Say you have granted $8M in equity over the past 11 months. A new hiring push adds another $3M. You just crossed the $10M threshold under Rule 701, and the SEC now requires you to hand every option holder audited financials, a plan summary, and a risk disclosure.

Rule 701 lets private companies issue equity without SEC registration, but it is not a blank check. The exemption caps issuance at the greater of $1M, 15% of total assets, or 15% of outstanding shares in any 12-month window. Exceed that ceiling and you lose the exemption entirely. Separately from that cap, once you cross $10M in aggregate issuance, you owe recipients GAAP-compliant financial statements no more than 180 days old, plus written risk factors.

The cost is not just legal fees. Preparing those disclosures mid-hiring cycle can slow grants by weeks, right when speed matters most.

Track your rolling 12-month issuance total before it tracks you.

$340 billion flowed into US venture-backed companies in 2025 — the second-highest year on record. Sounds like a great time to raise but look closer and the picture shifts.

SVB's latest State of the Markets report shows the top 1% of companies by valuation captured a third of all that capital. The bottom 50% got just 7%. Deal count fell 15% even as dollars invested jumped 53%. AI companies command valuation premiums of up to 222% over non-AI peers at later stages.

If you're raising outside of AI, the headline numbers don't reflect your reality. Revenue thresholds have climbed since 2021, graduation rates have halved, and nearly a fifth of 2025 Series A companies had previously done a seed extension round.

The market is generous at the very top and selective everywhere else. Plan your runway accordingly.

Sources: SVB | Saastr [1], [2]