If company unsuccessful or market or industry crashes, and lawsuit ensues: It substantiates your representations, proves your full and fair disclosure to investors; Protects you from said, “he she said”. If a broker or finder is selling your deal, the offering book protects you from the broker or finder, in the event broker makes exaggerations or misstatements. It also protects the company from miscreant officers or directors who overstep their bounds in promises to investors. Investor Perception Improved: Providing professional written disclosure document gives your investors confidence that you take the time to do important things correctly. Puts your money where your mouth is, because you will have invested personal assets in start up costs (legal, accounting, state filing fees). Time Saver: Shortens the depth and breadth of your sales pitches; Meetings shorter, to the point. Investor can read before, during or after pitch. Disinterested investors can read book and say before you waste your time “no” with them. You can concentrate on running the business, rather than 150% full time money raising. Oral disclosure is inconsistent, did I say to you must keep notes of “what whom?” conversations, which takes more time. Answers Investor Questions: Basics are in the Offering Memo, if a clear concise one. Investors can ask more complex questions. Marketing Document: Offering Memo can and should be a marketing document touting the virtues of you, your background and your company, with the proper temperament under the securities laws. No Disclosure Exemptions (Even if a registration exemption applies) “no filing” Disclosure Book Required by 10b-5. Even though an offering may be exempt from filing under the securities laws, disclosure is still required. The Reg D (“Exempt Offering”), Rule 502 exception from disclosure to accredited investors applies only to the means and magnitude of providing disclosure, but does not eliminate disclosure requirement of Rule 10b5. You are still obligated to provide investors with all material information that is relevant to their investment decision. Unique Methods of Disclosure In Lieu of an Offering Memo Family and Intimate Friends - Oral Disclosure Family and very, very close friends can acquire much of required disclosure by way of their relationship with you. They are investing in you, rather than in the company in any event. You may have another disclosure format option if the investors:
If company unsuccessful or market or industry crashes, and lawsuit ensues: It substantiates your representations, proves your full and fair disclosure to investors; Protects you from “he said, she said”. If a broker or finder is selling your deal, the offering book protects you from the broker or finder, in the event broker makes exaggerations or misstatements. It also protects the company from miscreant officers or directors who overstep their bounds in promises to investors. Investor Perception Improved: Providing professional written disclosure document gives your investors confidence that you take the time to do important things correctly. Puts your money where your mouth is, because you will have invested personal assets in start up costs (legal, accounting, state filing fees). Time Saver: Shortens the depth and breadth of your sales pitches; Meetings shorter, to the point. Investor can read before, during or after pitch. Disinterested investors can read book and say “no” before you waste your time with them. You can concentrate on running the business, rather than 150% full time money raising. Oral disclosure is inconsistent, “what did I say to whom?” you must keep notes of conversations, which takes more time. Answers Investor Questions: Basics are in the Offering Memo, if a clear concise one. Investors can ask more complex questions. Marketing Document: Offering Memo can and should be a marketing document touting the virtues of you, your background and your company, with the proper temperament under the securities laws. No Disclosure Exemptions (Even if a “no filing” registration exemption applies) Disclosure Book Required by 10b-5. Even though an offering may be exempt from filing under the securities laws, (“Exempt Offering”), disclosure is still required. The Reg D Rule 502 exception from disclosure to accredited investors applies only to the means and magnitude of providing disclosure, but does not eliminate disclosure requirement of Rule 10b5. You are still obligated to provide investors with all material information that is relevant to their investment decision. Unique Methods of Disclosure In Lieu of an Offering Memo Family and Intimate Friends - Oral Disclosure Family and very, very close friends can acquire much of required disclosure by way of their relationship with you. They are investing in you, rather than in the company in any event. You may have another disclosure format option if the investors:
Why%20You%20Need%20an%20Offering%20Memo%20to%20Raise%20Money%20-%204-5-16.docx