Raising Capital For Dummies

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John Wiley & Sons, Apr 27, 2011 - Business & Economics - 336 pages
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While raising capital has never been easy, it has become a lot more difficult over the past few years. The dot-com debacle has made investors skittish, especially when it comes to financing early-stage start-ups. As a result, more and more entrepreneurs are being forced to compete harder and harder for a spot around the money well. At the end of the day, all most have to show for their efforts are tattered Rolodexes and battered egos. What they need is the competitive edge that comes with having a friend in the business–an advisor who’ll cut through the mumbo-jumbo and tell them in plain English how to get the money they need. What they need is Raising Capital For Dummies.

Whether you’re just starting your business and need a little seed capital to launch your first product, or you’re looking for a little help expanding an established business into a new market, this friendly guide helps you get the financing you need to realize your dreams. You’ll discover how to:

  • Tap personal sources of financing, as well as family and friends
  • Approach customers and vendors for financing
  • Hook up with commercial lenders
  • Find angel investors 
  • Get an SBA loan
  • Raise cash through private equity offerings
  • Woo and win investment bankers and venture capitalists

Venture capital guru, Joseph Bartlett explains in plain English the capital-raising strategies and techniques used by some of today’s most successful businesses, including tried-and-true methods for:

  • Assessing your financial needs and creating a solid financial plan
  • Researching sources of financing and making first contact
  • Finding, contacting, and convincing angels
  • Getting your customers to finance your company
  • Understanding and exploiting matching services
  • Exploring commercial banks, savings institutions, credit unions, finance companies, and the SBA
  • Qualifying for a loan
  • Working with placement agents
  • Raising cash through IPOs and mergers

From raising seed capital and funds for expansion to IPOs and acquisitions, Raising Capital For Dummies shows you how to get the money you need to survive and thrive in today’s winner-take-all marketplace.


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State Regulation
Creating a Winning Privateplacement Memorandum
Preparing the contents of the PPM
Chapter 11
Venture Capital
Understanding VC Lingo
Your venture capital decoder ring
Taking a Closer Look at How VCs Work

Chapter 1
Got Cash? Figuring Out How Much Money You Need
Getting Your Financial Ducks in a Row
That Is the Question
Different flavors of debt financing
Different flavors of equity financing
Looking for financing in all the right places
Choosing a path
Chapter 2
Taking a Dip into Your Savings
Not Just for Breakfast Anymore
Turning Your Home into an ATM
Understanding how home equity loans work
Financing your business with a home equity loan
Theres Gold in That Retirement Fund
Withdrawing cash from your 401k
Using your 401k to get a loan
Chapter 3
Pounding That Rolodex
Fellow members of organizations
Fellow business travelers
Understanding What Goes into the Exchange
Making Your Pitch
Its refreshing
Going to the end of the line
Keeping It Fair and Legal
Valuing your business fairly
Managing expectations
Giving special consideration to family and friends
Sample BuySell Agreement
Chapter 4
Getting to Know You
Understanding where angels come from
Does your angel measure up?
The Outer Limits of Angel Deals
What You Can Expect from Your Friendly Local Angel
Angels can get you the capital you need
Angels make great advisors
Where to Find Them
Venture capital clubs
The Internet
Chapter 5
The Ins and Outs of Trade Credit
Getting your foot in the door
Do you know your credit score?
The Joys of Financial Incentives
Getting Your Customers to Finance Your Company
Who Needs Money?
The good news about bartering
Bartering dos and donts
Is barter for you?
Chapter 6
Understanding How Matching Services Work
Offline Matchmaking Services
Getting to know you
Face time
The Internet to the Rescue?
What online matching services can do for you
The good news and bad about online matching
Looking into the Future
Part II
Chapter 7
A Loan for Every Occasion
important lending terms ahead
Different kinds of loans
Doctor Livingstone I Presume? Exploring Sources of Loans
Commercial banks
Credit unions
Finance companies
Small Business Administration SBA
Qualifying for a Loan
Eight Steps to Getting the Loan You Want
Chapter 8
A Whos Who of Placement Agents
The crème de la crème
Early stage experts
Regional investment banks
Boiler rooms and bucket shops
Understanding the Role of Placement Agents
What placement agents do
What placement agents dont do
Do You Need a Placement Agent?
Coughing Up the Cash
The retainer
The success fee
Avoiding RipOffs and Failures
Being realistic about valuation
Sample Agency Agreement
Chapter 9
Exploring SBA Loan Programs
Section 504 program
Microloan program
Understanding SBA Requirements
Applying for an SBA Loan
And Dont Forget Small Business Investment Corporations SBICs
Cutting through the red tape
Chapter 10
Exploring the Regulation D Exemption
Rules rules and more rules
Complying with the ban on general solicitation
Avoiding nonaccredited investors
Wait Theres More Important Regulation D Considerations
Presenting tips for Regulation D transactions
How individual VCs make their money
How often VCs really turn 100 million into 300 million
How VCs find venture opportunities
Landing a VC
Understanding how VCs get their deals
Gaining access to VCs
Figuring out what VCs want from you
Remembering some triedandtrue rules
Chapter 12
Talkin the Valuation Talk and Walkin the Valuation Walk
Market capitalization
Capitalization rate
Expressing values before and after getting the money
Putting Different Valuation Methods to Work
A bit more esoteric
Discounted Cash Flow The Basics
Experienced Hockey Players Are Wary of High Sticks
Nonnumerical factors of forecasting for nonmath majors
Using cash flows as the basis of valuation
Other indicators of value
Chapter 13
Introducing the Basics of Lease Financing
Common terms and conditions
The two most common types of leases
Does your equipment qualify?
Some Good Things about Lease Financing
Some NotSoGood Things about Lease Financing
Making the LeaseBuy Decision
Lease Financing Where to Look
Banking institutions
Independent leasing companies
Part III
Chapter 14
What Investment Bankers Do to Earn Those Big Bucks
Underwriting yes overwriting no
Serving as placement agents
Trading on their own accounts
Playing an advisory role
Functioning as a retail brokerage
Managing buyout and venture capital funds
Your Money Is Safe Probably
Gaining Access to an Investment Bank
Get bankers to call on you
Work your connections
Chapter 15
The ABCs of IPOs
Deciding Whether an IPO Is Right for You
The good news about IPOs
And the bad news about IPOs
A StepbyStep Guide
Assembling your team
Completing registration forms
Selecting accounting principles
Preparing the prospectus
Presenting soft information
Embarking on your road show
Pricing and closing
The Road Show Never Ends
Chapter 16
Defining What a Merger Is
Selling out and paying taxes later
Asset versus stock purchase
The taxpostponed merger
Exercising Appraisal Rights in Forced Merger
Do Shareholders Have a Vote?
The entire fairness standard and enhanced scrutiny
Duty to auction
Fairness opinions
Protecting directors with the disinterested directors committee
Majority of the minority
Closing the Deal
Disclosing the deal to your staff and the public
Part IV
Chapter 17
Borrowing from Family and Friends
Utilizing Credit Cards
Taking Out a Homeequity Loan
Considering an Uncollateralized Personal Loan
Refinancing a First Mortgage
Selling Some Assets
Borrowing Against a Life Insurance Policy
Factoring Your Receivables
Borrowing Against 401k
Playing the Lottery
Chapter 18
Getting Advance Payment from Customers
Extending Your Payables
Swapping Stock for Payables
Seeking Assistance from State Regional and Federal Programs
Establishing Strategic Alliances
Exploring Investment Partnerships
Finding the Right Placement Agent
Hooking Up with Angel Investors
Chapter 19
Requiring Payment Immediately If Not Sooner
Dont Pay Bills Any Sooner than You Have To
Invoicing Frequently
Encouraging Fast Payment with Discounts
Budget Your Cash
Managing Your Expenses Rather than Letting Them Manage You
Keeping on Top of Your Accounts Receivable
Encouraging Your Customers to Use Credit Cards
Making Sure That Your Invoices Are Right the First Time
Invoicing upon Delivery
Bonus Step 11 Great Cash Flow Strategies

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About the author (2011)

Joseph Bartlett, author of Fundamentals of Venture Capital and other books, is an adjunct professor at NYU Law School.

Peter Economy, author of Consulting For Dummies and other books, is a business consultant.

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