Sample Reg D Private Placement Memorandum (PPM)

Do YOU Need A PPM To Raise Investor Capital For YOUR Company?

If you are going to seek angel investor funding, you will almost certainly need a standard securities law compliant PPM for your company in conjunction with the business plan so both integrate properly and provide the documentation you need for legitimate fundraising. And, since one of the goals of your PPM is to fully disclose all risk factors and any conflicts of interest, it can serve as your company’s insurance policy against potential, future litigation by disgruntled investors.

The PPM will fully define how much of the company the investor receives for his invested dollars, including setting the minimum level of investment.

Along with the PPM, you need a Prospective Investor Questionnaire to help insure that each prospect meets securities law guidelines. Usually your offering document will require, for a lot of very good reasons, that your investors be “accredited.” (If you want the short version of what this term means, click Accredited.)

You also need a Subscription Agreement for execution by the investor binding him to his investment and confirming he has received all appropriate documentation prior to making their investment (if you are seeking traditional, professional venture capital, you probably will have no need for a PPM).

With my experiences both from raising investor funds and from having founded my own NASD broker-dealer company, I can help you avoid many, potentially onerous problems and guide you through the business constraints of federal and state securities laws that could cause either overt or technical violations during your fundraising.

Ignoring these issues and their related dragons are very dangerous and might require rescission, i.e., giving back all the money, or cause even more onerous legal consequences.

How I Can Help

Even though there are no guarantees when it comes to fundraising, I can help you slay some of these particularly onerous dragons so that we can greatly increase your probability of success. Here are some specific action items that I can help you accomplish during your quest for funding besides helping you write a first draft of your own PPM:

• Help with your fundraising structure and documentation in order for you to be compliant with both state and federal securities issues.
• Develop a combined business model / offering structure defining how much of your company you will need to sell in exchange for the investment dollars you need to successfully implement your plan.
• Work with you and your securities attorney to properly reflect the business plan issues in your offering documentation.
• Work with your staff and attorney to complete and submit your Form D to the federal government for your Reg D private placement – this is required for your company to qualify for its securities exemption.
• Work with your staff and attorney to complete and submit the various state-required blue sky securities filings – required to avoid state securities law violations in those states where you solicit ANY prospective investor.
• Develop a marketing and sales strategy for finding qualified, prospective investors who may be interested in your company’s investment opportunity.
• Post your offering, in a legitimate manner, on various angel investor online sites to generate prospective investor inquires.
• Handle all of the endless, first-tier responses and answer all the due diligence questions by prospective investors and “tire kickers.”
• Develop a controlled-access set of web pages for your company to highlight your business plan so that prospective investors can gain a sense of your goals and the opportunity without them needing to plow through the whole plan as an expensively printed document.
• Write a standard one to two page cover letter / email for the initial contact with a qualified prospective investor.
• Handle all prospect tracking, action list and the multiple follow-ups that are almost always required to go for the “close.”
• Help ensure that all marketing efforts are compliant with both state and federal securities laws so no overt or technical violations occur.
• Ensure all subscription documents are completed properly.
• Provide updates to the Business Plan and Private Placement document as required.
• Provide ongoing support, mentoring and general dragon slaying for the company.

Hint: Virtually ALL of these steps can be very time consuming and most HAVE to be done by SOMEONE in order to legally convert your new, completed documents into cash so you can start your company.

Are you going to do all of this? Do you have anyone in your company who is knowledgeable about all this stuff? If not, who will be your WHO to do it? When?

How long are you going to wait to get the funding for your start up company?

Want A Sample PPM To Better Understand What You Need?