Got Money?

Oh, and one more thing: pioneering is hard, be it for attic-heat-transfer systems or Internet fund-raising. Palmer ended up raising a mere $20,000 on this round. On the plus side, the company got to keep the money this time around because it had avoided states that required a minimum level of funding--proving, at least, that some sort of useful learning curve is in effect. Even better, the company's increasingly bright sales picture has helped Palmer bring the total amount of money he has privately raised to over $600,000. (He now owns no stock personally but through a family trust exercises control of 40% of the company.) The obvious conclusion: private fund-raising was the way to go for SolarAttic. But that wasn't the way Palmer saw it. "I know we're destined to be a public company," he says.

Ever the optimist, Palmer concludes, "We could grow to a hundred million a year, easy." That's a long way from the $118,000 the company brought in last year, but, on the other hand, revenues so far this year are up 250% over the same period last year. There are now more than 200 SolarAttic pool-heating units installed throughout 31 states.

Buoyed by that growth rate, at press time Palmer was registering a $4.8-million Regulation A DPO in New York and--combative fellow that he is--Minnesota. He ticks off the reasons that things will be different this time around: he's learned a lot of the ins and outs of marketing stock on the Internet; Internet DPOs are gaining credibility; and he knows how to keep the satanic state regulators at bay. He also says he's going to try to play the affinity card this time around, using the Internet to zoom in on the environmentally conscientious. He's also going for a reverse affinity play. "If you're a pool owner who learns about our technology as a potential investor, I might get you as a customer, too," he says.

And if this round fizzles like the others? Then he'll try again. "I go by the kick-the-can theory of money raising," he says. "I won't allow myself to think I have to have a certain amount or I can't make the business go. That's linear thinking. I'll spend the rest of my life making this work."

You can almost hear the Minnesota regulators gnashing their teeth.

David H. Freedman is a contributor to Inc.

Virtual road show

Clay Womack, CEO
Direct Stock Market
Launched: 1993

What Direct Stock Market is: A listing service for direct public offerings (DPOs) and private placements. Direct Stock Market provides an on-line community environment in which investors can discuss offerings, but they must do their own due diligence. Direct Stock Market also helps companies to put together Web-based "virtual road shows."

And isn't: An automated system for filing a Regulation A or Regulation D offering. You still have to do all the paperwork yourself--off-line.

The on-line advantage: Investors can scan the prospectuses of several dozen DPOs and private placements, and companies can get their offerings in front of thousands of small-business-friendly investors. "There are 80,000-plus businesses in the United States that are growing at a rate of at least 50% per annum, and the VCs are only doing 2,000 deals at any point in time," says Womack. "I want the other 78,000 businesses on our site."

Your odds of finding funding: Probably better than if you posted the offering only on your own Web site. Womack has done a good job of generating publicity for the site. But mismatches are common. Interested investors may respond on-line from states in which your DPO isn't registered. On the other hand, if Direct Stock Market becomes a broker-dealer as planned, your offering could find a much wider audience. (For a price.)

Fee: From $2,500 to $4,000, depending on the size of the offering, for a 90-day listing. --D.F.

We're from the government. We're here to help

Terry Bibbens, Entrepreneur in Residence
Ace-net
Launched: 1997

What ACE-Net is: A Small Business Administration-sponsored listing service for companies that have completed the paperwork for a streamlined direct public offering (DPO). The Angel Capital Electronic Network (ACE-Net) was designed to make small offerings (up to $5 million) cheaper and easier to pull off by eliminating the need for a broker-dealer and lowering the legal barriers; a listing on ACE-Net satisfies many states' securities regulations.

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