Venture Capital and Hedge Fund Guide This site provides useful information and tips regarding:
Hedge Funds usually invest in public companies, but more and more are investing in private companies and taking them public through Reverse Mergers or Direct Public Offerings.
Whenever possible I have included case scenarios based on past transactions and provided answers to some questions that you might not have considered. I am periodically adding to and updating this Website so check back often. Each year a significant number of private companies enter into a Reverse Merger transaction with a public company that is usually just a shell with no current business operations. Reverse Mergers are when private companies merge into public shell companies to get their stock symbol and become public. This allows them to access the capital markets, and depending on their business model, track record, management team, and other factors, they may be able to raise several million dollars of funding for growth and/or acquisitions. Here is some more information on Reverse Mergers.
Hopefully, the tips and suggestions on this site will give you the leading edge you need when dealing with investors such as Hedge Funds, Angel Investors, Venture Capital Firms and Private Equity Firms. The more information and knowledge you have, the better your chances will be of raising capital and growing your company. Keep in mind that the key to your funding success is RESEARCH and PREPARATION and DETERMINATION. When it comes to meeting with investors, you can never do too much research or be too well prepared. I have advised numerous clients over the years and counseled them through the capital raising process, a process that is constantly evolving. Once you have attracted interested investors, then begins investor meetings and due diligence. The final steps in the process involve negotiation of the financing structure, reviewing, negotiating and drafting of term sheets, financing documents, corporate documents, employment agreements and lock-up agreements. As I mentioned, the capital raising process is constantly evolving. For instance, not too long ago, private companies primarily relied upon Venture Capital Firms and Angel Investors to raise capital. They were very limited in their options. Now some Hedge Funds are offering favorable terms to private companies. With the flood of money into Hedge Funds, the hybrid hedge fund has evolved. Now, instead of Hedge Funds investing only in publicly traded companies (as well as currencies, futures, commodities, etc.) some have even begun investing in private companies. Now companies have more choices than just focusing on venture capital firms. I hope you find this Site useful and it answers questions you may have or sheds light on some issues you need to consider. In either event, I wish you the best in your quest for capital. If you have any Comments on this Website I would be glad to hear from you. If you need some legal advice regarding negotiating terms with an investor or reviewing funding documentation give me a call. Also, if you need help drafting a Term Sheet for interested investors, analyzing a Term Sheet or discussing various Financing Structures give me a call.
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