Carter Allen, P.C. - Start-Up Services

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What type of capital should I raise?
"Green" works quite well for many, yet "strategic" is better, albeit not always available. Remember that "dollars" are attached to "investors" to whom you will have to answer and with whom you will have to work. Once you take an investor's money, you can't just ignore the investor.

How do I seek venture capital?
Persistently - VC capital is hard to come by today for recently minted entrepreneurs. The capital is theoretically out there, yet you need experience, proof of concept and persistence to close. Vet the business plan with experienced folk, use warm introductions to VCs and practice, practice, practice answering the tough questions. Before chasing VC money, you must understand how a venture capital firm works as a VC fund's objectives may be misaligned with your objectives. Chasing VC money is time consuming - if you'll never get it, don't waste the time searching for VC money.

Should I "just wing it" in the VC presentation?
No. Prepare for the VC pitch with someone who knows what to expect - as if you want your personal reputation to grow from the pitch, regardless of whether the VC thinks the idea is worth funding.

How do I seek "friends & family" capital?
Ideally, use a private placement memorandum. In certain instances, a stock purchase agreement with risk factors will do the trick.

Do I need a PPM?
A private placement memorandum is important for raising capital from groups of investors and for qualifying for certain exemptions to securities laws. VCs will invest without a PPM as VCs typically provide the first draft paper work to close on the investment, and in the word of one VC, "there ain't anything in a PPM that is gonna help me." However, many prospective investors will conclude that you are not serious unless you have a well drafted PPM. PPMs serve legal and business purposes.

Is it legal to sell stock to anyone?
No - the sale must fall within an exemption in order to legally sell unregistered securities. "Securities" can include stock, options, warrants and debt. You should plan your capital raising efforts such that you don't "run out" of exemptions.