An institutional quality investor package includes (1) a PPM drafted by an experienced securities law firm, like ours; (2) an institutional quality business plan; and (3) an institutional quality 6-8 page pitch book. A very small percentage of seed stage companies will be able to raise money with a business plan alone. Our investor network and most institutional investors must be able to recognize that an early stage company is capable, professional, and serious about selling an interest in their company (and this is a sale of securities) before they will be willing to devote time to reading a company’s materials. Seriousness and professionalism are partly represented by the quality and completeness of these offering materials. If you wish to be taken seriously, you have to “speak the part, dress the part, and walk the part.” Like our institutional investors, we receive dozens of business plans each week from early stage companies that would like for us to read their 30 page plan and invest a million dollars or more. VC’s, Angel Groups, and Institutional investors don’t read 30 page business plans until a 6-8 page professionally drafted pitch book inspires them to do so. They have to be motivated to take a close look at how they can make money in the deal—it is the company’s job to sell them in approximately 8 pages or less. Once the investors are inspired, they will be willing to leaf through a lengthy business plan.
Private Placement Memoranda
PPMs are a tool used by high net worth and institutional investors to provide credibility and to create a legal framework for the sale of the company stock/ membership interests/ notes (all securities). Specifically, our firm and any experienced securities law firm that drafts a PPM for an early stage company will also perform issuer and principal due diligence. In addition, the PPM provides investors the comfort of knowing that the company has enough initial funding to hire competent counsel to guide them in the early securities sale process. Investors don’t want to inherit the mistakes of early stage companies that are attempting to sell interests in their companies (securities) without any legal guidance. If you are one of the die hard company principals that is convinced that you can raise money without a quality package, try it and let us know how your way works for you. This is a different capital market than it was 10 or 20 years ago and today’s new world requires packaging for the sale of company interests. A great product with poor packaging and poor marketing simply won’t sell—just as is true about a great seed stage company. The old saying still holds, “it takes money to make money.” Just as you have to invest time and money in the product or service you are providing to consumers through marketing or intellectual property, you also have to invest in the legal structuring for the sale of the securities and the marketing materials to sell an investment interest in the company. If you are attempting to raise a million dollars and you haven’t spent 2% ( or $20k) on legal and marketing materials, unless you are experts in these areas, you are already missing your opportunity. I can’t overemphasize that this is a tough and highly competitive market. Just as you don’t enter the “tour de France” bike race with a $200 mountain bike or the Indy 500 race with a minivan, you have to recognize that all competitions have a basic equipment requirement. Raising capital also has a basic equipment requirement—it is an institutional quality investor package which includes (1) a PPM drafted by a securities law firm, like ours; (2) an institutional quality business plan; and (3) an institutional quality 6-8 page pitch book.
We are among the most highly skilled firms in the country at providing these services and our costs are very competitive. If you wish to hire us to complete any single part of your institutional investment package, we would be happy to serve you and to make capital introductions through our business consulting firm.