How to Use Brokerage Firms for Raising Capital

Some Brokerage Firms will try to raise Venture Capital for private companies from time to time. Although they tend to deal with publicly traded companies, some firms will have their investment banking departments actively raising capital for private companies. You should definitely contact some brokerage firms either in your area or on Wall Street. If they don’t raise venture capital for private companies ask them if they could give you some contact names of firms who do work with private companies.

Advice if you are a Start-up Company.
If you are a start-up company it is going to be difficult for you to raise capital no matter what sources you start out approaching. Try to meet with several brokerage firms though and pick their brain. See what they have to suggest and compare notes from your meetings with each of them. Ask them what they would do to get funding if they were CEO of your company.

If they all feel your start-up is not viable, you may have to rework your Business Plan. Maybe they think you are asking for too much money as a start-up and suggest you start on a smaller scale and try to raise money from Angel investors first. Either way, meetings you have with them are valuable. Listen to them with an open mind.

Advice if you are an Active Company.
Your chances are much better raising capital through Brokerage Firms, also known as a Broker/Dealer, if you have an active company with some revenues. This is true even if your company is not yet profitable. It shows you have a product or service that is accepted in the marketplace. Now you have to convince the brokers that your use of funds is not just to pay salaries or pay off debt. They hate to hear that.

Your explanation in your Business Plan of your Use of Proceeds is going to be critical at this stage. Make sure you break it down carefully. It should detail how long the funds will last. Most importantly, it should show how and when it gets you profitable. It is perfectly acceptable to use the funds for an acquisition or two. Brokers understand that. Heck, you are buying cashflow.

Final Comments.
Although you may not agree with everything these Brokerage Firms have to say, they are in the business and know what types of companies are getting funded and which ones are not. They could have some good contacts for you to speak with even if they don’t help private companies get funded.

Maybe they can introduce you to a Strategic Partner. See if they have any public company clients that might give you some funding because you may order their parts or use their services. Maybe they have a public company client that will fund you if they get a license agreement from your company or if you let them private label your product.

These brokers are usually the ones that leave their firms to start up their own investment banking firms. You have just gotten to them before they decide to go out on their own. Some of course stay and don’t go out on their own because they can leverage more contacts for deal flow if they stay at a big firm. The key here is "CONTACTS". Network with them. Ask them lots of questions. Unless you have worked in the financial field before, you have a learning curve to overcome so get started right away. Learn to make the most of the contacts you meet.
Preparation of the Business Plan is a Vital First Step in your quest for capital, so a great deal of time and effort should be spent preparing the business plan. Here are some great tips for preparing an effective Business Plan.

Brokerage Firms and Other Funding Sources to consider for Venture Capital. Here are some great “other” funding sources for you to consider during your search for venture Capital.

Venture Capital Firms are the leading source for financing significant amounts from $1,000,000 to $25,000,000 or more. Brokerage firms can help you through their contacts and the way they present your business. Here's some great advice to help you in your search.

Hedge Fund Formation.
Learn more about how to form a hedge fund, federal securities requirements, applicable state regulations and whether or not you need to be registered .

Equity Line Funding.
Learn more about how companies are raising capital to fund their capital needs. Also, get information on what types of investors are offering Equity Line Funding, how to contact them and how to structure the deal.

Standby Equity Purchase Agreement.
Get information on how companies are obtaining funding from hedge funds through Standby Equity Purchase Agreements. Public companies in the United States, Australia, Asia and Europe have obtained significant amounts of capital for growth, acquisitions and to pay down debt from this funding structure.

Private Placement Funding.
Learn more about how companies are accessing Private Placement Funding to fund their capital needs. Also, get information on how to locate funding sources, comply with important regulatory requirements and get tips on how to structure the deal with investors.

Tips on Raising Capital.
One of the most difficult tasks small companies face is raising capital. Get some useful tips that might give you an extra edge on sourcing capital and structuring a transaction with interested investors.

Reverse Merger Funding.
A Reverse Merger, if done properly can provide a fast alternative to going public through a direct listing. It can help a company raise needed funding by providing access to the capital markets. These types of funding transactions have become very popular over the years with hedge funds.