Below is an article by Austin Business Journal entitled “5 Ways to Prepare Your Business to Raise Capital”
5 Ways to Prepare Your Business to Raise Capital
By: Judd Hollas, Austin Business Journal Contributor
March 7, 2014
In 2012, President Obama’s Jumpstart Our Business Startups Act ushered in an era of unprecedented methods for startups to raise capital using crowdfunding. It opened the door for entrepreneurs and small business owners to acquire capital through alternative means outside of traditional financing from banks, venture capital firms or angel investors.
However, initiating a fundraising campaign for your business is not a simple process, and poor preparation will likely result in a tangible amount of wasted time - and possibly no capital to expand your enterprise.
Here’s five tips to help you make the most out of your fundraising efforts this year.
Create a solid business plan
The advantages of a well-developed business plan cannot be overstated. Not only does it serve as a powerful fundraising tool, it provides a solid framework for operations, helps establish your priorities, and assists you in making accurate predictions for the future of your company. It will also help you determine your company’s valuation and how much equity you will need to sell in order to reach your fundraising goal.
Make the proper legal preparations
A private placement memorandum (PPM) is necessary for any offering you make to a potential investor. First, it provides the details of your offering, risks involved, and what an investor can expect to receive. Secondly, it helps protect you and your company as it discloses regulations that dictate the offering and indicates to the investor that you uphold a professional attitude towards regulatory compliance with the SEC.