportunities that help launch or scale a company, and he argues that every successful entrepreneur has had one or more. The people who create those opportunities are not necessarily the people founders expect; they are often the ones who like the founder and want to see them succeed. He acknowledges that some billionaires may have more dictatorial personalities, but says the broader population of successful business owners tends to build loyalty rather than fear. That goodwill, he argues, becomes a practical business advantage because people give generous entrepreneurs introductions, help, and opportunities.

Bradshaw says one of the most common problems he sees is an incorrectly capitalized company. Founders may ask a friend-of-a-friend attorney or an accountant to form the business, only to discover that the company has the wrong share classes or has issued all of its authorized stock to the founder. He describes cases in which a company has 1 million shares of common stock, all 1 million are authorized and outstanding, and the founder then tries to give shares to investors. Fixing that structure may require recapitalization and can create tax complications. He particularly warns against a founder receiving shares for nothing and then selling them to an investor for $10 per share, because that difference can create a tax hit. Bradshaw recommends setting up the company with future financing and ownership needs in mind. As an example, he describes a structure with Class A common stock for investors, generally carrying one vote per share; Class B, or sometimes Class F, founder stock, carrying two, three, ten, or even eleven votes per share; Class C stock for employees, usually connected to an equity incentive plan and often carrying no votes; and preferred stock for venture capital or acquisitions. His point is that capitalization is not a formality to postpone: it determines who can receive equity, how control works, and whether later transactions are clean.

Bradshaw says going public is not automatically the ultimate milestone and does not make sense for every company. One appropriate situation is when a company has a stable group of investors demanding an exit, provided market conditions are favorable. In that case, a founder may also sell some equity and take part of the value off the table. He notes that a few companies can successfully go public during a weak economy, but most need to wait for a suitable market window. He identifies industries where public capital can be strategically necessary. Biotech companies may need to move quickly because scientific breakthroughs create fast followers; once a breakthrough becomes possible, competitors may be close behind, so the company may need several public offerings to raise hundreds of millions of dollars. Some technology companies need substantial capital while they wait for their technology to reach the market, and mining companies can require public financing because extraction is highly capital-intensive. At the same time, Bradshaw says mature companies can remain private longer than they once could because the internet has reduced the information gap that public disclosures used to address. He cautions, however, that he is not a fan of placing too much institutional money into private companies. He predicts that after a future market crash, investors may return more strongly to public markets because private-equity and venture-capital portfolio companies are not always audited or scrutinized adequately. He also expects blockchain-based distributed ledgers and tokenized securities to change stock trading and potentially areas such as real-estate title.

Bradshaw explains that startups now have more fundraising options than they did in the past, but the rules depend on how investors are found and what they qualify for. The traditional route he describes is a Rule 506(b) offering, in which a company can approach people with whom it has a substantive, pre-existing relationship. A person who is merely a LinkedIn connection is not enough; the company needs some demonstrable history. Under that route, investors do not necessarily have to prove that they are accredited. He contrasts this with general solicitation, which became possible after the 2012 JOBS Act and rules promulgated in 2016. If a company advertises its offering on the internet, many investors must be accredited, generally meeting requirements such as at least $1 million in net worth. When the company does not know an internet-sourced investor, it must verify accreditation, potentially by requesting tax returns or a letter from the investor’s accountant. Bradshaw says that can be a significant turnoff for a first-time private-company investor, even though experienced investors understand the process. He also points to Regulation A and Title III crowdfunding. These allow companies to use a portal in a process resembling a mini public offering, with required company information and investor message boards. He advises prospective investors to read those message boards because they can contain useful information, while remembering that some comments come from “haters” and are not necessarily accurate.

Bradshaw argues that legal work does more than protect a company from lawsuits: it can make the business more valuable and investable. He cites Dolce Glow and its founder, Isabel Bia, as an example of a company built over time by an inspirational founder who came from foster care, gathered advisors, and listened to them. The broader lesson is to establish agreements with the people and businesses that make the company work. He has seen companies valued at $800 million operate without formal agreements with customers, suppliers, or manufacturing partners, relying instead on purchase orders. That may function day to day, but it becomes a serious weakness when the owners try to sell the business. Long-term agreements with suppliers, management, customers, and other partners provide greater certainty. Internal financial controls also help demonstrate that the company is being managed responsibly. Bradshaw adds that founders should communicate with investors even when the conversations are uncomfortable. Investors have complained about management “as old as the hills,” and some can be insufferable, but responding to them builds trust even if it does not solve every disagreement immediately. He also recommends inspiring employees and accepting that the short-term cost of putting agreements and controls in place can produce much greater long-term value.

Asked for one legal lesson founders should adopt early, Bradshaw emphasizes accountability. Drawing on his work with businesses in Japan, Korea, China, and the United States, he says American executives are subject to a stronger developed doctrine of accountability to the government, shareholders, and boards. His recommendation is to structure a company so that executives and other key participants have clear oversight rather than allowing leadership to operate without checks. He recommends establishing a board of directors and involving attorneys as the company grows. Boards can create committees, including compensation committees to review whether executives are paid fairly rather than excessively, and audit committees to review financials and expenses. Even if a company cannot undergo a formal audit, it may still have external accountants who can periodically review its finances. Bradshaw acknowledges that these controls can be painful; he runs a business himself and does not always enjoy an accountant asking whether a team restaurant expense was really necessary. Nevertheless, he says those difficult questions strengthen the business. His final warning is for founders not to “drink their own Kool-Aid.” Accountability, financial review, transparent communication, and humility make a company more trustworthy to investors and more likely to survive as it grows. Bradshaw invites listeners to contact him through LinkedIn or securitieslegal.com; if his firm cannot handle a legal issue, he says his network can often refer the founder elsewhere. The conversation ends with Bradshaw unexpectedly telling JLD that, as a trained tenor, he has the voice and “chops” to become a great tenor. JLD jokes that nobody in more than 5,000 interviews had ever said that to him and considers asking ChatGPT about a possible second career in singing.