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Chapters:
- Audit
- How much time does it take to get qualified by the SEC
- Marketing methods and timeline
- Optimum Sequence and Timing For Broker-dealer Involvement
Disclaimer:
The content in this webinar is not and shall not be construed as investment advice. This information is meant to be informative and for general purposes only.
MSC is not a law firm, valuation service, underwriter, broker-dealer or Title III crowdfunding portal and we do not engage in any activities requiring any such registration. We do not provide advice on investments. MSC does not structure transactions. Do not interpret any advice from MSC staff as a replacement for advice from service providers in these professions.
Rod Turner
Rod Turner is the founder and CEO of Manhattan Street Capital, the #1 Growth Capital service for mature startups and mid-sized companies to raise capital using Regulation A+. Turner has played a key role in building successful companies including Symantec/Norton (SYMC), Ashton Tate, MicroPort, Knowledge Adventure, and more. He is an experienced investor who has built a Venture Capital business (Irvine Ventures) and has made angel and mezzanine investments in companies such as Bloom, Amyris (AMRS), Ask Jeeves, and eASIC.
www.ManhattanStreetCapital.com
Manhattan Street Capital, 5694 Mission Center Rd, Suite 602-468, San Diego, CA 92108.
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Schedule many variables here. And the biggest item is the audit, right? If you've got a, an, if your finances are in a mess, it's gonna take a lot longer. So the critical path item can be the audit, but in the case that the audit's already done or that the audit is straightforward, then two months to get ready to fire with the SEC is a reasonable timeframe, assuming management is paying enough attention and two months to get through the SEC is a reasonable estimate. So four months from starting the process to being qualified is very doable. We've had three or four clients, companies that were qualified in a week by the SEC or essentially qualified almost immediately. That was a mix. The SEC seems to like reggae plus, I, I couldn't have said that five years ago, but the SEC does seem to like reggae plus when it's a conventional offering in it, it doesn't have weird characteristics attached to it.
And so that's part of the reason. And another contributing factor has been during the spec phase, there were so many IPOs that the SEC was spread very thin, and they tended to, they tended to qualify offerings that were straightforward quickly, and the very complicated offerings would be deferred until later. So they did a really good job in my, my book during covid to do things to increase their productivity, to qualify offerings more quickly. And S one for that matter, S one IPOs. So it could be less than four months, but four months is a good guide as to time. And then once you qualify, you start marketing via whatever method it is, right to your customers to email list. If you've got special, wonderful high quality email lists and obviously via advertising outreach and leveraging the press and social media. So starting that process month five, and you have 12 months in that first year to raise money and you can extend it if you want to.
That's the nature of the beast. You don't spend much money in the beginning on advertising because in the very beginning month five, you know, you don't know the ideal targeting, you don't know the ideal messaging and you don't know if everything about the offering page set up is perfect yet. So we use heat mapping to help with that, for example. So when people like content on the offering page, we can see their activity when they don't like it, we can see that activity when they're confused, we can see that too. So we can do a lot of tuning of the content to optimize it and all of that, all of the component parts, the advertising, the content, the key messages, the offering video, all these things matter intensely on the schedule front. You need to be aware that when you involve a broker dealer, then you involve FINRA.
And FINRA is these days a lot slower than it used to be. It's a relatively slow bureaucracy unfortunately. So be aware that, you know, broker dealer involvement is an option in Reggae Plus and it has its advantages, but it is not a panacea. And a lot of entrepreneurs tend to think that by bringing in a broker dealer, that's gonna be a magic solution and they'll raise all the money. When in fact, in the early days of an offering, in most cases, broker dealers will not raise any money because their reps don't want to risk their client relationships for an offering, which is as yet unproven. Because if that investor were to invest, say they put in $25,000 or something and then later that offering does fail then that isolated investor amongst a handful of other ones won't be very happy, right? So usually broker dealers will only raise money once it's already been shown that this is a successful raise.
So that comes down to us, to our marketing agency, to you, to your team, and a lot of excellence to, to, to, to show that this is already a successful raise. And then you can imagine a situation, say six months in where you wanna do an IPO and you bring in an underwriter, we would help with that. Or if you want to bring in a broker dealer or more than one to access more investors, the only time I could see that I, that I see where that makes sense is where we ran out. We found a cost effective, easy to reach target audience through advertising. It was working beautifully. And now we've maxed that they're all those that are going to invest, have done so and the rest aren't going to invest. So now we're going, you know, we're going to target group two and that might be too expensive. So if that's the case, that's a marvelous situation to bring in a broker dealer. But my point about FINRA is, you know, once you've negotiated the deal with the broker dealer, that doesn't mean that you can add them right away. The SEC will add them immediately. FINRA blesses the deal terms, but FINRA is a slow bureaucracy. It might take four or five or six months to get through FINRA. So be aware of that. There are ways you and you don't have to have a broker dealer.
THIS TEXT TRANSCRIPT HAS ERRORS IN IT THAT WERE CAUSED BY THE SPEECH TO TEXT CONVERSION SOFTWARE WE USED. DO NOT DEPEND ON THE TEXT TO BE ACCURATE. WATCH THE RELEVANT PARTS OF THE VIDEO TO MAKE SURE YOU ARE PROPERLY INFORMED. DO NOT DEPEND ON THIS TEXT TRANSCRIPTION TO BE ACCURATE OR REFLECTIVE OF THE STATEMENTS OR INTENT OF THE PRESENTERS.