When you sell securities in your company, you make the sale as either a private placement offering or as a public offering. Being classified as private rather than public means your offering has an easier time complying with applicable federal and state securities laws.
The IPOs (i.e., initial public offerings) you read about in the newspapers are public offerings. However, your sale of securities need not be as large as one of the IPO’s discussed in the Wall Street Journal to qualify as a public offering. Most venture capital financings qualify as private offerings. A private offering might also be one in which a start-up entrepreneur obtains financings through friends, families, and angel investors.
Categorizing an offering as private versus public is often a subjective determination dependent on the number and type of investors, the amount of the money being raised, and other factors. To reduce the uncertainty of knowing whether your offering qualifies as a private offering, the SEC offers the safe harbor of Regulation D which defines three categories of offerings that qualify as private.