By Hugh Stewart
What do you do if you need to raise substantial capital for your business without wanting to give away the farm?
For my business, we were able to raise money through a type of private stock offering in our company, specifically a Regulation D Series Private Placement Memorandum. There are a couple other common forms of private stock offerings that may be appropriate for your business, depending on your structure or needs.
Most people think that IPOs are the only route to raising equity capital. Or they believe that they have to be very large or have very deep pockets to issue stock in their private companies. But this is not true. If your capital requirements are small, it still may be economical to issue a private offering.
There are many legal components to the process, of course: You will need to become a registered security, issue the stock, invite accredited investors, educate them, have them subscribe, be legally protected, and be able to “legally pool” their money — because pooling money usually is not legal unless done in a specific way.
Before we initially approached a securities attorney, we educated ourselves to be better clients by visiting www.cfss.com. The website is by Cambridge Financial Services and Software. They sell a private stock-offering template with instructions and forms.
Learn from it — and then take it to a securities attorney to create a custom solution for you. Not only will you probably save attorneys’ fees by educating yourself first, you will also have a much more productive interaction with them from the start.
Hugh Stewart, founder and CEO of Confident Solutions Coach, has both a substantial education background and diverse entrepreneurial background. Hugh was not only a nuclear fuel designer, but he has created and operated more than 17 businesses in the past 10 years in industries such as money services, real estate, advertising, reinsurance consulting, and coaching. Hugh seeks to help business owners who are struggling or simply wish to move their business to the next level. You can reach him at firstname.lastname@example.org.
Originally published: Sep 12, 2011