Would you love to sell stock to the public but can't get Wall Street's big players to give your company the time of day? Then you might decide to investigate the direct-public-offering option. Your accounting and legal advisers should be your first source of information on this one. But for an overview of the subject, look up " When Mom and Pop Go Public," in the December 1996 issue of Inc.
Still interested? Then check out Direct Public Offerings: The New Method for Taking Your Company Public, by lawyer Drew Field (Sourcebooks, 800-432-7444, 1997, $19.95). DPOs aren't simple, so it pays to devote serious attention to chapter 5, "How to Do a Direct Public Offering." There's also a good chapter about selling stock through the Internet, and chapter 8 includes some fascinating case studies.
LEASING
Savvy entrepreneurs know that leasing equipment can sometimes alleviate cash-flow pressures. If you're contemplating a leasing arrangement, the Internet is worth browsing, if only to give you the broadest possible list of contact names. But if you're also seeking to learn more, try www.bworks.com/funding. Our favorite feature there is a glossary of typical terms involved in leasing deals.
PRIVATE PLACEMENTS
If you're planning to raise capital through the private sale of equity or a debt-and-equity package, then you'll be conducting a private placement whether you think of it in those terms or not. To do a substantial private placement, you need the right team of financial advisers--but don't go into one of those deals without doing some self-education, too. How to Finance a Growing Business: An Insider's Guide to Negotiating the Capital Markets, by investment banker Royce Diener (Merritt, 800-638-7597, 1995, $24.95), is quite informative, especially in a chapter that describes types of private placements and typical components of those deals (such as sinking funds, kickers, convertibles and--well, now you see why you need to read a book on the subject). Raising Capital: How to Write a Financing Proposal, by business consultant Lawrence Flanagan (Oasis, 800-228-2275, 1994, $19.95), is light on other details but offers a good sample private-placement circular. Finally, to get a good sense of how exhilarating, exhausting, and complex the financing experience can be, read Inc.'s October 1996 story " The Deal," an account of one company's odyssey through a private placement.
SEED CAPITAL
If your company is new or young, your best bet for growth capital might be a local nonprofit or economic-development program. You can probably track down some leads just by networking through your local chamber of commerce or community college (many coordinate entrepreneurial-support networks) or an industry group. For a helpful contact list, try Free Money for Small Businesses and Entrepreneurs, by Laurie Blum (John Wiley & Sons, 800-225-5945, 1992, $14.95). You won't find any frills here, but you will find plenty of useful details about a variety of funding sources, including descriptions of eligibility standards and restrictions.
U.S. SMALL BUSINESS ADMINISTRATION
For all too many owners of small companies, the best way to obtain adequate bank financing is through some type of Small Business Administration financing assistance--most likely an SBA guarantee to raise the comfort level of an otherwise reluctant banker. If you believe that the SBA process is too complicated for most business owners to navigate without plenty of hand-holding from a real live person, then what you need from a resource is lots of leads to possible financing sources (and plenty of sample application forms to give you some sense of what you're getting into). Look no farther than The Insider's Guide to Small Business Loans, by former SBA official Dan M. Koehler (Oasis, 800-228-2275, 1996, $19.95). In nearly 100 pages of addresses, you'll find listings of small-business investment companies, certified and preferred lenders, and financial institutions participating in the Microloan Demonstration Program.
If you're interested in "just the facts, ma'am," visit the SBA's home page. Besides providing access to its on-line library, the site offers brief descriptions of various SBA financing options. While some of the thumbnail sketches are too brief to be of much help, others should be useful--especially the section on the "LowDoc" (less than $100,000) loan program, which does a good job of spelling out eligibility requirements. Technology companies interested in the Small Business Innovation Research (SBIR) program--a highly competitive program through which federal agencies issue research-and-development grants to qualified small companies--should definitely check out the excellent SBIR section.
VENTURE CAPITAL
If you're at the high end of the fund-raising spectrum--that is, you're running a hypergrowth company in an industry that strikes investors as sexy--you're probably contemplating approaching venture capitalists.
Since relatively few companies succeed on this front, it pays to do your homework first (and, probably, to upgrade your team of legal and accounting advisers). Then, since it's almost impossible to attract venture capitalists' attention through a cold pitch, concentrate on networking your way into the venture-capital community, through an investment banker, a venture-capital forum, or well-connected advisers.
There's no better way to start your research than with Pratt's Guide to Venture Capital Sources, edited by Daniel Bokser (Securities Data Publishing, 800-455-5844, 1997 edition, $325; 1998 edition, due out in March, will be $355). The book includes virtual blueprints of all the key steps involved in carrying out one of those deals, from how to prepare the right kind of business plan to how to handle a meeting with venture capitalists. There's also a clear discussion of mezzanine financing (detailing, among other matters, the investment criteria for venture capitalists in such deals). But you guessed it--the main reason to buy this book (or, better yet, to persuade your local library to do so) is to access its state-by-state list of venture-capital firms. You'll find all kinds of information here, including project preferences, minimum and maximum investment levels, and industry preferences.
