Paying Finder Fees:
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 from investors. As an example, Merrill Lynch is a Broker-Dealer.
To raise money for a start-up operation you start with first an idea and then a business plan. However, as a startup, there is a lack of proof of concept that you can be successful. In the absence of a proof of concept, you need to offer prospective investors a very good deal that convinces them to write a check. The following describes a strategy that is incorporated into your Offering Documents, website, and Google AdWords campaign designed to attract investors to your website and view the deal contained in the Private Placement Memorandum (Offering Documents).
For example, there are millions of 401k investors searching Google looking for a greater return on their money. (Note: 401k investors can invest in your Offering by moving money from their 401k account into a self-directed IRA.
This strategy brings the investor to you. Here are the steps you need to follow.
- Create a website.
- On the website have a link to your Dropbox that contains your offering documents. Investors can now download your Offering Documents from the website. (Note: Email delivery is not good due to the potential size of your file attachment. Email servers will tend to strip attachments from your emails or direct your email to your spam folder.)
- Establish a Google AdWords account. (There is no cost to set up an AdWords account). This will allow you to publish your Offering ads throughout the world if you choose to. However, you will likely limit your ad exposure 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 of a searchable keyword would be “high-yield investment”.
- We need to create 5 or 6 investor searchable keywords that will be in your Offering Document, on your website, and in the Google Ad. These keywords will be bullet points on your website and are the core of your marketing program.
- These keywords will be determined by your business performance expectations as described in your Offering Documents.
- One or more of these keywords will be what your investor prospects will be using in their Google searches.
- This will result in your Google ad displaying on their screen. The Investor clicks on your ad and is brought to your website page that has all your summarized presentation in bullet points; including the one that brought them to your website.
- This is now a “qualified” prospect since his keyword matches at least one of your keywords contained in both your website displays and your Offering Documents.
- Our goal is to bring these prospective investors to your website allowing you to present them your idea.
Google AdWords Account
Pay per Click – Every time your ad is displayed is called an impression. Every time your ad is selected it is called a “click”. You only pay when your ad is selected and clicked on. You don’t pay for impressions.
The amount you pay is based on what your bid was per click. If your bid is $1 per click 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 $10, $20, $30, or $100 per day. In this example, once your account has spent $30, Google will not continue to show your ads for the rest of the day.
As an example, if your bid is $1 per click, maximum spend of $30 per day, over 30 days you will have brought 900 persons to your website. 900 prospects all of which were qualified because they were searching on the same keyword in your Google Ad, your website, and your Offering Documents..
Solicitations are a Numbers Game
If you can close just 3% of these visitors per month that represents a total click cost of $900 resulting in closing 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?
You entered a keyword into Google search. My ad came up. You clicked on my ad which brought you to my website. You have read my presentation.
My Google bid is $1 per click. I don’t pay for the number of times my ad shows (When my ad is shown it is called an “Impression”).I only pay when the ad is clicked on by a prospect and they are brought to my website as you were. To make this presentation to you it cost me $1.
Yes, the strategy works. The fact that you are reading this is proof that it works.
Next – Creating a PPM – Private Placement Memorandum