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The greatest obstacle to raising capital that must be overcome is not having a sufficient understanding of what is necessary and required to raise capital from investors. The following will discuss in great detail topics you need to understand with this document addressing the gaps in your knowledge. The information in this document should allow you to "create" a plan to find investors and raise capital.


You are automatically subject to Federal Securities Laws if you are seeking investors for your company. Google, "Regulation D" which requires you to provide any and all prospective investors with "all material information" regarding your company so each investor may make an informed decision about investing with you. The document you need to create is called a Private Placement Memorandum. We discuss creating a PPM later. 

Create a good business plan


For most of you, professional Investors are not your likely investor. Most business plans are written for professional investors.

business plan is a marketing document created to generate interest in the company from a marketing and operational points of view. As a standalone document, it can pretty much say anything because it is the equivalent of a glorified brochure. HOWEVER, when it is added to a Private Placement Memorandum as an exhibit (and it must be added to the PPM to fulfill your responsibilities to the potential investors) it then becomes a document that carries with it legal responsibilities. Responsibilities that if the information and representations are misstated or wrong, even if accidental, can have legal repercussions to you.

The business plan should contain operational information, forward-looking statements,  potential markets, detailed information about partners, directors and also possibly financial projections of revenue and income. It must contain all the bad news, risks and potential downfall or liability of the company regardless if pessimistic, realistic and down-to-earth. It should include the list of competitors, an industry market analysis and a description of the management chain. It must list all possible scenarios involving the company that could go wrong. It must address the competition regardless of how gloomy the prospects of the competition or how sophisticated the competition.

A business plan is never an Offering Document and should never be used as one. If you include the business plan statements such as the amount to be raised, what the deal is, exit strategy, pricing, etc. you have crossed the line into making the business plan an Offering Memorandum. At that point, the document must include all the information necessarily that would be in an Offering Memorandum.

Expect to add your business plan to the Private Placement Memorandum (PPM) and for it to be "the" primary exhibit within the PPM. Prior to adding the business plan to the PPM you should review and remove any statements that are inappropriate. Examples of inappropriate statements would be: "Our exit strategy is to go public" or  "we will be profitable by year two of operation." In these cases, adding a disclaimer doesn't mean you get a free pass. 

There are interactive software programs that will greatly assist you in building your business plan by asking you pointed questions for information needed in your plan. Google, the keywords "business plan software" for specifics. Write your business plan to the level of your investor profile. Do not use abbreviations that they will not understand. Do not use "big" words to show how smart you are. Write the document to the level of the reader. If they don't understand the document - they will not write you a check.


If you are a startup, your likely investor is not an institution or venture capitalist or angel investor. Professionals know that 95% of startups fail within five years and they do not want to be the first money in. If your "start-up" is special and these professionals would consider investing, in almost all cases, they will want the control to protect their investment. Would you agree to the condition that they can kick you out of your company?

Profiling Investors

Showing your project to potential investors means identifying individuals who would be interested in the idea behind the project. In many cases, the likely investors will not be professional investors. The "investor profile" will likely be that of a small investor, investing amounts from $5,000 - $50,000.

Though it may be possible to interest Venture Capitalist and Professional Angels; it makes sense not to limit your options to just them. The investor you should focus on will be driven by the deal and the idea behind the project. Every deal is unique and should be judged on its own specific merits.

Be realistic in your risk assessment: 

It is very important that you properly identify what the likely prospective investor profile looks like and gear your presentations to that profile. This is a very important element of your overall strategy and a key to the potential for your successfully raising funds. If advertising for investors, this process will be the core reasoning behind structuring your ads.

Finding Investors 

There are millions of individuals with IRA's and 401k plans receiving less than a 1% return on their retirement accounts. You may be one of these persons yourself. Most of these individuals are wondering how they will ever have enough money to retire eventually. These individuals would be an example of one possible type of an investor profile. Many of these potential investors are searching for substantially better returns and will likely be your best prospects.

understand key points when ADVERTISING FOR INVESTORS


One of the most important changes in the Federal Securities Law was enacted in 2014 permitting "you" to advertise for investors. 

 Regulation D - Rule 506(c) is a new Federal Regulation that allows for the direct advertising and solicitation of investors. In other words, if you comply with the specific requirements of the law you are permitted to advertise for investors. However, remember that the rule mandates specific restrictions and compliance responsibilities and as a result investor solicitation (advertising) must be done in a manner that complies with the law. 

Goal: No one can force an investor to write you a check. To successfully raise capital your ultimate goal must be to drive "qualified" leads to a "place" potential investors can be exposed to your "Offering Documents."

Qualified leads: Your likely ad/message will be restricted to less than < 130 characters. We must say something within your 130 character ad that will cause the reader (potential investor) to reach out to you and request more information. As a result, each response provides you with a "qualified" lead. In other words, there is an element in your advertisement that the prospect likes and is now incentivized to read the entire Offering Document.

What's the deal?

To properly educate a prospect to the details of your project takes a great deal of time, hours. You cannot sit down with every potential investor and tell them your story. You need to offer prospects a deal that is financially attractive that can be pitched on a short website landing page and make them "want to" read your investor documents. There are many ways to conceptualize and structure a deal that will create excitement with prospects. Remember, your deal must incentivize the prospect to read your investment documents. Are you thinking of Offering Equity or Debt? Too often, we will have businesses submit to us their Offering Documents that contains an unworkable and unsellable deal. Their Offering is already a non-starter. When we prepare Offering Documents there is a great deal of information we must collect first before we begin to make suggestions as to possible structures. You will find this is especially true in Real Estate Offerings. We begin by framing the questions for talking points that you will need to consider and address. We then discuss both your thoughts and answers with our recommendations which allow you to make informed choices

Special note: Before we begin to prepare the PPM - Offering Documents, the first item discussed and decided is what are we going to say within the 130 characters that will identify the keywords that prospective investors will be "searching" which will be sufficiently compelling to readers to seek more information. That's the secret sauce as they say.

Place: Now that we have the prospect requesting more information; we need to have a "place" for the prospect to access and review all available information about your project.

We can only solicit investors who first meet the criteria of "accredited" investor" so we must qualify them as an appropriate "accredited" investors before giving them access to the Offering Documents. 

We need to provide the prospect with enough information to keep them interested but not information that would violate Federal Securities Laws.

We need to incentivize the investor prospects sufficiently for them to provide us the personal information needed to qualify them as "accredited" investors. In so doing, we can provide them with the Offering Documents fully informing them of "all material information" about your project and staying in compliance with Regulation D.

Follow up: Once the prospective investor has all the information a follow-up call from a company officer offers to answer any questions the prospects might have. 

Results: Sending your information to prospects that have qualified themselves by expressing an interest in key features in your advertisement has a much higher chance of success.

Advertising Cost: The advertising cost should average between $1.50 - $2 per "qualified lead. Dependent on the quality of the project, you might hope for 4% - 6% of those leads to pursue active discussions with you. In each and every case, the prospect willingness to invest will be dependent on how you come across. They must perceive you as honest if they are to write you a check.


Regulation D - Rule 506(b) or Rule 506(c) do not require any Federal approval. The differences between Rule 506(b) and Rule 506(c) is that with 506(c) you can advertise for investors and 506(b) you can't. So what does this mean? IF, you conduct your Offering following the Rules specified in Regulation D you are exempt from having to comply with the very difficult and complicated rules that govern the other types of Offerings. 

What do you need once you Find Investors? The short answer is Offering Documents which consist of a Private Placement Memorandum, Subscription Agreement, and Investor Questionnaire. You are responsible for giving your Offering Documents to each and every prospective investor regardless of whether they invest in your project. The Private Placement Memorandum aka PPM must meet Regulation D requirement that it contains "All Material Information" that an investor needs to make an informed investment decision. The Subscription Agreement is the acknowledgment of receipt of the Private Placement Memorandum aka PPM by the investor which they sign and return to you with their investment check. Remember, the Offering Documents are required to be given to any prospect that you discuss investing in your project; regardless whether they ultimately invest or not. The only exemptions are members of your immediate family i.e.: Mother, Father, Sister, Brother. 

Your responsibility is to provide each and every "prospective" investor with "All Material Information." You must create "Offering Documents" aka Private Placement Memorandum which will be discussed next.   You might have heard of other types of Offerings such as Regulation A aka Reg A, Regulation S aka Reg S, Initial Public Offering aka IPO, etc. In all other instances, you would be required to submit your Offering Documents for Federal approval. In each case, the costs will easily exceed $250,000, and unless you are a going business with several years of certified financials, you will not be successful in raising capital. The exception is Regulation D - Rule 506 (b) or (c) Offerings. The quick answer, don't waste your time. Each of those avenues requires "Federal Approval" before you can take any funds from investors. 


There has never been a better time to raise capital successfully. Most particularly for real estate projects. In fact, for the first time in years, Real Estate Investors are now coming to us asking to be shown real estate development projects. There is an increasing appetite for quality real estate investments, particularly if secured. In our opinion, the principal reason is that real estate is the most conservative investment choice available in today's marketplace. There are millions of Real Estate Investors with 401k and IRA plans complaining about the 1% return on their retirement accounts. Each one of these individuals has both the resources and potential to be an investor.

Investor Blind Pool: This is to raise money for your project where you do not name property specifics but describes in detail the criteria you will use to select specific properties for purchase. 

What's the deal? What deal can you offer prospective Real Estate Investors?  

Can you offer prospective Real Estate Investors an interest rate return on their investment? 

Can you offer to secure Real Estate Investors funds with the underlying property? 

Can you offer Real Estate Investors a piece of the profit (backend)? 

What is your Investor Profile and Presentation? 

1.         An opportunity for a significantly higher return on their 401k and IRA funds? 

2.         Security - Fully securing their investment funds with the underlying real estate?

3.         Interest: An interest rate return? 

4.         Profit Participation: A reasonably good piece of the profit (backend) in addition to an interest rate return?

Finally, what is the real estate investor's EXIT strategy? In other words, when can they get their money back? One of the several possibilities is offering a redeemable debenture (bond). 

Does this make sense to you? 

creating a private placement memorandum - PPM


The PPM comprises the following documents: 

Private Placement Memorandum (PPM): A completed Private Placement Memorandum is a document you give to an investor that will provide that investor with "all material information" needed to make an informed decision. It is generally around 30 pages not including your business plan exhibit.

Subscription Agreement: This is an 8 - 9-page document that the investor signs and returns to you with their investment check. The Subscription Agreement is your receipt that the investor confirms they have received the Offering Documents. In the event of litigation, it becomes your primary defense against any claims that you did not provide the investor with "all material information." 

Investor Questionnaire: Each Investor will fall into 1 of 2 categories. "Accredited" or "Non-Accredited" Investor. You will be required to identify the specific category each of your investors meets. This document provides the basis for qualifying each potential investor. 

Operating Agreement: If you are an (LLC) Limited Liability Company) an Operating Agreement must be given to each investor for signature and return to you. 

These documents must be given to any prospective investor that you speak with whether they invest or not.

The document belongs to the prospective investor and is not returned to you. No signature is required.

The PPM will be appropriate for your company structure whether LLC, C Corp or S Corp.

The Preparation of the Private Placement MemorandumSubscription Agreement, and Investor Questionnaire can be a very complicated process depending on a number of factors. Mr. Shields reviews with you many of the different options explaining the pros and cons of each so that ultimately each of your decisions is going to be made from an informed position. Mr. Shields has 35 years of Wall Street experience including being a Member of the New York Stock Exchange.

Some of the examples of the subjects we will cover with you. 

Investor Exit Options

Equity or debt and what it means to you  

Preferred -Common - Debentures

How to Solicit Investors or different methodologies in identifying and reaching out to investors

Pricing your offering

How much of the company should you offer investors?

What's the DEAL?

Offering amount

Complying with Federal Securities Laws - Regulation D (Reg. D)

Changes to your business plan

Options for Raising Capital  








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