Tag: Investors

Decoding Crowd Finance Part 1: When Reviewing An Investment Opportunity

Crowd finance Investment Word Cloud

Entering the crowd finance world is very overwhelming with lots of numbers, unfamiliar words and acronyms being tossed around in documents and conversations. So let me lend a helping hand and get you started on sounds like a professional.

  1. EBITDA: earnings before interest, taxes, deprecation and amortization.

EBITDA definition: An accounting technique valuable for business owners as an important standard measure of profitability.

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What are Offering Documents and Subscription Agreements?

Issuer Investor Handshake

Companies of all sizes raise needed capital publicly or privately by selling stock (ownership) or debt tied for the purpose of creating or growing their company and its operations. Public offerings require a company to publicly post their financial statements and other important documentation and to register their offering securities through “prospectus”. Prospectuses are costly and time consuming and regulated by federal and state securities laws. According to NOLO Law for All, “Most

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5 Steps to Finding Investors for Your Business

Trying to find the perfect investor for your business the “old” way can be quite challenging. Most venture capitalists and angel investors do not have time to meet with everyone and it is not uncommon for entrepreneurs  to speak with over 50 investors before closing a round of funding. An article posted on Forbes.com sought to help entrepreneurs by giving five tricks that are useful in getting meetings with the right people.  The Jobs Act signed by President Obama in April 2012 gave entreprenurs the ability to solicit and use the internet to solicit your business’ capital raise.  This helps evolve the  old traditional banking ways set by the The Securities and Exchange Act of 1933 to today’s 21st Century Investment Banking model. 

  1. Build a Profile (Have an Internet Presence) : AngelList is a great way to both learn about investors and let them learn about you. Apply to be an eBarnRaiser Portfolio Company and have a experienced Investment Banker advise you on the various capital raise options available, from Donation/Reward Crowdfunding, to Equity Crowdfunding (when SEC releases the rules) to Regulation D Private Placements.
  2. Create a Strategic List of Investors You’d Like to Reach out to and Communicate With: Given that more than 500,000 people in the U.S. have made angel investments recently, you can save a lot of time and hassle if you focus your initial efforts on the 30-50 investors who are most likely to be a good fit for your company. Your first people on your list should be potential family and friends.
  3. Comb Your Networks: Once you have a list of investors you’d like to meet and communicate with, go through it and see if you have any mutual acquaintances. Use your social networks to also get the word out about your business and capital raise. Under Title II of the Jobs Act, the ban of solicitation of Reg D Private Placements was lifted as of Oct 23, 2013.
  4. Thoughtfully Craft Your Own Introduction: Be thoughtful and selective about who you reach out to, craft emails that prove you are not just sending out hundred of emails to investors.  Open and transparent communication with any potential investor is very very important and can go along way with raising capital.
  5. Give Investors a Reason to Reach Out to You: Make sure you put yourself out there. As much as you want to find great investors, investors want to find great companies. Even if your product is not live, you can generate attention for your team through leadership. If you are raising capital on a reward crowdfunding website make sure your rewards and donation increments properly  incentivize the supporter for their contribution.

If you decide that reward crowdfunding is a viable option for your business to raise capital, check out our post about 4 Tips to Make your Crowdfunding Campaign Successful. An entrepreneur needs to be just as diligent with the success and direction of their business just as they are focused in finding investors and raising capital. 

For a more detailed explanation of each of these steps, visit the original article here. 

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