Selling to wealthy individual investors is better than seeking out venture capital firms. Only 1/500 businesses seeking money from venture capitalists receive it. Venture capitalists want a significant portion of a company, interfere in management, conduct tiresome "due diligence", and expect an exorbitant rate of return--leading some to call them "vulture capitalists". By contrast, individual investors fund approximately 20% of the proposals presented to them, and are not as demanding as venture firms. “How to Find Private Investors”, Jim Parrish, Management Consultant, University of Southern Florida Small Business Development Center (3/12/04). While some web-sites purport to match private investors with those seeking to invest capital, these sites are mostly unsuccessful because the ratio of entrepreneurs seeking capital to private investors is too high.
The best way to find individual investors is to directly contact them. Individual investors are the primary source of capital for new and emerging businesses. However, directly soliciting wealthy individual investors is generally illegal without first “registering” an investment opportunity with the Securities and Exchange Commission, various states, and national/provisional governments where offerings are made; and providing to prospective investors a detailed “prospectus” inclusive of audited financial statements. Registration and prospectus preparation are highly expensive—commonly running around $100,000, and hence prohibitive for most companies. FAILURE TO COMPLY WITH SECURITIES LAWS CAN RESULT IN FINES, HAVING TO RETURN INVESTOR MONEY WITH INTEREST, OR IMPRISONMENT. The value of legal compliance prior to contacting wealty individual investors cannot be underestimated.
Nimmer Law Office specializes in adapting your investment opportunity to be offered to wealthy individual US, Canadian, UK, European Union, and those of many other nations investors utilizing "exemptions" from registration/prospectus requirements in these nations. Our office recently developed a program for our clients to notify multiple wealthy investors in the nations discussed under "Legal". With President Obama’s signing into law of the Jumpstart Our Business Startups (“JOBS”) Act on April 5, 2012, on or before July 4, 2012 the SEC is required to implement rules to allow general advertising to be made to US accredited investors under Reg. D Rule 506. At that point e-mailing programs may be allowed in the US. You may view our comments to the SEC re: the JOBS Act at: http://www.sec.gov/comments/jobs-title-ii/jobstitleii-3.htm Please see "Marketing", or "Contact Us", for further information.
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* The content of this site is not intended to constitute specific legal advise to any person or entity, only the explanation of general principles underlying our services. Reliance upon this web-site, or any portion thereof, as a legal opinion is not intended or authorized. All services are subject to further terms and conditions of an engagement letter for services. Site last updated May 2, 2012.
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