Finding Investors
Finder Fee: Federal Securities Law prohibits you from paying a finder’s fee to anyone who is not a broker-dealer or employed by a broker-dealer for the purpose of raising capital for your Offering.
In many cases, people are trying to raise money for a start-up operation. They have an idea/business plan. However, they lack proof of concept that they can be successful. To offset that, we need to offer the prospective investors a very good deal that has elements of what they are looking for and convinces them to write a check. However, to make our offer we need to attract prospective investors to your website to view your deal contained in the (PPM) Private Placement Memorandum.
For example, there are millions of 401k investors looking for a greater return on their money. (Note: 401k investors can invest in your PPM by moving some of the money from their 401k account into a self-directed IRA. The fee ranges from $50 to $300.)
What we need to do is make it easy for the investors to find you. To accomplish that we need to:
- Create a website.
- On the website have a link to your drop box so investors can download your Offering Documents from the website. (Email delivery is no good due to the size of your file attachment.)
- Establish a Google AdWords account. (There is no cost to set up the account).This will allow you to publish your Offering ad throughout the world if you chose to. However, you will likely limit it to the United States only.
- Your investor prospects are searching the web for ideas to improve their investment portfolio performance. They do this by entering Google keywords for what they are looking for. An example would be “high-yield investment”.
- We needto create 5 or 6 investor incentives that will be in your Offering Document. These key incentives will be bullet points on your website and keywords at the heart of your marketing program.
- What these key incentives are will be determined by your business performance expectations. One of my principal duties is to figure out these key incentives since they are at the heart of our marketing and investor solicitation program.
- One or more of these keyword incentives will be what your investor prospects will be running in their Google searches. This will cause your Google ad to show. They click on your ad and are brought to your website that has all your incentives in bullet points including the one that brought them to your website.
- This is now a qualified prospect since his keyword is matching your keywords and is contained as part of your Offering Documents.
- Our goal is to bring these prospective investors to your website so that you can pitch them your idea.
Note: In a Google AdWords account you only pay when your ad is selected and clicked on. You only pay what you bid for a click. If your bid is $1 and 10 people click on your ad the cost is $10.
You can set your daily advertising budget with Google to whatever amount you are comfortable with such as $30 per day.
As an example, if your bid is $1 per click, over 30 days you will bring 900 persons to your website (30 prospects per day x 30 days) and make your presentation to them.
Solicitations are a numbers game.
If you close just 3% of these visitors per month that represents a cost of $900 and the potential to close 27 investors. If the minimum amount an investor can invest is $25,000 ($25,000 x 27) = $675,000 with a 3% closing rate.
Does this work? Yes, the fact that you are reading this is proof that it works. You put a keyword into Google search. My ad came up. You clicked on it and you have read my presentation. My Google bid is $1 per click. I don’t pay for the number of times my ad shows. I only pay when the ad is clicked on by a prospect and they are brought to my website as you were.
Next – Creating a PPM – Private Placement Memorandum