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Long on Ideas But Short on Cash? According to a comprehensive US Government study headed by the Small Business Administration (SBA) the most proven method of obtaining startup capital is private investors. In fact ninety-six percent (96%) of all start-up and early-stage businesses are funded by private investors -- therefore, to get funding it is vital that you know how to efficiently locate qualified private investors. That's where we come in, to help people get quality angel investor leads very quickly. In fact, we have new investors join daily they are screened for liquidity accreditation and interest in specific industries For example, when a company like yours contacts the angel investor, the investor will have an interest in your industry, money to invest and be willing to discuss an investment in your company. Further, as mentioned earlier, we add new investors daily. But, even though getting private investors is the main objective, we must point out, seeking private investments is governed by all fifty states. Additionally, each state has a securities board (example) that regulates and enforces the securities laws of the state. Also the federal government has The Securities and Exchange Commission (SEC) which enforces the federal securities laws. What’s more, all of the states and the SEC require any money invested in your company to be reported within fifteen days from the date one gets the investment. Of course one must only report to the specific state in which the investment was obtained and must report to the SEC. Obviously if one gets an investor in a particular state he or she does not have to report it to other states. For example, if one gets an angel investor from Florida (could be any state) he or she would only be required to report it to the state of Florida and the SEC. Therefore, one must report investments to the state in which he or she got the investment from, and the SEC, just as people are required to report income for a company to the IRS. Many people don’t know these rules regarding investments/securities or what the definition of a security is. IN TRUTH, A SECURITY IS ANY PRIVATE INVESTMENT. With all the above stated, you must not only speak with interested investors who have money to invest. But, you must be in compliance with both state and federal guidelines to legally speak to investors. Moreover, a company like yours must either register with the SEC and state governments or be exempt from registration. And, most beginning companies can’t qualify to register due to lack of operating history, so the company must find and qualify for an exemption. Furthermore, even if you plan on using an exemption, your company must file the proper forms to show it qualifies for the exemption, so, identifying an exemption and following all reporting and filing requirements is the only legitimate way to get capital. Remember most investors report investments made for tax purposes, so the concept of a truly private transaction really does not exist. YOU CANNOT JUST RAISE MONEY AND NOT REPORT IT, YOU WILL GET CAUGHT! Exemption To Choose Fortunately, on September 1st 1996, congress enacted “The National Securities Markets Improvement Act” (NSMIA), it amended the Securities Act of 1933 to exempt from state regulation any offer or sale of "covered securities" offered under 4(2) and 4(6) of the Securities Act. What this means is one can eliminate a vast amount of paperwork and expense that used to occur on a state level. BUT DON'T THINK, BECAUSE NSMIA EXIST ONE CAN COMPLETELY IGNORE STATE REQUIREMENTS. ONE MUST PROPERLY LET THE STATE KNOW HE OR SHE IS DEPENDING ON NSMIA. If you fail to file properly for the exemption with the SEC you will likely get a cease and desist order for offering unregistered securities on a state level. See Section 18(b)4(d) and 18(b)3 The reason we point out so strongly the state requirements, is to often people under-estimate how serious states are about protecting both institutional investors and private investors i.e. citizens of the state. Half of all businesses fail. And state governments want to be sure persons like yourself inform investors of any and all possible risks. Plus, there are standard required notices that states require to be delivered in writing prior to accepting any investment from investors, and again, from institutional investors and private investors i.e. citizens of the state. We have provided just two different examples below of what states require in an investment package. This type of notice is to be presented at the same time you provide any information to ANYONE. Remember the below are just two examples of what states require; there are fifty other states. These notices are specific to each state, so one general notice won't do. A properly written investment package contains these along with many other very important legally required features. FLORIDA INVESTORS THE INVESTMENT HAS NOT BEEN REGISTERED WITH THE STATE OF FLORIDA UNDER THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT AND THEREFORE CANNOT BE RESOLD UNLESS THEY ARE REGISTERED UNDER SAID ACT OR ARE EXEMPT FROM REGISTRATION UNDER SAID ACT. PURSUANT TO THE FLORIDA SECURITIES AND INVESTOR PROTECTIONS ACT, WHEN SALES ARE MADE TO FIVE OR MORE PERSONS IN FLORIDA, ANY SALE IN FLORIDA MADE PURSUANT TO SECTION 517.06(11), FLORIDA STATUTES (THE APPLICABLE PROVISION OF THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT), SHALL BE VOIDABLE BY THE PURCHASER IN SUCH SALE EITHER WITHIN THREE DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE ISSUER OR ANY ESCROW AGENT, OR WITHIN THREE DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER. INVESTORS ARE HEREBY NOTIFIED OF SUCH PRIVILEGE. A PURCHASER MAY EXERCISE THIS VOIDING PRIVILEGE WITHIN THE AFORESAID APPLICABLE THREE-DAY PERIOD BY SENDING A TELEGRAPH, FAX OR LETTER TO YOUR COMPANY NAME AND ADDRESS GO HERE SENT AND POSTMARKED, PRIOR TO THE END OF THE AFOREMENTIONED THIRD DAY. IN THE EVENT THIS PRIVILEGE IS EXERCISED, IT WOULD BE PRUDENT TO SEND LETTERS BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED TO THE ABOVE ADDRESS TO EVIDENCE RECEIPT AND TIME MAILING.NEW YORK INVESTORS THIS OFFERING CIRCULAR DOES NOT CONTAIN AN UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS MADE, IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE., NOT MISLEADING. IT CONTAINS A FAIR SUMMARY OF THE MATERIAL TERMS OF DOCUMENTS PURPORTED TO BE SUMMARIZED HEREIN. THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THE OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.What it Takes to Get the Funding There are four requisites to qualify for the 4(2) exemption, angel investors MUST:
If one offers an investment to even one company or person who does not meet the above requirements, the entire offering is likely in violation of federal and state law. Many people ask what is an entity one must avoid soliciting for private investments--decide for yourself, the SEC list is below:
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After exploring the facts, most capital seekers realize the seriousness of the situation, and ask how can he or she be sure to not solicit institutional or individual angel investors in an improper fashion. To avoid soliciting a person or company improperly you must:
After the above four steps are met you can freely contact the investor without violating non-solicitation guidelines. As was earlier stated you are only allowed to communicate with sophisticated angel investors that are properly screened. According to the Small Business Administration fifty percent of all businesses fail, due to incompetent management, and, sophisticated investors know that fact. Investors begin by analyzing your competence the moment you begin presenting your offer. Don't kid yourself, investors know if your breaking securities laws when you don't have a properly prepared and properly filed investment package. Nothing shows greater incompetence than not knowing the laws that govern what you are doing. What that means is, smart investors don't want do business with a company unless it can show them it is legit from the very start. Further, investors don't want to take all the risks alone by being the only investor you have. Therefore, is much easier to syndicate an investment offer among multiple investors. Thus, investors look for legitimacy and dividing risks. When you submit your investment package and file the Form D with the Securities and Exchange Commission (SEC), the investors can go to the SEC Database . This allows the investor to see you have filed and are not likely not to be a incompetent business person. We at BreadStreet have a very simple method to do things right. Under our program you will get the forms, filings and investor prospects you need to be compliant and effective at reaching sophisticated investors. If looking for private angel money you must have all documents, such as, Regulation D prospectus, Form D and filing. Everyone is curios how much time is usually required to raise capital and how to know he or she is on the right track for fastest possible funding click here for a time line and methodology study performed by the Kauffman Foundation. Though no one can guarantee if or how soon you will get funded there are three reasons that make Regulation D best for early stage companies.
Under The Radar--Bad Idea "Negligent failure to comply with state and federal law is an easy trap for fast moving executive teams who weigh the costs required for typical compliance methods against the risks of getting caught." And that's because it can be expensive. It's not uncommon to spend upwards of $50,000 for multi-state offerings of $500,000". But BreadStreet offers a much better value than the national average. We are affordable for virtually any budget. "For entrepreneurs, properly registering or filing proper exemptions of their investment offerings vitally protects them against strict rescissory liability, not to mention the potential for civil enforcement and criminal actions. And without initial compliance, the costs of raising the next round of capital, corporate investment or being acquired becomes dramatically more expensive and complex." Google's 2005 IPO was delayed five months, and cost millions of dollars in additional legal costs to remove unaccredited investors from the early-rounds of investment. Google is one of thousands of examples that negligently failed to comply and got in trouble. Think about it, Google had been raising capital since 2000 they got in trouble five years into company development. What if they had not had the money to give back to investors or pay legal costs. *Source: ACE-NET which is the cooperative effort between SBA and nine universities, state-based entities, and other non-profit organizations. FREE Training Below One Hour Recorded Phone Conference This conference is over an hour of quality training regarding how to get, and close private investors. There are three speakers. One is a gentleman that has been successfully raising millions of dollars annually for over ten years. This recording is NOW FREE, but it normally sells for $9.95. This Recording Requires RealPlayer® If it does not play for you, get your FREE Download
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