Real Business Plans

RAISING CAPITAL
GUIDE

 


    

 

Finding Investors (Funding your Business)

 
 

Raising capital can be simple if you are equipped with the right knowledge and tools.  

Writing a business plan and an offering is one thing... Getting your plan in front of an investor is another!  Through years of actual experience with marketing business plans, we have put together the tools to accomplish the job. Most plans don't get read because the financials were a joke.  And believe this: Serious investors look at the numbers first!  It is just like buying a house; 'Why look at the inside when you don't want to live in the neighborhood.'

All of the financial items are created with a spreadsheet program on your computer.  If you have limited knowledge of the 'ins and 'outs of spreadsheets, don't worry.... the easiest way to do your financials is to go to our Guide and Templates

 

Beyond the financials and other supporting documents, you will need to consider a Private Placement  Offering (aka: Offering Memorandum, Private Placement Memorandum, PPO or PPM).  The Offering markets your new venture in a form that investors want.  It does not replace the business plan; it precedes the plan.  The Offering lays out what monies are needed, structure, plan summary, risk, state regulations, investor suitability requirements/questionnaire, etc.  The Offering you create will not only give you the confidence to raise the money, but it also complies with the SEC Regulation D 505/506 securities offering. These offerings allow you to market to NASD broker-dealers and others for equity capital without the expense of a formal Initial Private Offering (IPO).

The only people creating Offering Memorandums are business attorneys and companies specializing in SEC Reg. D Offerings.  The cost to have an Offering Memorandum written for your venture ranges from $4,000 to $10,000.  

If you spend some time researching the private placement 'specialists', you will notice some claim to provide a broker service.  No, they are not going to act as stock broker and raise the money for your new business. They can't do that... It's against the law, they are not licensed stock brokers.  What they say they can do (with no guarantees, mind you) is use their contacts with brokerage firms to see if any will take on a huge block of stock and guarantee it's sale.  Don't hold your breath!  All these guys do is plug in your information into their Offering template, and you get to pay $5,000?   We can do all of the work for you, if you wish.  Our cost for the Memorandum is $249.00 and it includes the Subscription agreement.

Screen shot - offering memorandum

Once you have the offering, plan and financial projections, you are ready to get it in front of investors.  How to publish the documents is important.  You have a choice on how to print and whether to go digital.  You must print some copies and have them bound.  Local copy centers are perfectly equipped to handle the task.  Digital copies should be converted to PDF format and are now easily emailed and posted online.  Posting your docs allow you the ease of emailing a link and a password versus multiple files that may have trouble with spam software.  As you may have guessed, we can help with online password protected posting of your docs.

 

Now it is time to talk investors - The best place to start is within your circle of friends and family.  Do not be pushy, start out by asking for their opinion and if they know of someone who may be interested in an investment.  Bringing it up in casual conversations can help too.  Advertising is not allowed in the blatant sense, but there are means to get the word out.  One method when posting an ad is the word it as "Looking for a financial partner".  The important part is that you are looking for a partner; not an investor. 

Other avenues for financing are few and far between.  Some will always bring up getting an SBA loan.  Sounds good on paper, but unfortunately the way most think of the SBA is a fallacy!  Go to any SBA approved bank and try, what want from you is an asset to collateralize the loan.  very quick you will see that unless you own property worth more than the amount you want to borrow, no SBA loan will ever happen.  Yes the SBA is backed by the government as long as you back the loan first. 

The other famously touted method for start-up funding are angel investors. Angels only show themselves when you have a proven, ongoing operation that has tremendous potential for explosive growth.  We are talking new patent or Microsoft type potential. In reality, angel investors are very hard to crack.

The truth is that your best bet is with people you know.  Sometimes they are the hardest to approach, and you do not want to jeopardize a close relationship.  So be smart about your approach; plan this stage just as you planned all the other aspects of you new business. 

 

 

 

 

   

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