Forums: Discussions for entrepreneurs and small business.

Does anyone have any examples of how to best package the contents of an investment folder or packet that includes a Business Plan and Private Placement Memorandum?  The business plan serves it`s purpose, but now we need  a little "fluff" to accompany the boring yet necessary numbers. What`s appropriate to include? Or not?

Should it be a flashy cover? Should it contain photos? Should it be serious? I`m really not very sure. I`m afraid that if we take a casual approach, we`ll get a casual response. However if we take a casual response could that actually be better?

Essentially, we are marketing ourselves here and to me it is more important than just about anything in the business plan itself. Essentially we are telling people (friends and family first) that we are building a success here someday soon, and this is their one and only opportunity to have a preffered position as an investor. They`ll have three or four months to respond and then the door shuts quite possibly forever on any level. 

We are doing this so that we can at least tell everyone we know friends, family, acquaintances....you were offered an opportunity. That`s not to say that we won`t be there for them as friends and as family, of course. It`s only to say that they won`t be part of the adventure that will soon be.

Then there is the issue of how to best present an offer to a few hundred people.

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~Eric
JE Design Group, LLC
If all you do is what you`ve done, then all you`ll get is what you`ve got.
www.jedesigngroup.com

I don’t think there is one answer to this, you should target your proposal to your audience. If you are presenting your proposal to somebody whom you know is a potential serious investor you would be ill advised to make it a flashy presentation, he’ll be able to see through that and likely dismiss your proposal because you didn’t have the common sense to make a decent business proposal. On the other hand if you are presenting it to somebody whom you know knows nothing of business, someone to whom terms like equity, margin, ROI etc. will make about as much sense as  Phospholipid, Karyotype or Nutraceuticals he’ll never read your proposal, and if he does read it he wont understand it. You should target your presentation to your audience.

Eli,

Yes. I agree. It should be somewhat tailored to each "level" of investor.

I`m going to attempt a description of what I see in my head. Please, everyone, I would love to hear thoughts, improvments, suggestions of any kind.

 I`m imagining a quality proffesional presentation folder with the company logo on the front. When you open it there is a "Welcome page" signed by myself and my brother, Jason. (doesn`t actually use the word  "welcome" I`m just using that as a descriptive term..we are essentially welcoming people to take part in this opportunity)

This "Welcome Page" that addresses each individual personally and states the reason why they are receiving this folder and quickly summarizes the contents and their location within the folder

On the left they will find the business plan that it serves as the framework which builds a comprehensive understanding of the operations of our business. Under that there is a sealed envelope which contains the investment  proposal. and terms.

On the right, they will find a few pages.Nice presentation quality, glossy paper.

A quick "how we got to where we are" page. Words over a collage of black and white pictures from our history.

A biographical page about Jason white words over a black background wrapped around a medium sized black and white picture of Jason.

A biographical page about Eric,  black words over an all white backround wrapped around a medium sized black and white picture of Eric.

And 1 page about Jason and Eric working together. A collage of Color photos and a few words about how they are poised for success.

I believe that if we do this right. We can offer this to almost everyone. 

One thing I should point out is that we are not losing our minds desperate for investors. We could trudge are way onward bit by bit toward our eventual huge success and it will take a decade of some of the best years of our lives in the process or we can just do this now by right now putting ourselves into the best position to run a successful operation. Doing this will require some startup capital. We would obviously like to get moving sooner rather than later.

We are very confident that we will have investors. The only question is  how many and how much? Whatever the number is, we`ll adjust our approach and make it work. That`s the beauty of a business like ours. With product design and development there is a unique and fully adjustable component that allows us to operate slowly on a shoestring budget or quite quickly with ample funding, but nothing is likely to kill it off entirely.

Still looking for input everyone. Thanks!

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~Eric
JE Design Group, LLC
If all you do is what you`ve done, then all you`ll get is what you`ve got.
www.jedesigngroup.com

Eric,

I think you`re on the right track with your package concept. Just a couple of comments:

You say  "Under that there is a sealed envelope which contains the investment  proposal. and terms." I`m not sure what you mean by terms - but be sure the offering documents are appropriate for your situation.

You say, "I believe that if we do this right. We can offer this to almost everyone." If you are making a private offering (sometimes called a private placement) - be sure that you take the necessary steps to keep it "private". Appearing to offer it to everyone may be consrued as a public solicitation.

 

Good luck.

Robert Johnson

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Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com

I would like to add humble comments beside previous mentioned; presentation shall be simple, comprehensive and easily lead reader to your company`s facts fast, do not miss following topics:

1. Privacy Legal Notice (to protect your ideas & info)

2. Market Opportunity

3. Your offering road map

4. Competition Analysis

5. Market Approach

6. Management Board

7. Financial and Corporate Information (current and future income forecast)

 

Sincerely

Anthony

http://www.kyliptix.com

 

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Anthony KN
Kyliptix Solutions Inc.

http://www.kyliptix.com

Robert and Anthony,

Thank you both. Excellent points.

Robert I should clarify. When I mentioned in my post "almost anybody" I simply meant that the packet should not need too much tailoring as far as approaching an accredited investor or unaccredited investor. For the accredited investor, they will have the details and numbers that they look for in an investment. For the unaccredited investor they will have the details that they need and the required disclosures

 If you don`t mind I would really like you to elaborate on the importance of keeping a private placement private and why it must not be misconstrued as a public solicitation. This compliance with securities regulations is definitely the most difficult problem that we face for raising startup funding.

I`m sure our lawyer has a handle on this but I would love to hear your take on a description and I think it will help anyone else that bumps into this thread with a similar situation.

Robert or Anthony. Would either of you like to speculate what kind of cost we can expect to incur for this?  Does the number of offerings change the amount of work for our lawyer? What exactly is required of our law firm to facilitate this private placement? I believe I remember hearing a number related to this and I want to take a guess that it`s going to be near10k. Does that sound reasonable to anyone? How much of this can be done without them?  

~Eric

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~Eric
JE Design Group, LLC
If all you do is what you`ve done, then all you`ll get is what you`ve got.
www.jedesigngroup.com

Dear Eric:

It depends on your business type, I advise you to use specialized lawyer, for e.g. our company uses lawyer that is well know around High-Tech industry, we paid little more money but we have headache free future.

Some people make it clear that investors shall pay advocate fees.

Sincerely

Anthony

www.kyliptix.com

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Anthony KN
Kyliptix Solutions Inc.

http://www.kyliptix.com

Eric,

It sounds like you are making a private offering (placement) using a Reg D exemption - although your attorney may be using some other exemption(s), if your transactions will be limited to you home state. The requirements differ for each exemption – so it’s difficult to provide general answers – but:

 

1. Most exemptions, which allow for the private sale (placement) of securities –place restrictions on “public solicitation”. Generally speaking, if you have a “prior relationship” with the party before making an offer – you can avoid the public solicitation. On the other hand, the SEC has taken the position that posting a request for investors on your web site is a public solicitation.
   1. I appreciate that it appears to be a challenge – but as our clients have discovered – it really isn’t the limiting factor. It is however, something that one should avoid.
2. If by the number of “offerings” you mean the number of people you talk to about your investment opportunity – that single point should not be a factor to the “work” for the attorney. If, however, you get investors from more than one state – that will involve additional filings and thus more expense.
3. I don’t know your lawyer – but I would strongly suggest that you engage the services if a securities specialist. We have several that we work with. Securities law –especially for a private placement is made up of a goodly amount of “lore” and you need someone with real experience to avoid the pitfalls.
   1. Contact me privately and I’ll give you some tips for determining if you have a securities expert.
4. Since you mention non-accredited investors – you should be using a complete Private Placement Memorandum (PPM). This document provides “full disclosure” to the potential investor. Depending upon the company situation a PPM can range from $12,000 to $50,000 and up for established operating companies.
   1. Much of the information contained in the PPM should can (should) be prepared as part of the business plan development process. It is not necessarily in the plan but is part of the process.

A final general comment, if this capital round is the only and last one you will ever need – some of these details might not be critical. However, if the company will need to acquire future equity capital – then it is wise to invest in preparing a solid foundation now rather than face turndowns in the future.

 

Good luck,

Robert Johnson

 

PS: One point that I want to add- The PPM does not get you the funding. It is for executing the transaction and legally documenting same. Contrary to what others might say - Business plans don`t get funded (especially in early stage ventures) - people get funded!

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Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com