Selling Techniques for Securities Offerings with Online Tutorial Videos
Most successful capital raising efforts start with raising Seed capital, generally $200,000 to $500,000 through a Private Placement of securities. A portion of this Seed capital is then used for raising additional rounds of Development or Expansion capital, generally $1,000,000 to $5,000,000, through subsequent larger Registered Public securities offerings, which can be advertised in the local newspaper or through other general media to attract individual “Angel” investors.
Once your company has gone through a few rounds of raising capital, established a “Proven Economic Model” and is earning $1,000,000 (EBITDA) your company will be considered “Quality Deal Flow” and you’ll find that venture capitalists, investment & commercial banks will be more willing to invest in your company at that time.
We know what most of you want. Most of you want to hire someone to raise capital for you. If so, then hire a stockbroker away from a securities brokerage firm and employ him or her as your “In-House CFO” because no legitimate securities brokerage firm will raise capital for start-up or early stage companies. The burden of compliance in regards to securities laws is on you, not on those you hire to raise capital.
Some IRA’s may be used to invest in Private Placements see our Financing Resources Links for Private Placement IRA Custodians.
It has been our experience that the following options work best when trying to attract capital:
Seed Capital Prospecting:
- Personal & Professional contacts. These individuals already know and trust your character and work ethic. (This is known as the Friends & Family round).
- Network with local community leaders. We are referring to those who are in engaged in the economic development of your local geographic area. (i.e. the Chamber of Commerce, University Incubators, Economic Development Corporations, etc.).
- Your local bank and various leasing companies.
Development Capital Prospecting:
- In addition to the above prospecting techniques, include prospecting Angel Networks. (See the Financing Resources Links in the Commonwealth Capital Club).
Expansion Capital Prospecting:
- In addition to the above prospecting techniques, you may want to consider registering your company’s securities at the State level for an Intra-State offering of a private entity. This will give you the ability to advertise your securities in the general media (for investor leads) with this type of registration. (Depending on the amount of money you are seeking, generally this is for those who are seeking $1-5 million).
- Hire a Stockbroker. At this stage, you may want to consider hiring a stockbroker away from his or her firm to work for your company exclusively. Provide a base salary with pre-determined performance bonuses, stock options, matching 401(k) program, profit sharing, etc. Remember, you cannot pay anyone a percentage of the amount raised unless the securities are being sold through a bona fide registered investment bank/broker dealer, which must be an NASD Member. Just make sure that the stockbroker position becomes a permanent position within your company.
Continued Expansion Prospecting:
- NASD Member Firm. Engage a NASD Member Firm to serve as lead manager underwriter for syndicated selling groups, which will sell your company’s securities, for a commission, to raise capital for your company.
REIT Fund Prospecting:
Film Capital Prospecting:
Oil & Gas Projects Prospecting:
Venture/Hedge Funds Prospecting: