Raising Capital

KEY CONSIDERATIONS

Capital Raising is a core aspect for growing your business or expanding into new markets. At Founders Legal, we can help you understand your options and choose the right path forward.

Learn about the process of raising capital, including tips and tools to help you raise capital for your business.

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A QUICK LOOK AT THE U.S. CAPITAL MARKETS



Trillion

in Capital Raised for Businesses (U.S.) in 2019



Billion

of Equity Issuance for Businesses (U.S.) in 2019



2810

Million

in Capital Raised via Regulation Crowdfunding (U.S.) in 2020

Next: Table of Contents

Capital Raise considerations:

PART ONE: Core capital raise considerations

PART TWO: Ways to raise capital

PART THREE: Public vs. Private offerings:

Public Offerings

Private Offerings

PART FOUR: SPEAK WITH AN ADVISOR

Consult Us

PREREQUISITES

1. IS YouR BUSINESS Investor-ready?

Before diving into the Capital Raise process, consider the following factors:

Next: PURPOSE

PURPOSE

2. What is the Purpose of Your Capital Raise?



What will the money be used for?

Working Capital?
Salaries?
Inventory?
Office?
R&D?



Is there a secondary purpose to raising capital?

Are you seeking to raise the profile of the company for greater exposure or more customers?
Will part of the money come from certain people (like angel investors) who will help in other ways (i.e., open supply & vendor channels, or act advisors or directors)?

Next: TIMELINE

TIMELINE

3. What does your timeline look like?

Various factors, including how quickly you’re seeking to raise capital, can play a part in deciding which options you may have or how to raise capital.



Are you looking to raise money in a month?

If so, you may be limiting your capital-raising efforts to Private Offerings.



Or can you wait at least six months?

Having more time to work with opens up the opportunity of working out more complex forms of capital raising, like Public Offerings.

Next: TARGET

TARGET

4. Targeted INVESTORS

The amount and character of potential investors you are aiming for also play a role in how you can successfully raise the capital your business needs.



What is the character of the investors you are targeting?

Are you only seeking accredited investors or are you also open to some non-accredited investors?

‘Accredited investors’ are eligible to participate in private capital markets and must satisfy SEC-established requirements for income, net worth, asset volume, or professional knowledge.

‘Non-accredited investors’ are generally referred to as retail investors.



How many investors are you seeking?

The difference between 10 and 100 investors may determine which means of capital raising is best for your business.

Next: STRATEGY

Strategy

5. Setting up for success in the next strategic transaction

How can you maximize your capital-raising strategy to facilitate easier and more successful subsequent capital raising and future strategic transactions?

Seamless and effective strategies can be set up now to ensure that future capital-raising efforts, mergers, and sales are set up for success.

Next: WAYS TO RAISE CAPITAL

PART TWO:
Ways to raise capital

DEBT-BASED
Financing

Borrowing money from a lender or individual.

EQUITY-BASED
Financing

Selling shares of company ownership in the form of common stocks or preferred stocks.

HYBRID
SECURITIES

A combination of debt and equity characteristics. Hybrid securities provide investors with a fixed or floating rate of return as interest or dividends. Tend to be more complicated.

REVENUE
SHARE

A capital investment that is repaid through a percentage of revenues from the company’s operations.

Next: PUBLIC VS. PRIVATE

Part three:
PUBLIC Vs. PRIVATE OFFERING:

Private Offering

Selling securities of a company to a small number of known investors:

Institutional Investors, Accredited Investors, Friends & Family

Regulations: Light
- Regulation D (SEC)
- Rule 506 B or C (SEC)
- Regulation S (Overseas)
Time to Completion: 5 to 30 Days
Cost: Low to Medium Legal Costs
Challenges:
- Keeping paperwork drafting very organized
- State & federal-level compliance

Next: PUBLIC OFFERINGS

Public Offering

Selling securities of a company to the public:

Institutional Investors, Retail Investors

Regulations: Heavy
- Full Registered Offering (SEC)
- Regulation A (SEC)
- Rule 147 (SEC)
- Regulation Crowdfunding (CF)
Time to Completion: At least 4 Months
Cost: Medium to High Legal Costs ($50,000+)
Challenges:
- Keeping paperwork drafting very organized
- State & Federal-level compliance
- Reaching a crowd
- Planning: communications, marketing, and events

LAST: Consult Us

PART FOUR:
Raise capital with confidence.

At Founders Legal®, our specialized Securities Law team has the strategic insight and industry experience to guide you through a successful capital-raising process with confidence.

Our Securities Services have helped thousands of businesses accelerate their growth and take their business to new heights.

Let Us Be Your Trusted Securities Advisor.

Consult Us

DEBT-BASED Financing

EQUITY-BASED Financing

HYBRID SECURITIES

REVENUE SHARE