As an entrepreneur, it can be quite overwhelming to evaluate your options for raising capital. You might be surprised to find that there are options to help you raise capital that you may have never heard of. We can help you make sense of all of the options and find the one that makes sense for you.
The Challenge of Raising Capital for Small Business
Raising capital is one of the most difficult challenges faced by today’s entrepreneurs.
- Bank loans are very hard to get
- Risk capital investors (angels and venture capital funds) expect high growth and rapid exit, which are not options for a huge majority of businesses
- Complicated securities regulations place severe limits on who can invest
Financing Strategies to Raise Capital
Cutting Edge Capital provides small and mid-sized businesses with the information, tools, and expertise they need to raise capital in a way that fits with their unique business model and long-term goals.
As experienced business lawyers, entrepreneurs, and finance experts, the CEC team has identified capital raising strategies that allow businesses to solicit non-traditional sources of funding. In addition to being a great way to raise capital, these strategies allow businesses to build public support and recognition at the same time they are raising funds.
We have identified five categories of capital raising strategies that allow entrepreneurs to raise money from non-wealthy investors in compliance with securities law. These are
- fan-based funding (donations, pre-sales, memberships, etc.)
- special strategies for cooperatives
- private offerings
- grants and public-private partnerships
- direct public offerings
For entrepreneurs and nonprofit organizations – we help you raise capital without sacrificing control
- Not sure what your options are? Start with our comprehensive assessment
- Or get started right away with raising capital from your fans, customers, and community
Cutting Edge Capital works with clients that want to raise capital in three ways:
- Clients that need extensive consultation to determine which financing strategy best fits their needs receive a comprehensive assessment. After this assessment, clients select a financing strategy and CEC provides the services needed to complete it – from initial compliance work, through marketing, to funding.
- Clients can hire us on an hourly basis for consultation on fundraising strategy.
- Clients that already know which fundraising strategy they want to pursue can hire us to complete their chosen strategy.
Frequently Asked Questions
How much can I raise?
In the assessment process, we work with you to determine how much you need to raise, to identify potential investors, and to estimate the amount you are likely to be able to raise. Based on this, we set a realistic fundraising goal together. Our clients usually raise between $25,000 and $5 million.
How much will the financing process cost?
The cost will vary a great deal depending on the type of fundraising you choose as well as details like which states you want to make your offering in, whether any legal clean-up work is needed, whether you need audited financial statements, etc. A financing may cost as little as $3,000 or as much as $100,000. Here are some ballpark estimates for the five categories:
- Category 1: Fan-Based Funding — $3,000 – $6,000
- Category 2: Cooperatives — $4,000 – $10,000
- Category 3: Direct Private Offerings — $6,000 – $45,000
- Category 4: Grants and Public Private Partnerships — $4,000 – $20,000
- Category 5: Direct Public Offering — $5,000 – $100,000
I am a start-up – can CEC help me?
Yes! Many of our clients are start-ups. Start-ups have more difficulty than established businesses raising money from the more traditional sources. Our financing tools are designed to be effective for both start-ups and established businesses.
How do I get investors?
In most cases, your investors will be your customers, community, colleagues, and friends. There may also be affinity groups for your product or service that would be interested in investing in your business. We work with you to identify the most likely investors for your fundraising. We also use our networks and relationships to introduce you to potential investors. CEC does not find investors for you but gives you the tools you need to find the best investors for your situation and we coach you through the process of identifying potential investors and communicating with them.
What if I don’t raise the amount I set as a goal?
CEC cannot guarantee that you will meet your fundraising goal. You may raise more or less than what you plan. However, we can help you set the most realistic possible goal and increase your chances of success by helping you find the best possible fundraising strategy for your situation. You are not obligated to complete the entire process. You may withdraw at any time without further payment obligation.
Do I need to have a business plan before working with CEC?
No. The more clarity you have about your business’ financial position and funding needs, the better we will be able to help you. But a formal business plan is not required. Some of the fundraising strategies require the development of a prospectus which is like a business plan, but we will help you through that process.
Can CEC help me structure my business to preserve my company’s mission?
Yes! We can help you identify the best ownership structure for your business by exploring alternatives such as cooperatives, employee-owned firms, and more. Additional information is available on our Ownership Strategy page.
How do I know if I am a good candidate for CEC’s services?
Take our quiz!
If you can answer yes to most of these questions, you are likely to benefit from CEC’s services!
- Is your business something that might excite potential investors or appeal to a particular affinity group? For example, do you find that your customers love you and want to be your fan on Facebook? Are you invited to speak about your business at conferences? Do people get excited when talking about your business model?
- Does your team have a reputation for integrity and honesty? Is your past free of any “red flags” that might make people think twice about investing in your business?
- Do you have a track record of running a successful business?
- Is your business model easy to understand for the average person or at least to a decently-sized affinity group?
- Do people tell you they would love to invest in your business?
- Do you have a network of contacts and affiliations that could serve as a channel to get the word out about investing in your business? Examples could include your place of worship, professional associations, neighborhood groups, etc.
- Are you comfortable with promoting your business to potential investors? Are you willing to “pitch” the investment or do you have someone else on your team who can?
- Do you or someone on your team have time to devote to a fundraising process? You may need to devote several hours per week to communicating with potential investors and completing compliance work.
Did you answer “yes” to most of these questions? We may be able to help you!