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Idea Cafe's CyberSchmooz
Financial Feasts

Financing message forum where you can get and give insights found nowhere else. Belly up to the table and request funding. Or tell your money tales. Any money talk is fair game except ads.

The Latest Hot Topics:

Show Me the Money!
Belly up to the Financial Feasts table and talk turkey about money... what to look for, where & how? All money talk is fair game. Go


Private Placements

1. What is a Private Placement?

2. Who is This Good For?

3. When is This the Best Choice for Me?

4. When is This Not Advised?

5. Tips for Getting The Money.

6. Ingredients You'll Need on Hand.

7. Watch Out For...

8. Web Links.

1. What is a Private Placement?

You sell shares in your corporation -- not on the open, public market, but to select individuals. You'll be deciding how much of the company to sell, at what price, to how many private investors, and even which investors. That's a lot of control, but also a lot of footwork.

2. Who is This Good For?

Companies that need an infusion of capital to jump to the next level of growth, but that already have a proven track record. Your company is successful enough to be a solid investment for outside investors, but you don't have the time, patience or inclination to take it public right now.

3. When is This the Best Choice for Me

When you're looking for a substantial infusion of capital but aren't a good candidate for a venture capital firm or don't want to do a public offering.

4. When is This Not Advised?

When neither you nor anyone else in the company is comfortable or effective in the sales role.

When your business' growth will be too flat to distribute profits to a lot of investors fairly soon (before they become impatient and start phoning all the time)

When you can't spare yourself (or anyone else) from operations to chat with the number of potential investors you'll have to woo.

5. Tips for Getting The Money

Network! Turn your nose up at no one, for her contacts and money may prove invaluable in the future. This is where contacts within your own industry or neighborhood may pay off big -- trawl the trade associations, local business groups, and clubs.

Get a lawyer seasoned in private placements. Private placements are overseen only loosely by the Securities and Exchange Commission, but state securities and exchange officials will want to review your documents just to see what you're doing. To satisfy them, have your attorney prepare the paperwork. Tread lightly as you promote the private offering so as not to attract the attention of the regulators early on for innocent hyperbole.

6. Ingredients You'll Need on Hand

  • A Business Plan
  • A good attorney, familiar with Private Placements
  • Basic Financial Package
  • Legal Documents to meet SEC and state regulations

7. Watch Out For...

Regulations that require you to qualify your investors by income. Investors in private placements must have substantial personal wealth and annual income. Recognizing that private placements often represent risky investments, the government wants to make certain investors can afford to lose the money if the company doesn't make it.

Lawsuits. It's all too easy for investors to hear your plans as promises. If they buy shares expecting a windfall, they may be disappointed -- and sue.

8. Web Links

Venture Associates Ltd.
Denver financial consulting firm run by James Arkebauer. Information on private placements as well as finding angels, venture capital, investment bankers, management consultants and more.



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