Sunday, December 20, 2009

Update about Linkedin

From by previous articles, I've shared how to market for investors and business on Linkedin. I hope that by now you have built up your Linkedin contacts using these techniques.

I left out a key tip that is extremely important. Did you know you can export your contacts on Linkedin to a CSV file and import contact names and email address' directly into Outlook or any other email program?

Sending messages to your connections on Linkedin is extremely time consuming because you have to manually checkmark each name you want to send a message and are limited to 50 messages at a time. The drawback here aside from the time it takes is that many great contacts do not check their Linkedin messages very often. However, the opposite holds true as well because some people will not open your message directly through a regular email but may open it on Linkedin.

My suggestion is to use both techniques when you have a marketing piece to share with your contacts.

How do you export your Linkedin Contacts?

1) Click on the contacts tab on the left of your profile page.
2) Go to the bottom and in VERY small type is a link that says "export contacts"

The rest is self explanatory.

To your Wealth!

Russell Roesner

Sunday, December 6, 2009

Know your Audience

I receive investment opportunities via email and especially through Linkedin everyday. I would say that 90% of the people asking me for money didn't take 5 minutes to read my profile or do any research on my firm at all before they asked me to help them.

The number one offense in asking for money is to approach someone about an opportunity they clearly have told you they do not want. All one has to do is usually google a firm or managing partner's name to find their profile on Linkedin or their own website.

If you are raising capital for renewable energy or films, and you approach a firm that exclusively funds high tech or real estate, you not only will most likely receive no response, but you will be mentally noted as someone who does not know what they are doing. Almost every investor I know has an elephantine memory for the names of those that approached them with bad ideas, wrong ideas, or inept presentations.

Never spam on business sites like Linkedin. You will be remembered by the few people on Earth who might have the money to fund your deal as someone they do not want to do business with. I've had fund managers remember me from 5 minute phone conversations or emails going back 7 years and they base their time and interest in me on that phone call or email.

My positive advice to you is to always research your prospect or company. The more homework you do, the more likely you will be successful today and the less likely you will close a door that could have been open in someone who could help you in the future.

To your Wealth!

Russell Roesner

Saturday, December 5, 2009

Private Offerings

One of the most common ways of raising capital is through a PPM or Private Placement Memorandum governed by regulation D securities law. Why is a Regulation D securities offering critical to effectively raising capital from investors? Many companies seeking private capital make the mistake of using only their business plan as a funding vehicle. While business plans are an important facet of raising capital, they are not designed to properly raise capital from individual investors.

Who should use a Regulation D Offering? Any company or entrepreneur that is seeking to raise equity or debt capital from investors.

There are 2 basic types of Regulation D Offerings that can be structured:

An "equity" offering is where the company sells partial ownership in the company (via the sale of stock or a membership unit) to raise capital. Equity offerings are preferred by early stage companies because there is no set repayment schedule or debt service payments - the investors profit when the company profits.

A "debt" offering is where the company raises debt financing by selling a note instrument to investors with a set annual rate of return and a maturity date that dictates when the funds will be paid back to investors in full. A debt offering functions much like a business loan except instead of a bank providing the financing it is a group of investors lending funds to the company.

Preparing a Regulation D Offering is very straightforward. It involves three primary steps:

1. Pre-Offering Structuring: Most entrepreneurs are not experts in raising capital - and thus typically have poorly structured transactions. An improper or non-existent transaction structure will portray a very unprofessional image of you to potential investors. Thus, the very first step in an offering is properly setting the transaction structure and, in equity transactions, company share structure.

Pre-offering structuring typically includes such items as setting share price or note amount, determining how much of the company to sell (in equity situations), which Reg D program to use, setting the maturity date and annual rate of return for corporate notes (in debt situations), share allocations to principals so they maintain a set amount of control in the company, minimum and maximum offering amounts which set the effective range of the offering, minimum amount of investment per investor, etc.

2. Document Creation: Step two of preparing an offering involves the creation of the related Regulation D offering documents. These documents include:

  • Private Placement Memorandum: The Private Placement Memorandum, or "PPM", is the document that discloses all pertinent information to the investors about the company, proposed company operations, the transaction structure (whether you are selling equity ownership or raising debt financing from the investors), the terms of the investment (share price, note amounts, maturity dates, etc.), risks the investors may face, etc. Do not confuse the detailed disclosures and transaction structure in a PPM with the general information a business plan provides - they are not the same.

  • Subscription Agreement: The Subscription Agreement sets forth the terms and conditions of the investment. It is the "sales contract" for purchasing the securities. It is practically impossible to raise capital without this document - investors are not going to invest into your company or opportunity based on a handshake. Would you invest into a company without having the terms and conditions of the investment set in writing and agreed to by both parties?
    Promissory Note: In debt offerings you need to have a Promissory Note outlining the terms of the loan arrangement with the investors. The note is the actual "loan document" between the company and the investor.

  • Form D SEC Filing: The Form D is the notification filing that is sent to the SEC in Washington, DC. It notifies the SEC that you are using the Regulation D program and provides them basic information on the company and the offering. It is not an approval document or registration - it is merely a filing that notifies the SEC that you have a Regulation D Offering in place.

3. Marketing: The offering is now ready for marketing to investors. We provide our clients the capability to implement a diversified marketing campaign that involves NASD brokerages, Internet Marketing, and Direct Investor Marketing tactics.
A Regulation D Offering will solve all of the technical issues you will face when dealing with investors (investment structure, investment documentation, etc.) - these are issues that should be addressed before you interact with investors. Not addressing them ahead of time presents a very unprofessional image of you to the investor.
The Regulation D Programs can be used by domestic as well as foreign corporations. While the programs can be used by any corporation type - the preferred structure is a stock "C" Corporation or Limited Liability Corporation "LLC".

More detailed information on the Regulation D programs can be found at the Regulation D Resources website. This company also will help you create an offering for a fee. However, I use them just for information. Another very good source of information and a firm you can hire to create the offering for you is The Trowbridge Curriculum.

To your wealth!

Russell Roesner

Thursday, December 3, 2009

Broker Dealers

Raising capital from Broker Dealers is time consuming and expensive but can be a fruitful endeavor.

Broker Dealer firms are essentially licensed by FINRA that regulates the firms who employee the registered representatives who will present investment offerings to their clients.

Any offering that is legally registered with the SEC can be presented to clients of broker dealer representatives. However, broker dealers have in-house or 3rd party due-diligence firms who approve investment offernings before they are presented to clients (investors) of the registered representatives of the broker dealer firm.

Merril Lynch, Charles Schwab, and thousands of small broker dealers you may never have heard of are all essentially the same thing. A firm who has complied with the SEC to offer investments approved for sale such as stocks, bonds, mutual funds, and alternative investments such as Forex, Real Estate equities, Real estate debt, Oil & Gas, etc.

The big difference between raising capital through broker dealers and essentially every other avenue is that broker dealers require up front fees or commissions to refer their clients to buy into your investment. At the present time, gross fees range from 6-10% of capital raised.

Wow! Does that sound expensive? Well, it does if you your offering is designed to offer an internal rate of return (IRR) below a 15-20% or more thresh hold. Many investors have no idea that when they invest with their trusted broker dealer rep, the company very well may have made for more than he did.

However, if you have short term offerings where you can make in excess of 20% annually and at the present time not very difficult to attain especially in the distressed real estate asset, real estate debt, and corporate debt markets, it might make sense to pay those fees.

Ok, so how do you get a broker dealer on board?

1) First of all your offering needs to be investment ready both legally and from a marketing perspective. I've posted recently about how to do that so refer to my September 09 article entitled " "
2) Find a local broker dealer association nearby to your investment offering if it is localized. If its and international investment, then choose the market you feel most interested in what you have to offer.
3) Have your offering underwritten either by the internal due diligence team of the Broker Dealer firm or by their 3rd party team. A great example of a 3rd party team is the Alliance of Independent Broker Dealers focusing on the San Francisco Bay Area.
4) After your offering has been approved, its up to you to attend the broker dealer's conferences and functions. You also will have access to the broker dealer representatives email address' and phone numbers. If you are good at selling and have a good investment that has a track record and a future, you will begin to receive investment inquiries.

This is obviously a very brief description of the process. If you are interested in knowing more, do not hesitate to call or email me.

To your wealth!

Russell Roesner
415 680 3454