Minority Access to Capital, Inc. (MATC) had a GREAT general body meeting on March 10th, 2016 with partners J.R. McNair of Strongbox West and Gregg with Allstate. (Pictured above). If you missed the meeting, here are the audio notes and the powerpoint is below. Topic: Choosing the Right Investors For Your Business.
Text of Presentation:
- 1. CHOOSINGTHE RIGHT INVESTORS FORYOUR BUSINESS Prepared Specifically For: Minority ATC (Access to Capital), Inc. March 10th, 2016 Dar’shun Kendrick, Esq./MBA Kendrick Law Practice, LLC
- 2. About Me Started Kendrick Law Practice in January of 2010 Boutique law firm focused on private securities (legal compliance for companies raising private capital) 2 B.As (Oglethorpe University), J.D. (University of GA), M.B.A. (Kennesaw State) FINRA Non-Public Arbitrator Follow me on social media
- 3. DISCLAIMER: This presentation does not create an attorney-client relationship nor will specific legal advice be given. Furthermore, this presentation does NOT include all the laws, rules and regulations required for a proper and legal private placement offering. Please consult a knowledgeable securities attorney before making a solicitation to an investor.
- 4. The Numbers • $17.B in angel investing in 2009 to 57,255 businesses • $4B inVC funding in 1982 Almost $300B in 2007 • $1.6T in private equity overall from 2000-2009 • Quarter before last saw MOST private equity investment in a quarter since early 2000s
- 5. What is private capital? • Hedge funds • Venture Capital • Leveraged Buy outs • Angel investors • F & F • Convertible notes
- 6. What is NOT private capital? • Rewards based crowdfunding • Grants • Publicly held companies • Traditional loans
- 7. Ways to Raise $$Through an Exemption • Mini-IPO (Regulation A+) of $20- $50MM • Regulation D (3 rules) • Equity based crowdfunding
- 8. Not all investors are created equal!
- 9. 2 Important, Non Exclusive Factors RE: Investors Type of Capital Raise • Some exemptions will limit the NUMBER of “unaccredited investors” you can raise money from • Some exemptions will limit the WAY (no “general solicitation”) in which you raise • Some exemptions will limit RE-SALE in and of the secondary market • Some exemptions will limit the AMOUNT of money raise • Some exemptions will limit the LOCATION of those you raise money from Type of Relationship • Rule ofThumb: If you wouldn’t have dinner with the investor, don’t go into business with them.
- 10. Types of Investors • Institutional Investors (Morgan Stanley, SunTrust Rob Humph, Citibank, etc.) [$100M +] • Venture Capital Firms [$1M+; 10 year partnership; high return and usually “high growth” industries and preferred equity rights] • Angel investors [$2,500+; lesser restrictions on high growth and return; typically individuals or small groups]
- 11. So CAN YOU and SHOULDYOU just start raising money (in exchange for equity) from investors, including family and friends?
- 12. PIECE OF ADVICE Hire a knowledgeable securities attorney who will be able to guide you through the LEGAL COMPLIANCE and BUSINESS DECISIONS of who to go to dinner with for 6 months- 1 year.
- 13. Pitfalls • Corporate form set up has to be specific and in a certain order • “Time triggers” for solicitation • Agreements that you will need to have to investors (limit on the secondary market, unregistered security disclaimer, risk disclaimer, PPM, etc.) • Financials required to be provided to investors • Founder protections to be discussed (Dilution and bad math caused a company who thought they owned 66% of a company to go down to less than 10%) • M & A strategy needed for an exemption that allows for “general advertising” under a Reg. D exemption • State “blue sky laws” requirements • REMINDER: The S.E.C. can recommend CRIMINAL PROSECUTION to the Department of Justice, like the I.R.S.
- 14. Thank you! Dar’shun Kendrick, Esq./MBA Kendrick Law Practice http://www.kendricklaw.net(678) 739-8109 Find us on social media
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I am Dar’shun Kendrick, Private Securities Attorney and Owner of Kendrick Law Practice, helping businesses raise capital the LEGAL way. We work with “for profit” companies seeking to raise $250,000 or more through private securities (equity and/or debt) that have a line item budgeted for legal services. We do NOT find investors or introduce companies to investors; that is the job of “broker-dealers” and we are prohibited under federal securities law from doing so. I have 2 B.A.s from Oglethorpe University, a law degree from the University of Georgia and an M.B.A. from Kennesaw State University.