Women 'Shatter the Glass Piggy Bank'

Women Entrepreneurs / Business Owners now have a greater access to new sources of Venture Capital

By Charles David Dreher

According to statistics from Venture One, in recent years only about 6% of venture-backed companies were founded by women. In addition, a recent report from the Center for Women's Business Research found that in 2003 only 4% of women-owned businesses with revenues of US$1 million or more obtained or intended to seek equity investments.

“Studies have shown that historically women entrepreneurs have more difficulty raising capital from traditional sources than men do. A private placement or limited public offering puts women in control of the capital-raising process", said Timothy Hogan, CEO of Commonwealth Capital Advisors.

"Women entrepreneurs / business owners no longer have to reply on the 'old boys' network for capital derived from traditional financial institutions, such as venture capitalist and investment banks. With a direct offering of securities, they avoid the need to be 'qualified' by traditional sources of venture capital. In addition, this process has become far more accessible because these entrepreneurs can complete the documents with the use of template, for legal counsel review, at a fraction of the traditional costs," Hogan said.

All institutions raise capital from individual investors and your company can, as well. The key to a successful capital-raising effort is to build an "in-house" Finance Department that can compete with these institutions for individual investor funds by advertising and selling securities in high demand according to the individual investor market environment. If your company's securities are well engineered to meet current market demand and if the marketing of the offerings are well orchestrated, you can complete with traditional institutions for individual investor capital. Once your company's Finance Department is fully operational, you will be surprised at how much capital you can raise and how easy it can be.

For most start-up and early stage companies, the process begins with conducting a "Seed" capital round, for US$200,000.00 to US$500,000.00, using a private placement securities offering under Regulation D under the Securities Act of 1933. Producing a marketable deal structure and the securities offering document can now be relatively quick and inexpensive. It enables the management team to raise capital from personal and professional contacts, as well as, from friends and family. And ample amount of seed capital is a must to launch a successful capital raising effort.

Seed capital us generally raised through the issuance of 2 to 3 year Notes with Equity Kickers, which enables the company to provide the potential investor with a quick exit strategy, upon Note maturity, with a small amount of equity for long-term capital appreciation. Seed capital can also be raised through the issuance of participating preferred stock, which can be engineered to provide some of the same benefits to the investor while giving the issuing company unlimited time to raise capital, as opposed to issuing Notes, which eventually mature and the principal comes due.

A portion of the seed capital is used to: 1.) further the protection of the company's assets, i.e. intellectual property; 2.) expand business operations; 3.) provide ample working capital to pay executive and staff compensation and 4.) more importantly, to hire and fund a V.P. of Finance to manage the capital raising process. Remember, only SEC Registered Broker Dealers and Bona Fide Employees can legally solicit and sell your company's securities. You cannot pay a bona fide employee a commission from the sale of securities.

A portion of the seed capital is used to produce the next securities offering document in order to qualify for an SEC exemption from registration under Regulation A (No SEC Reporting or Audited Financials necessary). This enables the company to legally advertise the securities to compete with the financial institutions to attract individual investors locally or over the Internet, globally.

A portion of the seed capital is also used to fund the advertising and promotion of the securities. Advertising a security with a "Marketable" deal structure that meets current investor demand is the key here. Advertising common stock simply does not work, unless it has a stated dividend like a REIT. We generally recommend offering a participating preferred stock with a high stated dividend so that the "Yield" can be advertised because the fixed income markets, i.e., Notes, Bonds, and Preferred Stock, are 15 times the size of the equity markets (Common Stock) and is growing larger every year due to the baby boomer generation entering into retirement and looking to generate income from their investments.

Commonwealth Capital Advisors' Financial Architect® System software suite can significantly cut the cost of private placement or limited public securities offerings, bringing these capital-raising tools to women entrepreneurs / business owners who normally do not have access to venture capital or other traditional forms of financing.

A complementary E-Book entitled "The Secrets of Wall Street - Raising Capital for Start-up and Early Stage Companies" is available on the web-site:
http://www.CommonwealthCapital.com enter promotional code 4750 at the bottom of the home page.

Mr. Charles David Dreher is a Director and Executive Vice President of Commonwealth Capital Advisors, Inc and is the Founding Partner and CEO of CCA International.

Commonwealth Capital Advisors is sponsor of the Networking Extravaganza on April 19th. See page 35 for details.

Reprinted with permission of DuPage Woman Newspaper ™ © March - April, 2006.