Model Ships Blog

Global finance is a convergence of polar opposites. It’s a hybrid element that is the result of merging bankruptcy and profitability and the infusion of the ethically inclined and the ethically obscene.

The obtuse minded institutional banking system and the endless motivational depth of the prototypical entrepreneur clash and a give and take, debt and debtor mentality evolves. This evolution results in the crisis of indentured servitude where the banks will give but will take much more.

The entrepreneur is often stranded without the means for economic defense in difficult times and the FDIC backed lender moves in to take assets whose value are derived by number crunchers in a backroom and the bank’s corporate headquarters.

Business owners will often sign their lives away in order to obtain modest loans and lines of credit, the financial equivalent to signing your soul away to the devil in blood. As a globalization consultant I am constantly hearing from small and medium size companies who have proprietary patents and technology and will put them up as collateral for financing.

I must admit, at times its tempting to facilitate a merger between them and an existing client that will result in instantaneous profitability and distribution for my client and the end for this uninformed startup.

If you are an upstart you need to evaluate your options before signing on that dotted line and giving up a pound of flesh. Banks should only be used as a last resort. Venture capital funds should only be considered if all else fails.

Your key to raising capital is to go directly to the public via vehicles such as a Private Placement Memorandum (Regulation D Rule 504, 505 and 506) which will allow you to sell stock in your company in return for capital and the ultimate in maximum capitalization would be to go public on the OTCBB (Over The Counter Bulletin Board), NASDAQ or NYSE. Even the London Exchange or Frankfurt Exchange are better options then institutional lending sources.

Taking your company public, growth through acquisition and merger and solidifying your public position with a hefty amount of corporate publicity and hardcore investor relations, this is what will get you to the next level.

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Your company is growing. Now you are ready to start raising serious capital and you here the public fund raising markets. Here are the basics of your S-1 filing. Know the lingo before you hire a consultant. Because companies must adhere strictly to SEC regulations, initial prospectuses are similar in their organization. Each S-1 generally consists of the following sections:

Front Section — An S-1 contains a small amount of information not available in a prospectus. In this first section, you can quickly find the issuing company’s phone number and get a vague sense of the future offering price.

Cover/Inside Cover — The prospectus cover outlines the general terms of the offering, including names of the underwriters, number of shares offered, and pricing information. The actual share price is absent from a prospectus until the day of the offering.

Prospectus Summary — Here you will find a brief synopsis of the company’s business and history, a modest discussion of the change in capitalization to occur as a result of the offering, and a useful summary of financial information covering the last five years, if available. If you are screening prospectuses for investment ideas, start here.

Risk Factors — After you have read a few prospectuses, you will become familiar with the “usual suspects” in this section, including “Possible Volatility of Stock,” “Limited History of operations,” “Dilution,” and “Dependence on Key Personnel.” Nevertheless, this section is a worthwhile read to be sure that you understand the challenges facing the company’s management. The discussion of competition can be sobering, but it can also provide a means to compare the value of the issuer against the financial performance and market valuation of its competitors.

Taking your company public should be an exciting and revitalizing time. Don’t take unnecessary risks, hire a consulting firm who can streamline this process and deliver the results you’ll need for success!

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