how to raise money in utah
TRANSCRIPT
HOW TO RAISE MONEY IN UTAHHOW TO RAISE MONEY IN UTAH Wayne Brown InstituteWayne Brown Institute
March 15, 2006March 15, 2006
Chris AndersonSnell & Wilmer L.L.P.15 West South Temple, Suite 1200Salt Lake City, Utah 84106(801) [email protected]
STARTING A STARTING A BUSINESSBUSINESS
Personal AssessmentPersonal Assessment
Do HomeworkDo Homework
Be CommittedBe Committed
Get StartedGet Started
Focus on What is ImportantFocus on What is Important
FORMATIONFORMATION
Choice/location of entityChoice/location of entity Tax considerationsTax considerations Intellectual property protectionIntellectual property protection Establish rolesEstablish roles Refine business planRefine business plan
INITIAL OWNERSHIP/CAPITALIZATIONINITIAL OWNERSHIP/CAPITALIZATION
Who will be the initial Who will be the initial investors/participantsinvestors/participants
What will they getWhat will they get Valuation, vesting, restrictions, rightsValuation, vesting, restrictions, rights
DO YOU WANT/NEEDDO YOU WANT/NEEDOUTSIDE INVESTORS?OUTSIDE INVESTORS?
Look at needs, resources, alternativesLook at needs, resources, alternatives Consider advantages of outside investorsConsider advantages of outside investors Consider disadvantagesConsider disadvantages Remember different types of investors bring Remember different types of investors bring
different demands/expectations/talentsdifferent demands/expectations/talents
WHAT KIND OF INVESTORS WHAT KIND OF INVESTORS DO YOU WANT/CAN YOU ATTRACTDO YOU WANT/CAN YOU ATTRACT
How much money do you needHow much money do you need What do you offer (stage/potential)What do you offer (stage/potential) What are you looking for in an investorWhat are you looking for in an investor There are different kinds of investmentsThere are different kinds of investments There are many kinds of investorsThere are many kinds of investors
ARE YOU ATTRACTIVE TOARE YOU ATTRACTIVE TOTARGET INVESTORSTARGET INVESTORS
Demonstrated potential to create Demonstrated potential to create value/return for investorsvalue/return for investors
Proven managementProven management Willing to accommodate termsWilling to accommodate terms Potential exitPotential exit Meet criteria Meet criteria
SECURITIES LAW COMPLIANCESECURITIES LAW COMPLIANCE
Federal and state regulationFederal and state regulation Registration or exemption requiredRegistration or exemption required Common exemptions (Regulation D)Common exemptions (Regulation D) Dealing with sophisticated (accredited) vs. Dealing with sophisticated (accredited) vs.
unsophisticated investorsunsophisticated investors Be careful with disclosuresBe careful with disclosures Be careful with findersBe careful with finders
BUILDING A VENTURE THAT CAN RAISE BUILDING A VENTURE THAT CAN RAISE MONEYMONEY
AVOIDING RED FLAGSAVOIDING RED FLAGS
Substance over promotionSubstance over promotion Business factorsBusiness factors Experienced teamExperienced team Simple, Clean structureSimple, Clean structure Open to inputOpen to input Listen before dictating termsListen before dictating terms Careful documentationCareful documentation Be focusedBe focused Don’t ignore business to search for moneyDon’t ignore business to search for money Confidentiality/Proprietary Information AgreementsConfidentiality/Proprietary Information Agreements Ownership/protection of intellectual propertyOwnership/protection of intellectual property Vesting arrangementsVesting arrangements
THE MONEY RAISING PROCESSTHE MONEY RAISING PROCESS
Do homeworkDo homework Follow targeted approachFollow targeted approach Complete Business Plan, Executive Summary, Complete Business Plan, Executive Summary,
financial statements and various presentationsfinancial statements and various presentations Get inputGet input Introductions can be valuableIntroductions can be valuable Professional advice/compliance/credibilityProfessional advice/compliance/credibility Be persistentBe persistent Be the companyBe the company
STRUCTURING THESTRUCTURING THEVENTURE CAPITAL INVESTMENTVENTURE CAPITAL INVESTMENT
Often Preferred StockOften Preferred Stock– Voting, board representation, liquidation preferences, Voting, board representation, liquidation preferences,
dividends, protective provisions, conversion, anti-dividends, protective provisions, conversion, anti-dilution protections, redemption, co-sale, drag-alongdilution protections, redemption, co-sale, drag-along
Be familiar with typical financing terms and Be familiar with typical financing terms and consequencesconsequences
Accept reasonable terms, but remember bad terms Accept reasonable terms, but remember bad terms can hinder future investmentscan hinder future investments