- April 28, 2014
- Posted by: John Fischer
- Category: Accredited Investors
If you are issuing a Reg D private offering, it is important that you complete a private placement that will both inform and excite potential investors. Once you have finished your PPM it is time to reach out to accredited investors and see if they are interested in participating. The challenge that many companies face is learning how to reach the right investors.
There is no outward way to tell if someone is an accredited investor or a regular citizen. Even people with good jobs may not be accredited and owning a large home won’t make you one either. In order to be an accredited investor, the individual needs to have made $200,000 or more for the past two years or $300,000 or more combined with a spouse. They can also have a net worth of over 1 million, but this does not include the equity in their primary residence. Since you can’t tell if someone is accredited, you need to be targeted in your efforts to reach investors.
Here are some tips for contacting accredited investors:
Purchase a leads list. You can buy a list of accredited investors from www.accreditedinvestorleads.com. This will give you the contact information for investors that you can then call and make a sales pitch to. When you contact them give them enough information to want to view your private placement or set a meeting.
Speak at Angel Investment groups. The various investment groups typically require that there members fill out a form stating that they are accredited investors prior to participating in the group. This makes it easier on companies, so they don’t have to worry about whether or not they are speaking with someone that is accredited. Additionally, angel groups typically like to invest in local companies that they can check up on and participate in board duties as necessary. Look for groups in your region of the country and start by presenting there.
Work your connections. Talk to your family and friends about your exciting opportunity and ask if they know of any local investors that may want to participate. You may be surprised to find how many local investors there are within your own community. It may be a local banker, doctor, or realtor that is actively putting money into companies so start having those conversations.
Work with a broker dealer. If you need help reaching investors, you can also work with a registered broker dealer. This can be a small company or a large financial powerhouse like Merrill Lynch. The key is to ask if they will introduce you to investors or show investors your private offering. They charge a fee so it is important to make sure they will be actively promoting your offering and if possible, tie their compensation to a success fee instead of paying it all up front.
More money is raised through private offerings than on the stock market every year. You can tap into this pool of capital by staying focused and being creative in your approach. Visit www.AccreditedInvestorLeads.com today and start calling from your own investor list.