Reg D - Turns out it still takes money to make money.
A bit ago I was on a webinar for Financial Poise, where I said that startups can expect to have a sunk cost of ~$46k in travel expenses alone and expect to take on average 21 months to raise money using the Reg D exception. On the webinar was “Mark”, the archetypical securities lawyer, who in typical lawyer fashion disagreed vehemently with these figures. So, what follows is a simple breakdown of typical expenses incurred in raising money via not only via Reg D but also JOBS ACT Reg CF and Reg A/A+ crowdfunding. Because it turns out that it still takes money to make money.
The Sunk Costs of Raising Capital
“A sunk cost is a cost that has already been incurred and cannot be recovered.”
There are numerous sunk costs in raising capital. For the entrepreneurs out there who will actually cut the checks here are the cold hard facts.
Reg D
Raising money via Reg D is the easiest and cheapest way to raise money if:
- You have an established business that is current
Ready? The three steps to raising up to $5M in capital for your business via JOBS Act CrowdInvesting.
The secret to raising money for your business is having money to spend raising money for your business. Thank you for attending my TedTalk on how businesses are using JOBS Act Investment Crowdfunding to raise up to $5M for their business. Note - they’re spending $250k to $500k to do it.
As you get over the shock of the Sticker Price of how much it costs to raise money for your business below are the Three Steps you need to know to understand why it costs money to raise money. In short, you need to be ready.
Step 1 - Getting Your Business, Business Ready
You need to have a BONAFIDE BUSINESS in order to legally raise money for your business. What does this mean if you’ve been in business for a few years or decades? It means you’ve already invested in starting a business and are more than likely 95% Business Ready.
However, if you’re a StartUp, are you business ready? More likely, if you’re thinking about starting a startup (aka, you’re a wannapreneur) is your star...more
- 1
