In the next couple of months I want to re-structure my business.
To do so I need more venture capital.

I'm just wondering, do you think it would be a good idea to sell shares in the company?

If so:

1. How many people are interested?
2. What value per share are you interested in, ie. $10 per share, $100 per share?

I would be interested. You would have to impress me tho.So put together a proposal. Thats one of the best ways.

I'm always interested in other companies' shares, but only in 51% or more. :cool: :D

Hey Dylan.

Put Me Down.
I'd love to hear more about your ideas first though.

Trevor

Hmmmmmmm I have to say your talking about dangerous grounds there.

Lets just go for a hypothetical situation.

Your the owner. and origionally have 100% of the shares.

You decide to sell a total of 40% of the shares, for simplicity's sake lets say the company has a total of 100 shares, and each share is worth $1000 a piece.


You have 4 people that buy into the company.

Share Holder #1 buys 20% of the company for 20,000
Share Holder #2 buys 10% of the company for 10,000
Share Holder #3 buys 5% of the company for 5,000
Share Holder #4 buys 5% of the company for 5,000

Thats great, you've got 40,000 worth of capitol to work with.... But, if you don't involve a lawyer in this and if you aren't very careful, what happens, say, 5 months down the line after 35,000 of that money is gone and investor #1 wants to pull out and cash in his stock.......... :)

I think what your looking for is an investor and not a stockholder, yes an investor is similar but investors come in with an investment mind set and normally will invext X for X amount of the company for X years before you start having to pay them back :)

That secnario of the shre holder pulling out is easily dismissed. Where you sell them shares you sell them at nonpar value instead of par.

nonpar basically means the stock has no finacial value which is what is done for new companies a lot of the time. Later when they are finacially stable you can issue stocks with a par value broken down by the companies profit/worth.

Dylan, you should check with a lawyer. There are complications with selling shares, and especially if you sell (or, technically, offer to sell) across state lines you might come under the jurisdiction of federal securities law.

Basically, if you're selling outside of your family or circle of close friends, you'll have new legal responsibilities -- even more than if you sell just within that circle. This shouldn't be entered into casually (not saying you are, just that you shouldn't :) ).


That said, questions such as price per share and how many shares you really can't answer until you have a more firm idea of the valuation of what you're going to sell. It'll also depend on where you are. For example, here in New York the maximum number of shares you can be authorized to sell (you make this statement when incorporating) is 200; if we wanted to do more than that we'd have had to pay the state an additional fee.

What you really want, and which I went for and got, was a Venture Capitalist. I basically asked a friend of mine (someone who has alot of money) to give me Venture Capital to start up my company. We made a contract up ($300.00 with a lawyer) that basically said the Venture Capitalist will give me $15,000.00 and then will take a 25% of the total profits for as long as the business is running.

As far as taxes are concerned, the only thing we had to worry about is:

1) we had to be incorporated
2) 25% of the profits was deemed as income (meaning you will have to pay income tax).

There is a few more things that a lawyer can tell you, and that you should ask the lawyer before you start asking people for money.

This way, my friend would recieve alot of money for his investment, and the business could still run. The 25% must have made him around $30,000.00, which is double of what he first invested.

The other side of the story, is that if your company files for Chapter 11, or goes downhill, it was Venture Capital, and there will be no legal way for a person to get his or her money back. This is why a lawyer is the best way to keep this part sealed, so that nothing comes back on you.

Check with a lawyer on what I have said, but Im pretty sure its all true.

Jim

Are there any other hosts out there that have made shares available? Were they issued privately or on NASDAQ? It would be quite interesting to know.

There is one other option for me. Which won't require me to offer shares or raise more venture capital and that is if I could give my current clients away, yes give, then I will have enough capital, but the only problem is and please don't bash me because I've seen it happen on forums before, my clients have pre-paid for a y...

How much money do you need ? and Do you have a business plan ?

As JayC remarked, you're going to run into a great deal of legal complication. Securities law is exceedingly complicated and you should stay away from it if remotely possible. Quite apart from restrictions on what you do there will also be restrictions on who can buy shares.

If you're considering going down this route you absolutely must consult a lawyer... and I wouldn't be surprised if the lawyer ended up eating much of the capital you want to raise.

I want to do away with my yearly plan and introduce a monthly plan. In doing so, the money I generate monthly will see me short.

I need $1500 monthly for the next 5 to 6 months to pay for the current expenses of the servers while I re-build my business. After that I should be fine.


Any other suggestions/recommendations/offers???


Thanks NyteOwl, if you could please edit your post :D

As there ahave been a lot of comments on legal and practical ramifications of stock offerings I'll comment on another aspect.


Dylan originally wrote:
If I give my clients away so that I can restart my business, I want them to stay where they are. No move. It must be a silent deal. You know how clients get when another company takes over. I'll have to offer some support during this time because if I leave, they'll bawling: After their year is up, it's up to you what you want to do with them.



If you wanted it silent a public forum is definitely NOT the place for this sort of query. Many hosting clients read these forums and even a couple of your former/present customers. I dare say this won't be "silent" for long - even if your forums are down again.
Although I suppose you could just delete the postings.

To be listed on the Nasdaq you need quarterly revenues in the Millions, By the Way.


You might get listed on smaller exchanges, but not any of the major ones like DJIA, Nasdaq, NYSE, S&P 500.

You may have some luck on smaller exchanges, possibly OTC BB

But even then you need revenues in the high 100Thousands.

Just a note.

Goodluck.
:D

Dylan,
From looking at the site, It appears that you are based in South Africa. If this is still correct, then you would obviously need to look into your local laws. I would imagine it may be a little bit difficult to attract investors from the USA, UK etc.

I may be wrong, but I get the impression that you are looking to restructure due to cash flow difficulties with your current business model. Otherwise one would simply introduce monthly plans, discontinue yearly plans, and honour the clients who had paid their up front fees. And then look to introduce partners to the company offering them a certain percentage stake for a set price. I may be way off the mark, but these are the alarm bells that will ring for potential investors, who will be extremely cautious, especially given the current financial climate.

I dont mean to be too critical, just raising points you should consider. Good Luck.

Also, if you are looking at cash shortfalls of $9k over a 6 month period, you may want to seriously consider a bank loan of some sort. You get the cash to get through this time, yet once you have paid off the loan you aren't stuck with a bunch of other "owners".

I'm paying the earth in credit card fees with ClickBank. If I form an LLC in the States and get my own merchant account I will be able to introduce monthly plans and discontinue the yearly plan - should everything go according to plan.

Originally posted by RunOfTheMill
To be listed on the Nasdaq you need quarterly revenues in the Millions, By the Way.

You may have some luck on smaller exchanges, possibly OTC BB
But even then you need revenues in the high 100Thousands.
Just a note.
Goodluck.
:D

I'm not sure your right about OTCBB. If I recall correctly, pleanty of "blind pools" are in the OTC and have no revenue to speak of.

I did some quick research on Score offerings ( small public offering that you don't have to comply to "all" the S.E.C. rules and your limited to 1MM or 5MM per year ) for a client. It's very interesting and a good route to go if you already have a small and trustworthy userbase of clients, ( have them buy into you and own their loyalty ) you'll need about 50K to do a decent offereing.

also for note : the pacific exchange canceled the pilot program for small stocks.

for more information use a search engine with the terms IPO SCORE REG-D OFEERING. that should get you the basic information.

If someone want's a book refferal I'll post it ( give me 3 days to find it in my home )

-michael.