The pace at which your company develops – and even your ultimate success – can hinge on your availability of capital. Learn these basic rules of raising capital. Our experience has shown that a properly coordinated out reach program can attract attention and increase awareness.
There are over 100,000 publicly traded companies in the world. In the US, less than 4000 companies are actively traded in NYSE or Nasdaq. There are another 15000 stocks that are traded over the counter. The majority of them are thinly traded. When the time comes to make an investment, stockbrokers and investors alike are swamped with decisions, choices and alternatives. Your company is lost in the shuffle – just another needle in the haystack, unless brokers and investors are familiar with your company’s name and business. The only way to build that familiarity is to put your company’s name, story and pertinent information in front of targeted brokers as often as possible. A well-organized, professional Investor Relations and Broker Network Program can help build the familiarity your company needs in order to get its share of attention in today’s competitive markets and increase the liquidity in your company stock.
Angel investing in start-ups has been accelerating with many high-profile success stories that have spurred angel investors to make multiple bets with the hopes of getting outsized returns. Many angel investors may not be as wealthy as you think but they are financially savvy. Most are looking for a way to grow their money by promoting innovative new business.
In today’s business climate, there are literally hundreds of ways to fundraise.
Here are some basic rules to keep you on the right road to raising capital.
1. Establish clear, realistic goals. From day one, clearly state your objective. If you can’t explain your vision in concrete terms to potential investors, you can’t expect them to give you their money.
Be realistic about what you are trying to accomplish. By laying out your plan in detail, you should be able to say with confidence what you can expect to accomplish. Investors deserve transparency and truth. Your partnership must be based on trust — and only credibility can breed it. Making a good impression with a solid pitch presentation is important, but it won’t guarantee funding. Credibility invokes confidence, which mitigates risk and opens wallets.
2. Have a solid team in place. Any startup is only as good as its people. A strong, efficient and success-driven team is absolutely necessary. Your team represents the company, its goals, its vision and credibility. Recruiting people with sound reputations for honesty and integrity helps attract investments. After all, you are your team.
3. Focus on the “real” market. Exhaustive, in-depth market research is the only way to map a blueprint for success. Many early stage businesses are too eager to get started and end up setting out in the wrong market. The best market for a new business is not always the biggest or the steadiest. You have to do your homework. There is no replacement for in-depth market research.
You and your startup team should profile a variety of markets. That is the only way to determine which one is the best fit for your business. Market research can be tedious, but it is the bedrock of a solid business plan.
4. Get your name out there. The biggest irony in raising capital? You need some capital to do it. Investors won’t know every detail about your project, so you have to decide what essential information to deliver. Fortunately, the Internet is the best advertising medium invented, and it’s always open for new business.
The web is without a doubt the most powerful place to advertise. Even better, it’s cheaper than broadcast TV, radio or print media. Social media can also be a real boon, as solid networking can help you connect directly with potential investors. That’s how you create the support network for your project.
5. Consider crowdfunding for validation. Crowdfunding is one of the best fundraising tools available for startups today. The concept is simple: You advertise your business idea in a number of difference dedicated platforms and users vote with their wallets. A crowdfunding pitch can also be a good litmus test. If you don’t attract investors (or interested customers), you should consider tweaking your pitch or your business model.
Raising capital can be a very time-consuming process and it will always take longer to raise angel financing than you expect.
Not only do you have to find the right investors who are interested in your sector you have to go through meetings, due diligence, negotiations on terms, and more. There are a variety of ways to find angel investors, including through:
• Angel investor networks (groups that aggregate individual investors)
• Venture capitalists and investment bankers
• Crowdfunding sites like Kickstarter and Indiegogo
After finding investors you should determine whether a prospective angel is a good fit for your company, questions you should ask:
• How do you like to help your portfolio companies?
• What amount of follow-on investment do you think our company will need to succeed?
• How do you think you can be helpful to us in growing the business?
• How do you like to interact with your portfolio companies?
Angels will often invest in the company through a convertible note. They key terms negotiated are:
• Unsecured or secured on the assets of the company – this is almost always unsecured.
• Interest rate and payment – the interest is usually accrued and not paid currently.
• Discount rate – this is the discount rate the investors enjoy for taking the early risk in the company, expressed as a discount from the company’s Series A round of financing. A discount rate of 20 percent is typical.
• Valuation cap – this is the maximum valuation of the company where the note can be converted in the next round of financing.
We specialize in targeting qualified stockbrokers and investors who are actively seeking small cap investment opportunities. Our clientele are Public Companies, like you who are making a real effort to broaden their retail stockbroker and shareholder base with Real Retail Buying?
OTC PR Group can reach qualified and targeted stockbrokers for your company. Our experience has shown that a properly coordinated out reach program can attract attention and increase awareness. We have integrity and a high-quality database of stockbrokers and VC Groups who we are able to target for your company. Learn More:
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