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Questions/Answers about our services
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Q: Am I guaranteed to find an investor?
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A: No.
What we do guarantee is that your plan will be seen by our IRA Network
Associates. Additionally, it will be profiled for selective distribution
for submission to literally hundreds of qualified lenders and investors in
our database. If your plan is good, you have a pretty good chance of being
funded. However, if your plan is flawed, the investors likely will not show
interest.
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Q: I'm interested in starting a small business - where do I find venture capital?
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A:
Venture Capital is probably not the correct form of capital for your small
business. You'll most likely be better served by debt financing, or
"Angel" financing if your business can generate a significant
return on investment.
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Q: Does IRA Network help non-technology companies?
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A: Absolutely!
We help the high-techs to the bricks-n-mortar crowd find the right kind of
financing and capital. What's most important is a well thought out business
plan that focuses on making profits.
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Q: Why is a business plan so important?
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A: First, it helps you by providing a "road map" for your business.
Second, it is used to show potential sources of money how you will generate
profits.
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Q: Why does IRA insist on reviewing my business plan?
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A: Simply put - our reputation is also on the line but we also want to make
sure you see the "forest" among the "trees".
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Q: Does IRA make loans or give grants?
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A: No, but we will help you find those resources.
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Q. Do I provide my business plan to all your investors with information on my
project?
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A. No.
After analyzing your project, we only target our funding sources that
specialize in your industry, size, stage, amount and other attributes.
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Q: Who are the venture capitalists you are referring to?
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A: They are strictly "start-up" and mezzanine level investment groups
with the most prestigious track record in the investment community, having
funded some of the most recognizable start-ups in the world today!
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Q: What about banks or SBA sources?
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A: They are included in our investor resource pool!
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Q. What happens when an investor asks for more information?
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A: We will respond immediately by providing the additional level of service and documentation.
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Q: What if the consulting and research time for my project runs over the
allotted time I contracted for?
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A: In most cases, the time allotted will be more than sufficient; however, should
your project require more time to complete the level of service you
contracted for we may consider deferring a portion of additional charges
for equity in your project.
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Q: What happens when an investment group requests a full business plan and I
don't have one or my current plan needs work?
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A: The IRA
Network will prepare and/or enhance your current
business plan for a nominal fee, or of course you are free to choose
another business plan service or write the plan yourself.
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Q:
Is my pre-qualifying fee applied to your business plan service?
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A: Yes,
full credit will be applied to any other services provided by the IRA
Network.
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Q:
How much does a business plan cost?
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A: A
typical professionally written business plan will run $1,500-$12,000,
depending on how much information and documentation you bring to the table.
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Q:
What if I can't afford to pay all of your "nominal" fee?
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A: The
IRA Network will endeavor to offset some of the expense of writing the plan
in return for a small percentage of equity in your company.
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Q:
When can I expect to see results from your search efforts?
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A: On
average, we experience a 30-90 day window depending on what level of
service you choose and investors committee review timetables, backlogs, and
other mitigating circumstances.
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Q:
Really? What are my chances of attaining funding?
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A: It
is impossible to absolutely predict whether any project will in fact get
funded. However, there is strength in numbers and your opportunity for
success is dramatically and greatly enhanced through our extensive investor
network and presentation abilities. Every year, thousands of companies are
funded - why not yours?
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Questions/Answers
about Valuation
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Q:
You indicate that investors are looking for a return of 30 times their
investment in 2 years. Am I to understand that if one were to obtain
$50,000 from an investor, they would be expecting to see $1,500,000 in two
years (30 x 50,000)? Or, am I misinterpreting what you mean by 30 times
their investment?
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A:
Great question - Yes, they really do want 20X to 30X returns, and yes, your
math is correct. Reason? Simple. Yours and other similar investments are
"high risk" and if they put money in this kind of high risk, they
expect a very high return. But with stock equity, it can be done simply enough.
Consider a $50K investment in your company for 5% of the company. That puts
the valuation of your company in the $1,000,000 range ($50,000 X 20 or
$50,000 divided by 5%). Now assume you grow your company to a revenue base
of $5MM in 2 years with that $50K investment. Assuming a multiple of
revenue of 2 as a valuation standard, your company is now worth about
$10MM. The investor's original investment of $50K, or 5% is now worth
$500,000 which is a 10X return (5% of $10MM). If you attract a competitor
whose stock is traded publicly who wants to purchase you by leveraging his
stock with yours, he purchases you for $40MM in his public stock. The
investor's stock is now worth $2,000,000 (5% of $40MM) which translates to
a 40X return. In real life, you will have raised additional capital,
thereby diluting yourself and the original investor, but even then, the
valuation continues to ratchet up as you bring value to your company by
revenues and profits.
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Questions/Answers
about Management Teams
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Q: I
hear time and time again about my "management team". I don't HAVE
a management team, so what do I put in my business plan?
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A:
Investors don't expect you to have your management team in place when
you're trying to raise money. They DO expect you to identify who you will
hire, or that you are in need of certain key people. They also want to see
that you recognize the importance of having a good "top dog"
running the ship. In other words, if you've got no track record of running
a company, it's unlikely an investor will invest in you with his or her
money as long as you're positioned to run the company. In cases like that,
we urge entrepreneurs to identify a "president" or
"COO" from the outside world who will be the person who runs
things operationally.
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Questions/Answers
about Small Business
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Q:
I'm interested in knowing more about how to build a business.
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A: That
goes beyond the scope of this web site, and would best be addressed by your
local community's outreach programs. Look up the SBTDC in your area
government listing and inquire about classes or instruction in business
building. Also, check to see if you have classes such as the Kauffman
Foundation's "Fast Trac" in your area.
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Q:
Is it hard to get capital on a business venture that started in Oklahoma
and is doing well enough to expand on a much larger scale to other states?
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A:
Expansion can do great wonders for a business, but it can also sink it.
Many companies have gone under trying to expand outside of their regional
boundaries, and the culprit is usually management experience and/or
capital. The first thing you need to do is create or update your business
plan that looks at the cost of expansion versus the gross profit. Assuming
your "honest" look tells you your expansion efforts are
profitable, you next need to locate an individual who has done it
successfully. Once you have those two entities, you'll be a good candidate
for an investor who will gladly take a piece of the action for your hard
work in expanding to these new areas.
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Q:
How can I get "angel" financing for an idea that solves the area
code saturation problem in the telephone system?
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A:
Write a good and believable business plan that addresses your technology,
why it's unique, why it's protected and how it will bring in millions of
dollars of net income. If you believe your own business plan, show it to
some trusted advisors. If they believe it, contact the IRA Network.
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Q: I
am interested in starting a women's clothing boutique. I have excellent
clientele. The clothing will sell like hot cakes but how do I obtain
financing to purchase more stock and inventory?
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A:
First you need to understand that you are NOT an equity capital candidate.
In other words, an angel investor will likely not invest in you because you
will not be able to return 30 times the investor's money. You should focus
your efforts on "debt" financing from the SBA or banks to obtain
your working capital or line of credit. Second, you need to write a
business plan to substantiate your profit targets, and then prove to your
banker that you can make the first target. If you succeed, he or she will
likely give you more so you can get more stock.
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Q:
We are greatly interested in information we found on your site. We would be
obliged to you if you would answer this question: We are not Americans; we
are from Russia. Is it possible for us to obtain a loan?
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A:
Assuming you have some really excellent technology, product or services,
you would be a candidate for equity or debt financing from American
investors. American banks, however, will generally not loan you money.
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Q:
My husband and I have had a machine shop for 12 years. We downsized at the
end of 1998 and I changed the name of the business and put it in my name.
The machining industry has been slow in this area so I developed a product
that I think will sell well and started another company to market the
product through. We had been running a production job for the past year at
our machine shop that slowed down the last couple of months but is due to
start up again in June. This caused me to get behind on my lease payments.
The bank that carries the lease has a lien on about everything we own
including our house. I have $88,000 worth of product in production for the
new company which with a little time and money I could get on the market.
My trouble is I need to keep the machine shop going and keep my house in
order to finish the products and get them on the market. What I really need
is turnaround money for the machine shop and start up money for the new
company. I wondered what the possibility of finding financing would be.
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A:
First of all, run, don't walk, to your banker and sit down with him or her
and tell him/her exactly what your situation is. If you do not communicate
with your banker you will find that he/she has no choice but to foreclose.
If you "talk" to your banker and present a sound plan for how you
are going to get out of your jam, you stand a greater chance of keeping the
loan intact and your house as well. Second, concentrate on making the
machine shop profitable. If you are bleeding red ink because of that shop,
you cannot concentrate on anything else. If it appears that you will not
make it profitable, don't hang onto a dying swan. Sell it to a competitor
and move on. Third, you need to realize that an investor will not invest any
money in you in your current condition. I hate to break the news to you but
you have no value to an investor in your current shape. Get the machine
shop cleaned up and get your debt reduced and THEN look for investors.
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Q:
How can I find investors on the web for a good business already established
or should I advertise?
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A: Once
again we say that investors will invest in a business if it has a clear
exit strategy and a sound business model. If your already established
business is a taco stand and you want to add curtains, chances are no
investors will invest in that because they will never get their money back
out of your company. If, however, you plan on growing and adding more taco
stands in the future, you have a great chance of attracting investors - if
you have a sound business plan.
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Q: I
own a Bed and Breakfast and am seeking a private investor to help expand my
business. The particulars are some what complicated, but I was wondering if
you deal with investors who deal with sums of 300 thousand plus? I would
not waste your time if I was not confident in my ability to be successful
with this venture. When I started in '94 I was $60,000 in debt. Last year I
brought in $125,000.
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A: Yes,
investors deal in sums from $25,000 to $5,000,000. But will they invest in
a bed and breakfast? Why should they invest in your business? Are you
promising them a quick exit strategy? Will they get 30 times their
investment in less than 2 years? If the answer is NO, you need to consider
a lending source, such as a bank.
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Q: I
am seeking information on how to find a capable investor who will fund a
challenging project for a new company with an exceptional new idea in a
consumer product. After contacting hundreds of consultant brokers who
claimed to be the actual investors and paying their fees (and after many
months of waiting their decisions) I've been turned away with little or no
explanations. I have submitted all business and personal documentations
requested by these company which left me broke, exhausted and without any
funding or referrals. I was told my executive summary business/projection
plan was in order. But their final decision was naught with any explanation
as to their sudden withdrawal. They have my main ideas about my product and
the strategy to promote them. Now I feel isolated and left with a great
product and no money to launch one of the newest game activities to be
introduced for the new millennium.
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A:
Hopefully, you have a signed confidentiality agreement with all the people
to whom you showed your business plan? It sounds like you have a good
concept, but without seeing your business plan, we have no way of knowing
if it is sell-able. Too often, an entrepreneur gets an idea, crafts a
half-baked business plan, and gets disappointed when no investors knock on
their doors. To attract investment capital in this world, you need (1)
sound management team with experience, (2) exit strategy for the investor,
(3) a sound business plan, (4) unique and proprietary idea that cannot be
easily copied, and (5) believable pro formas. If you think you have these,
contact the IRA Network and we'll help you find funding. If not, go back to
the drawing board and work at curing the deficiencies.
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Q:
Do you look for investment money for film projects? Would US investors work
with Canadian business opportunities?
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A: Yes.
But you still need a viable business plan for the film project. How will
you distribute it, how much is the talent costing, what are your
contingencies, etc?
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Q: I
own 1/3 interest in a motel and land. I would like to find an investor to
buy me out. I also own property in the mountains of Oregon, and would like
to start a bed and breakfast. Can I find an investor interested in it also?
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A:
Unlikely. Your best bet is to sell your motel to a competitor who is
successful in your area and wants to expand. As for the bed and breakfast
idea, typically they are not equity investor deals, but are more suited for
bank financing.
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Q: I
came up with an idea that involves an invention I made. How do I get it to
market?
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A: Your
best bet is to sell your idea or product outright rather than try to start
a company to market it. Depending on your business skills and experience,
you may be better off selling your idea to a manufacturer or company.
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Q:
Recently, I've been told that I'm an "inventor-prenuer", based on
my invention/concept. I am new to all this invention process and I'm trying
to find a private equity investor for my needs and to properly develop the
prototype and components. I was told that funding could be found providing
I had the working prototype to show and demonstrate to potentials (Ben
Franklin Technology Center, Philadelphia, PA). So, I thought I go about it
another way and form the business of business. I'm doing this all myself
and learning as I go. My questions are: 1) Would I be better off as an LLC? As opposed to a "company" 2) What is "risk"
capital? (it's not really to much of a risk.) 3) Is 22.2% of all sales for
a three period, (post product launch) unreasonable as my terms for said
investment funds of $100,000.? *Based on a worst case scenario of 45-55
million units sold @ $2,200.00 per unit in that time frame? 4) I haven't a
business plan nor executive summary, rather a 9 page outline regarding my
invention concept, what I've done and have at hand, feasibility and
worst-case scenario. Who could I send this to for starters?
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A:
Again, focus on selling your inventions rather than starting a company
around your product. Unless you're a very strong business person, you stand
a much greater chance of success and fast capital return doing it this way.
But, to answer your exact questions: 1) An LLC is a company - it's just a
more protected corporation set up like a partnership instead of a
traditional corporation. 2) Risk capital is the amount of money an investor
puts up to show proof of concept - that is the point where your invention
is proven to be marketable and your business model proven to be correct. 3)
22.2% is high if you're measuring it as a percentage of retail sales. It's
better to make it a percentage of gross profit (retail sales less costs of
goods sold). 4) You can send the 9-page summary to us for review, but once
again it is stressed that you have a prepared business plan to show to
investors.
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Q:
Where would be some good avenues to pursue for some investment capital for
a franchise restaurant? I have great credit, a house with about $15,000 in
equity, and about $40,000 in accessible cash. Looking for
$200,000-$300,000.
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A:
Forget putting your house up as ransom for your plan to make millions. Your
family will sleep better and if it all goes in the tank (and many do) you
won't lose your house. Restaurants are tough to finance with equity capital
because they don't provide an investor with an easy exit strategy. Instead,
try to find an angel investor in your town who has funded other
restaurants. A local investor is a must for restaurant financing, as he/she
will be able to monitor your business with you, which is so important for
the restaurant business.
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Q.
Our company required funding in the amount of $250,000. Our product is
new, patent has been lodged and all legal aspects adhered to. Where do we
find an investor for our product?
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A: Call us at 1-866-308-1181
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Q.
Do you have a company or companies that give grants to individuals
designing new and better products that need money to have prototypes made?
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A. Yes.
That kind of thing is best done by the federal government's SBIC
organizations, or local groups. However, investors don't give
"grants" - they are capitalists and necessarily want to maximize
return on investment.
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Q:
Do you have any non-disclosure agreements with the investors to protect the
confidentiality of our business plan?
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A:
Great question. The way to handle it is to send each investor a generic
summary of the business without listing the business name or any other
confidential data. If they have an interest they will contact you and the
confidentiality agreement is then submitted. Thanks for your interest!
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Q:
Where can I find cash to get my business off the ground floor with low
interest or % rates. Need ASAP?
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A: Call
us. Most investors are "equity" investors, meaning they put their
money in your business and take back stock. However, you are looking for
more of a loan arrangement. We can help you file for a Bank/SBA Loan.
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Q. I
desperately need funds to keep my business going. My partner ran off with
money and I'm facing foreclosure of some of my assets. What can you do to
help me?
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A. We
have some bad news for you. Desperate entrepreneurs tend not to get
funding, because they usually are distracted as a result of what is going
on in their lives or business. Our best advice: Weather this storm out,
hunker down and focus on your business, get the plan built and approach it
like a business and not an emotion.
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Q:
I've been in the tree trimming/removal business for many years, working for
others. I've always done "side-work" and realize the type of
money that's out there for someone willing to work hard, which I am. My
question is this; is it possible to find someone willing to finance the
necessary equipment in order to start up a new company? As far as
investments go, this is probably a minimal investment for someone with a
substantial amount of money....but for someone like myself, the sums are
unreachable. Also, I have absolutely NO experience in coming up with
reports and such to show how the business would operate, but from my
experience in doing side work, I CAN tell you that this is a workable
project. Is there someone available to help me with this?
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A: Step
# 1: It's VERY unlikely that you will ever start a company that grows to
such size that an investor of ours will make a very large return on
investment in a short period of time. Therefore, you must find another
source, other than equity capital, for your business idea. The first thing
you MUST do is PLAN your business - for yourself if for no one else. We can
help you with your business plan or you can do one yourself and THEN you'll
be ready for step # 2.Step # 2: We can help you take your newly completed business
plan to your local banks for a "term loan" that will enable you
to buy tools, trucks, etc., using your tools and trucks as collateral, and
you will pay 2% over prime. It may take 20 banks, but you have a fundable
opportunity, by the banks - NOT by investors.
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Q:
If I use your services, how do entrepreneurs, like myself, get in touch
with investors?
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A: The
short answer: You need to submit your plan to us. Once your plan has been
approved by us, we will provide you with a profile database of qualified
investors for email and hardcopy submission. If the investors like what you
have they will contact you directly.
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Q:
Our company markets about 40% online, and 60% through a growing network of
offices in 16 cities. We are 3.5 years old, revenues have increased from
the 140/mo range to the 350 range since July, and we have proven break even
levels with solid margins. We've had one seed VC investment and are
currently doing an angel round. How is the best way to market, and what
exits are preferred?
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A: We
can't answer your question about the best way to market, as we don't know
your business or industry. Sounds like you have things under control if
you're growing that quickly. However, regarding the preferred exit
strategy, VCs and Angel investors prefer a simple acquisition that nets
them a good and healthy return on their investment, typically 30X to 40X in
a few years. Look to a competitor to buy you after you establish your
valuation. How do you establish valuation? See our learning center.
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Questions/Answers
about Real Estate
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Q: I
am interested in starting a cattle farm and horse ranch in south central
Indiana. I am curious as to what are the state securities laws and
regulations and also what is a SCOR form. Please tell me where I need to
start?
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A: If
you engage us we can research the States' securities laws. However you can
also consult a qualified securities attorney in your state for exact
answers. A SCOR form is the Government's version of a simple offering,
limited to $1MM, and generally available to anyone trying to raise that
amount of capital. It's a 37-page form that we can do for you or you can
fill out, however, you will need help from an attorney and accountant.
Also, since it's somewhat of a "public offering", be aware that
your State Securities people will scrutinize it carefully before they
approve it.
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