RAISING MONEY TO FUND YOUR STARTUP Dear Bill: It was great meeting with you on Friday and learning about your new software product. I really do believe that you have developed something that can produce really significant revenues and profits for your company. As promised, I have provided below a brief summary of a plan to assist you in raising money for the launch of the new company. Raising money to fund your business startup typically involves a six step process: 1. Business Plan ($10,000-$15,000) 2. Private Placement Memorandum ($7,500 fixed fee) 3. Registration with the States (N/C) 4. Investor Multimedia Presentation ($5,000-$10,000) 5. Investor Presentations & Raising Funds (As needed) 6. Ongoing Consultation as needed (As needed) YOUR BUSINESS PLAN A Business Plan written by InfoCentre serves the following purposes. 1. First and foremost, a business plan is to help you efficiently raise funds very rapidly; 2. It is an operations and chronological guide for your business; 3. It is a management and strategic partner tool; 4. It is proof of feasibility; 5. It is a vehicle for bank and other financing; 6. It provides a detailed investment summary and exit/harvest strategy. Raising Capital The main objective of the business plan we prepare is to help you attract and raise capital from investors. Any sophisticated investor, from your rich uncle to venture capitalists, require a highly detailed, user friendly, readable business plan. Even non- accredited, unsophisticated investors need to know that you know what you are doing and they need to believe that you will be successful in order to put their trust in you, in the form of their hard-earned money. Operations Guide As your company progresses, the business plan will serve as an operations guide, a chronological timetable of events, and a benchmark for future performance. Management Recruitment The business plan will help you recruit potential management and strategic partners. These relationships are vital to your businesses future success. Nothing will happen without a quality written document. Feasibility Study As part of the business plan, we will conduct a feasibility study. In addition, the research will identify certain segments of the market which should be targeted with your product or service. We do not take on clients if we believe their company is not economically feasible. Bank and other financing A business plan is essential in obtaining additional financing such as a line of credit from a bank or other financial institution, as well as municipal development agencies. InfoCentre knows exactly what must be in the plan to satisfy the bank. Typical sections in a business plan include an executive summary, market analysis, business model, operations strategy, financial plan, investment offered, management and ownership profiles, use of proceeds, harvest strategy, and keys to success. Harvest Strategy The most important section of the business plan to a potential investor is the harvest strategy. It cannot just state that there will be an IPO, merger, or acquisition. Detailed information about each harvest strategy is required. PRIVATE PLACEMENTS Most issuances of public equity securities must be registered with the Securities and Exchange Commission. Registration documents must include detailed disclosure, historical financial statements, and third party audits that take time to assemble. The process requires assistance by attorneys and accountants, and the SEC review can last up to 60 days. Registration costs a business thousands of dollars before the offering raises any money. Private Placement A Private Placement, however, is exempt from federal registration. In March 1982, the SEC adopted Regulation D to coordinate the limited offering exemptions and to streamline the existing requirements applicable to Private Placement and sale of securities. Rule 504, which provides exemptions for non-reporting companies stipulates that: The sale of up to $1,000,000 of U.S. securities within 12 months is allowed. As a rule, you should normally not solicit or advertise for private placements, rather you should plan on making direct contact to interested investors. We can assist you in doing this and in networking successfully with your friends, family and business associates to expand your pool of potential investors. The solicitation and advertising rules are governed by state laws. An unlimited number of persons may purchase the securities. No required investor qualifications--can be sold to anyone. Shares can be sold on the public market one year after purchase. No money can be spent until the minimum amount stated in the offering has been met. This is called breaking escrow, because all funds until that point must be deposited and held in an escrow account until the minimum is reached, Typically, this will be from 10% to 25% of the total amount to be raised. Buyers of stock under a private placement cannot sell their shares for a minimum of one year. Rule 505 allows the sale of up to $5,000,000 of U.S. securities and Rule 506 allows the sale of unlimited amounts. Both 505 and 506 require accredited investors with the exception of up to 35 unaccredited investors. Investor Multimedia Presentation Accompanying the Business Plan and Private Placement documents, InfoCentre will prepare a Investor Multimedia Presentation. This presentation takes prospective investors from a state of disinterest to a state of enthusiastic, logical and emotional fascination in participating in the growth of the company. It puts the "sizzle" in the private placement offering and appeals to investor expectations primarily the path to a public offering or other harvest strategy. This presentation shows them how it is not only possible but likely. Selling the Offering Our best results in raising money come with clients who realize that raising capital is their responsibility. We are glad to refer you to some of the successes of our current and previous clients. Again, we do not take on clients unless we are convinced that raising the capital they need is economically feasible. One of our specialties is helping officers and directors craft an investment presentation with a high degree of expected success. We spend considerable time training corporate officers on exactly how to present to investors. We can then even assist you in making these investor presentations. YOUR MARKETING STRATEGY In addition to raising money you may also benefit from additional branding and marketing services, which may include selection of a new name for the product, an effective branding and buzz-building plan that will create rapid adoption of the product into the marketplace. This will happen over several months and will be closely integrated with the business plan. These services are available as needed at our standard rates. STARTING UP YOUR STARTUP We can also assist you, as needed, in all aspects of starting up your startup. This could include identifying management roles, hiring, training, creating policies & procedures, creating internal control, accounting and sales systems and advising management as requested. These services are available as needed at our standard rates. I have attached our standard Service Agreement for your review. If you wish to proceed just let me know and we can get started this week. Hope this is helpful!
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