The,Five,Questions,You,Must,An finance, share, loan The Five Questions You Must Answer

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The Five Questions You Must Answer to Get Financing HelpBy William CatePublished November 1999[http://home.earthlink.net/~beowulfinvestments/] [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]1. What do you have? Is your company making money? If you are a startup company, youwill find it hard to raise money. The industry in which your companyoperates is important. If you are in a fad industry, your odds of findingmoney are better. Where are you selling your product or service? The largeryour market, the better your odds of finding money.2. How is the company structured?You must be incorporated somewhere. I think that a company with aninternational market for its products or services should incorporate in atax haven. Your management team must have a relevant education and work experience to make your company succeed.3. What do you want?You want money. How much money? Do you need all the money now or can the investment be spread over time. You are more likely to find money if the investment can be spread over time. The reason is the investors have the opportunity to see their initial investment produce positive resultsbefore they risk more money on your company.4. If you had what you wanted, what would you do?Expanding the company's market is your best answer. Poor answersare R&D, raise managements' salaries, or paying down debt. If your companyisn't growing, why should anyone invest?5. What are you willing to pay for help?Concisely answer what you are offering an investor to risk theirmoney on your company. Do you intend to rely on professional help inraising the money? Then, concisely answer what you are willing to pay theprofessionals for their help.If you are unwilling to pay the current cost of investment, youwon't find an investor. If you aren't willing to pay for professional help,you won't find professional help.The trick is to summarize your answers into a 300-350 word emailmessage. I'm willing to read your summary without charge. Most people inthe finance business will review a clear, concise, and short email andreply with a "yes" or "no." Please don't send me your investment packageunless I indicate an interest in your company.-----* LiquidityIf your potential investors can't sell their stock, they won'tinvest. You have better odds of beating the Bank at Monte Carlo thanfinding serious money for a private company. In Monte Carlo, your odds ofwinning at Roulette are 1-in-36. In Vegas, they are 1-in-37.Your odds of finding a Venture Capitalist are 1-in-2,500. Your oddsof finding a Vulture Capitalist are about 1-in-100. My best guess is thatyour odds of finding an Angel are about 1-in-300. It will cost $30,000 to$100,000 to prepare a business plan and present it to these groups. Is itworth the risk?According to Money (1/1/98), your odds of raising $200,000 for aSCOR company are about 1-in-4. The costs of raising this money will bebetween $15,000 and $100,000. If the potential costs are over $50,000, it'sa losing bet. You are making the same statistical mistake that a pokerplayer makes drawing to an inside straight.With liquidity, your odds improve. It may cost $1.25 million to doan IPO (Initial Public Offer). However, it's an even money bet that theunderwriter will do the IPO. If your IPO financing exceeds $2.5 million,you've made a statistically sound bet.Your odds of succeeding with a Spinoff/Offshore Private Placementexceed 9-to-1. This means the odds are over 90% in your favor. The reasonthat the spinoff works is the 1934 U. S. Securities Act is clear that anycompany with 500 American resident shareholders must be a reporting(public) company. While the U. S. Securities and Exchange Commission (SEC)can delay the review process, they can't stop a public company from payinga stock dividend to their shareholders. The reason the European FundManagers risk money on spinoffs is that they are buying the stock at asubstantial discount to the trading price. They can't lose because they areassured liquidity.It's your money. You can risk it on an IPO. You can risk it on aspinoff. You can waste it trying to find an Angel or VC. If you want torisk it on a spinoff, contact me.To contact the author: Visit the Beowulf Investments website: [http://home.earthlink.net/~beowulfinvestments/] Or, visit the Global Village Investment Club Website:[http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/] Article Tags: Five Questions, Must Answer