Raising Capital For Dummies

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Great Financial Web Sites for Raising Capital

If you’re trying to raise capital for your business venture, you can turn to a considerable number of comprehensive Web sites for financial information. Strengthen your quest for capital by visiting these sites:

• VC Experts has a simple mission statement: “To leverage the power of the Internet to minimize the inefficiencies in the venture capitalization process.”

  
  



• Beyond its matchmaking service, Garage Technology Ventures offers forums for discussion of venture capital issues, conferences, a start-up recruiting and job-finding service, and plenty of links to other Web sites of interest.

  
  



• Explore ACE-Net if you’re looking for financing in the range of $250,000 to $5 million — amounts too high for debt financing but too small for most venture capitalists.

  
  



• Through its direct loan and loan guaranty programs, the Small Business Administration (SBA) has provided millions of dollars of financing to thousands of small businesses — many of them unable to obtain loans from any other source. If yours is a small business, be sure to give the SBA a try.

  
  



• Quicken has its own small-business Web site, chock-full of all kinds of useful financial information and tools for small and growing businesses.

  
  



• The Beyster Institute for Entrepreneurial Employee Ownership runs a great Web site that offers loads of information about employee ownership, including an extensive resource library, financial tools, and an online magazine.

  
  

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Top Ten Forms for Raising Capital

Like anything else in business, if you want to raise capital, you need to fill out plenty of forms — red tape must be cut — before you can get much done. The following list contains the more important forms when it comes to raising capital:

1.    Articles of Incorporation provide the overall capital structure and set bounds on the equity classes — especially for classes other than common stock.

2.    Stock Subscription Agreement can have a few important angles on defining the rights of the class of shares being solicited.

3.    Preferred Stock Designation further defines the rights and benefits of a preferred shareholder — beyond what is contained in numbers 1 and 2.

4.    Convertible Preferred Stock Designation like the preferred stock designation (in number 3) but for a convertible.

5.    Unsecured Loan may apply to bank and other loans.

6.    Secured Loan more typical loan secured by your assets or a portion of them such as receivables.

7.    Agency or Underwriter’s Agreement agreements used to engage a placement agent or underwriter.

8.    Confidentiality Agreement a wide range of terms is included in a confidentiality agreement; a restrictive example would be good to see and is especially appropriate for a sale or merger transactions.

9.    Letter of Intent (LOI or term sheet) is the key agreement that outlines the general terms for a sale or merger.

10.    Due Diligence Checklist is the outline of what a buyer can expect to be able to inspect to assure him- or herself that the price and terms in the LOI are satisfactory so that the transaction can proceed.

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