MARK KOHLERMain Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, LLC · Owner at Main Street Professionals, LLC

Calling Partners "Investors" Is Illegal

23 Jul 2026 · 1 min

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In this brief monologue, Mark Kohler warns entrepreneurs that labeling business partners as "investors" can create serious legal problems. He clarifies that partners, lenders, and investors are distinct categories, each subject to different regulatory treatment. Mischaracterizing a partner as an investor can trigger SEC securities regulations and even criminal liability. Kohler also points out that a so‑called “silent partner” is effectively an investor under the law, meaning the same compliance rules apply. He urges founders to keep these classifications separate to avoid SEC enforcement and potential criminal exposure.

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Remember, raising money and starting to call these partners investors is a very dangerous territory as well. We've got podcasts in the past on raising capital and partners, lenders, and investors are 3 different things. Do not blend those. That's when even worse problems can happen. That gets criminal and SEC gets involved and it becomes a security. And you may say, well, I want a silent partner. That's AKA for investor. And if you don't follow the rules, you're in big trouble. Trouble.