Investing in a start up company

What is the name of your state? California

I have an opportunity to invest in a start-up biomedical company, which is Incorporated. This company is being run by a parent company that has had success in another product that was brought to market and sold for a substantial profit under another name and will try to duplicate this success with this company. This company has a product and wants to launch it by the first quarter of next year. They want to have a private placement and raise $10 million and sell only common stock. The company is being supported by a parent company that is contributing $30K a month to bring it to its current state. Some of the proceeds from the private placement will be used to pay back the parent company. What should I look for in the private placement memorandum? I'm concerned about purchasing common stock instead of being offered preferred stock. Any comments about this?

Any infromation would be greatly appriciated.
Thank You
Rexlaser

[vrzirn]

My advice: DON"T!!!
Start-up companies are extremely risky and very few ever get in the black. You will also find that there is a restriction on the sale of your stock, perhaps over two years, Additionally, there is virtually no market should you wish to sell the holdings. You will find, reading the small print, that you and other share-holders are assuming a great deal of risk for virtually no equity. Most of the stock will go to the general partners and even more in options. The seed money will have to be paid back as well.
Buy GE. If you want a bit of risk and an interesting long-term hold, look at Cubic.