Invest With Our Company – Read All About It! Not!

One of the biggest mistakes that startup and emerging companies make was a major topic for discussion while we were having dinner with some friends this past weekend.

Our friends’ mentioned that their website about their thoroughbred racing farm referenced that they were looking for investors for their upcoming syndication. This was their first time they had considered raising money from angel investors – and they didn’t understand the legal constraints of a private placement offering.

Once they understood the onerous consequences that come from violating state and federal securities laws, they immediately changed their website — and are now both listening to my five-hour audio course called Funding Foreplay. before they move forward with any fundraising activities. (Funding Foreplay teaches entrepreneurs the right way to romance prospective investors for your company while still complying with securities laws.)

Executive Summary

Here’s the executive summary about one of the biggest mistakes that startup and emerging companies make: Advertising to the general public, in any way, that you’re looking for investors.

This means, in general, that you cannot discuss your investment offering on your publicly accessible web pages, in an e-mail blast to 10,000 people, in newspapers and magazines or walking up and down the street carrying a big sign.

The federal government, and all 50 states, have very specific rules, regulations and requirements in order to qualify for their securities law private placement exemptions.

The operative word here is “private.” This means that public is not invited.

It doesn’t matter if you’re raising $10,000 or $10 million. You cannot solicit the general public.

Period.

Some of the Penalties

Some of the penalties you could face from violating these specific requirements include:

• Having to rescind your offering — which basically means that you will need to give back all the money.  This is the usual consequence – although it gets a LOT harder to do once you have already started spending the investors’ money!
• Being barred from continuing your offering or ever sponsoring any future offering.
• Going to jail. (This usually won’t happen on the first offense — but it can!)
• Etc.  There are a LOT of these – but too numerous to list.

It’s totally understandable why fundraising virgins wouldn’t know about these kinds of laws – or even know to ask about them.  However, I can tell you that state and federal investigators won’t care.  Ignorance of the law won’t work as an excuse.

Hopefully, from this, you can see that it might, just maybe, be worth your time to make sure you understand the legal constraints and implications of fundraising before you consider raising investor capital.

Solutions

I offer a variety of fundraising services at my website, www.Chiefi.com including my audio course, Funding Foreplay which is also available from Amazon.com.

But, whether you use my services are not, please do yourself a very big favor and do the necessary research to get the right professional help to make sure you comply with securities law – before you even start on your Quest to raise money from angel investors.

(PS: Note:  I am not an attorney – just an MBA – so this is business advice not legal advice.)

Please leave your comments and ideas below.

Fundraising: Can I Use Investor Money To Pay Me Back?

As I get questions from readers from my Ask The Chief ImpleMentor series, I will take some of the questions that I think might have a broad audience and post them here on the blog.

This one is filed under “Dragons – Fundraising: Can I Use Investor Money To Pay Me Back?”

Question:

Love the blog! Finally someone answering real life startup company questions! I want to raise $1.8 million from investors for my computer business to take it to the next level. Can I use $250,000 of the $1.8 million to pay me back the money that I have already invested in getting my company started?

Thanks again!

Walt

Answer:

This is one of the most frequent questions I get from clients: Can I get back all of my money that I have invested so far in starting my company from the new investment dollars I get from angel investors or venture capital?

The short answer is almost never.

• Most will see it as a red flag and not invest.
• Most want to see you so committed, financially, to the company that you can’t afford to let it fail.
• If you don’t get paid back, then the company only needs $1,550,000 instead of $1,800,000 to accomplish the same goals that are in your business plan.

The longer answer is maybe a little. Read more >>

What Are Accredited Investors And Why Should I Only Raise Money From Them For My Startup Company?

As I get questions from readers from my Ask The Chief ImpleMentor Campaign, I will take some of the questions that I think might have a broad audience and post them here on the blog.

This one is filed under “Fundraising: What Are Accredited Investors And Why Should I Only Raise Money From Them For My StartUp Company?”

Question:

I’m getting ready to raise $2 million for my startup real estate company. I’ve finished my business plan but a friend of mine said I should only talk to accredited investors. I’m not exactly sure what an accredited investor is and I don’t understand why I can’t talk to anybody I want to about investing in my company?

Thanks,

Mark

Answer:

Read more >>

Welcome to Chief ImpleMentor

Dear Friend and Fellow Entrepreneur,

We are in the process of collecting our wide variety of pages and web sites and relocating many of them into this one location so that our clients can find our various services more easily.

The process may take us a while to complete construction – but stay tuned!

We will be offering a variety of free stuff to help the start up and emerging company accelerate its success.

Here’s some topics you might find interesting:

• Free Stuff – Here you can download a sample business plan, a sample private placement memorandum for investors, a sample real estate investment analysis, a workbook to predict your life in five years and a mind map that plots out the realistic steps to starting a company.  They are all free with zero obligation.
• Recent Clients – See the hundreds of industries I’ve helped with my consulting services in 49 of the 50 states, in over 40 countries and on 6 of the 7 continents.  Find out if you are in the one state I am offering a major discount for my first client with headquarters in that state.
• Profile - Find out if my background, credentials, expertise and experience is a good match for your current consulting needs.
• Testimonials - Read the comments from several dozen past clients about how my services have helped them get much closer to their desired Point B.
• Blog - Check out my blog on start up and emerging companies.
• Deviled Details – See how well you have already defined your own strategy and tactics for your start up or emerging company.  Do you know what your W Cubed is for every major and semi-major milestone for the next 12 months?
• Funding Foreplay – Learn how to romance and seduce investors with the right dozen documents.
• Finding Your Funding – Do you know what you need to know to legally raise investor capital for your company?  Avoid jail time by watching this short video.
• Real Estate ImpleMentor Service – Need help with capitalizing on the current real estate market?
• Virtual-Exec Service – Need cost-effective, senior-level executive help with your start up or emerging company?

If you need immediate needs or opportunities, I invite you to use the Contact Us tab to let me know how I can best help you and your start up and emerging company.

All the best,

Robert Lee Goodman, MBA
Ceo & Chief ImpleMentor
Ceo Resource LLC