Investors & Raising Capital

Ultimately what will convince an investor to write you a check will be the deal you are offering them. Our process is to review with you the hundred or so items that need to be considered and decided before the Private Placement Memorandum documents are prepared. Many of these decisions are anticipatory of your prospective investor’s questions and concerns that you will need to address within your Offering Documents. The preparation of the Private Placement Memorandum, Subscription Agreement, Investor Questionnaire and Operating Agreement is a complicated process but when we are done you will understand exactly to what terms you are committing. We will provide you an explanation of the pros and cons of each of your potential decisions. At the completion of this process, all your decisions will be made from an informed position. Most important to remember is that whatever you decide during this process you must own. You will become contractually responsible for all your representations. Also, if we think your decision(s) are wrong we will tell you including why we think it is wrong and suggest an alternative. Whether you are raising investor funds through the sale of equity or bonds you will find that Regulation D Rule 506(c) or Rule 506(b) will apply.

IMPORTANT INFORMATION…..For Differences between Rule 506(b) v Rule 506(c) ….

IMPORTANT INFORMATION……For More on Raising Capital and Finding Investors….

The majority of our clients need to find investors for their project. In these cases, we explain that the preparation of their Private Placement Offering Documents in compliance with Rule 506(c) will provide them the legal opportunity to advertise for investors. We will explain this further as the deal structure is prepared.

What’s the DEAL to Find Investors?

To properly educate a prospect to the details of your project takes a great deal of time; several hours at the minimum. You cannot sit down with every potential investor and tell them your story. You need to offer prospects a deal structure in which the key points can be pitched in a 2-minute telephone call or email. A “deal” that is financially attractive and makes them “want to” read the investor documents. There are many ways to conceptualize and structure a deal that will create excitement with prospects. Remember, your deal must provide sufficient incentive for the prospect to read your Private Placement Memorandum Offering documents.
There are hundreds of different issues or possibilities that need to be considered in the structuring of the Private Memorandum Offering Documents. Such as:

• Investor Exit Options.
• Do you organize as an LLC, LLP, LP, Sub S or C Corp?
• Voting or non voting?
• Equity or debt and what it means to you.
• Preferred -Common – Debentures -implications of each.
• How to solicit Investors or different methodologies in identifying and reaching out to investors.
• Pricing your Offering.
• How much of the company should you offer investors?
• Offering amount?
• Complying with Federal Securities Laws – Regulation D – 506(c) or 506(b).
• An Example of one option you can offer Investors is do you pay an annual dividend?

Example: Offering investors, a Series ‘A’ 6% Preferred Share or Unit – “Only if Earned” – “Non-Cumulative”
The Impact on a $1,000,000 Offering.
The first $60,000 earned goes to the investors as a dividend payment.
If not earned, nothing is owed. Non-cumulative means it does not need to be paid at a later time.
More importantly, as part of your sales presentation, you can represent that you could be paying them an annual dividend and a return on their investment. A very big sales incentive.

A very important key to successfully raising capital is to anticipate the investor’s needs and questions so that the answers are part of your presentation. Anything that is material to an investors decision must be in writing and made a part of the Private Placement Offering Memorandum. This is especially true of all aspects of the deal and any commitment you make to Investors.

For those of you who want to first see whether a deal structure to your potential investors will be sufficiently attractive before assuming the expense of preparing the Offering Documents – Our fee for guiding you through the Deal Process only is $850.

Our fee for preparing your Private Placement Documents is $3,600. This fee is all-inclusive and includes Structuring the Deal. Once you have decided on the Deal you intend Offering your investors the following documents will be prepared within the next 10 days.
Private Placement Memorandum
Subscription Agreement
Operating Agreement
Investor Questionnaire.

During our conversations with you in preparing the Private Placement Memorandum Documents and included in that fee we explain how to Find Investors and Raise Capital for your company. If you need more help or information it is available for an additional fee. However, most clients do not need to go that extra step and we encourage you not to make that decision until after the Private Placement Memorandum Documents are completed.

No Charge for the Consultation
Mr. Shields / Shields Capital Partners
365 Fifth Avenue South / Suite 200
[email protected] / 239.300.9725
239-231-5509 (cell/texts)
Office hours: 9:00 – 5:00 Eastern Time
www.shicap.com

Copyright © Mr. Shields 2019