Angel Investors | Private Equity Funding | Venture
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most entrepreneurs, raising capital privately is their first introduction
to navigating complex securities laws and subjecting their ideas to
the scrutiny of investors. This is the time when sound advice can propel
you quickly through uncharted territory.
Placement Memorandums (PPMs) – The Balancing Act Worth Getting
When raising capital privately, your offering memorandum is the disclosure
document you must present to communicate the benefits for your business
model – and warn potential investors of the risks inherent in
your business. Failing to adequately disclose all the material risks
and operating factors to potential investors can be a disaster in the
making. Government regulators like the SEC and their state counterparts
could require you to refund investors all of their money, as well as
impose stiff penalties, fines and interest.
help you trumpet the benefits of your business model while still accurately
disclosing all risks. Our experience will guide you through identifying
what aspects of your business are material, and how to accurately disclose
them to potential investors using the right terminology for raising
Click here to see our special packages on all the legal documents you need
for your private placement.
Favorable Financial Terms
You can obtain the best financial terms possible when raising capital
privately through an understanding of funding terminology that only
comes with experience. Financially sophisticated investors often use
different language than startup executives – and we are here to
‘translate’. We stand with you to negotiate offering terms
representing the investors in private offerings, we can help them obtain
terms in a deal that mitigate the inherent risks of the investment.
with Networking and Presentations – an Unexpected Bonus
There are certain value-added services we provide that our clients comment
on as being an unusual – and welcome – benefit. Namely,
assisting them with “pitches” to potential investors, and
even locating investors to begin with. Read our article, “Finding
are institutional "gatekeepers" to a number of investors and,
where appropriate, we will introduce clients to those in our network.
No matter where you find investors, how you present your opportunity
to them is vital.
competition for financing is fierce and the investment landscape for
emerging companies is more difficult than ever. Showing up unprepared
for an investor presentation is like going on a job interview in shorts
and sandals. You cannot control an investor's preferences, but you can
control how your company's information is presented. We help clients
organize their presentation in a manner that investors expect.
Matters – Crossing the Minefield of Securities Law
When selling securities in a private offering, follow the footsteps
of those who have successfully navigated the regulations which are complex
and, sometimes, counterintuitive. This is not an area of the law where
companies (or investors) can afford to “play lawyer”. Even
a small mistake in raising capital privately can have very significant,
and long term, consequences. For example:
- In most private
offerings, a company cannot use advertisements, including any web
postings, to distribute securities.
- Issuers and
investors can not pay commissions to persons making introductions
to investors - unless that person is a registered broker.
- In most cases,
a company is forbidden from making offers to potential investors whose
names they obtained from a purchased list.
In a securities
offering, there is no such thing as an “inadvertent” error.
One small mistake could contaminate an entire securities offering, costing
thousands of dollars in fines, legal fees, and even prevent a company
or investor from participating in future securities offerings. Read
our article, “Accepting/Paying Finders
Fees on Transactions”.
Offerings – Not Entirely Private
In today's regulatory environment, everything is scrutinized; the stakes
are high and there is NO room for error. The penalties for incorrect
or unlawful securities offerings are significant. The typical resolution
is a “rescission offer”, giving all your investors the right
to receive a refund of their entire investment – plus interest.
Government agencies can levy fines, shareholders can sue you and you
can be prosecuted criminally.
Cleaning up mistakes
made in a securities offering is expensive, time consuming and can shut
your business down. We not only protect our clients but educate them
on how to offer securities so that they remain in compliance with federal
and state securities laws.
Should anyone in
your company commit an error, we also help clients resolve issues with
state and federal regulators in an expedient and cost effective manner
so they can get their companies back on track.
Your Business or Handle Deals – Can You Do Both?
Orchestrating the acceptance and tracking of investor's subscriptions
in a private offering is time consuming and cumbersome. Contracts and
questionnaires completed by investors need to be carefully scrutinized
and tracked. Time spent on the administrative tasks of an offering is
time spent away from what you do best – operating your business.
We help clients
coordinate the acceptance of investments, keep investor lists organized
and facilitate the closings in a seamless manner. Keep your business
running while we handle the cumbersome administration of your funding
Deals Quickly to Avoid Lost Opportunity
Once the terms of funding are negotiated, it is vital to move quickly
before conditions arise that might interfere with signing. We help clients
"paper" the deal expediently and efficiently. This includes
the drafting of:
- Accredited investor
- Rights agreements
- Preferred stock
- Promissory notes
- Security agreements
- Warrants and
We help you reduce
the cost of preparation, and provide the documents you need to begin
raising capital privately as quickly as possible.
SEC Filings – Beating The Clock
Most private offerings of securities require filings with the SEC and/or
state securities agencies according to rigid timelines. We help you
prepare the documents that need to be filed and ensure that those filings
are made within the time limits proscribed by law. It’s one more
way we actively look after our client’s best interests.
To learn more about
developing a strategy for raising capital privately, contact us today
to discuss your choices for pursuing funding.
secrets that successful business owners know that help them raise more
investment capital, faster and with greater success! Subscribe to our
FREE 6-part streaming audio course "Handling VC Rejection: 4 Funding
Alternatives When Venture Capital Proves Difficult". Visit www.AlternativeFundingStrategies.com
for more information.
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