AOCBA CAPITAL™
BUILD THE BUSINESS.
PREPARE FOR CAPITAL.
Capital doesn’t begin with an application. It begins with a business that is prepared to pursue it. AOCBA Capital™ helps business owners assess capital readiness, organize critical business and financial information, understand potential capital pathways and prepare for conversations with appropriate capital providers.
THE CAPITAL QUESTION
RAISING CAPITAL ISN’T ALWAYS THE FIRST STEP.
Before asking where the money will come from, understand what the business may need in order to pursue capital responsibly.
“WHERE CAN I GET THE MONEY?”
Access to capital matters. But the source of capital is only one part of the decision.
Capital providers may evaluate the company, the owners, financial condition, revenue, cash flow, business model, documentation, use of proceeds, risks and ability to meet the requirements of the particular capital source.
That means the capital conversation should begin before the application, investor presentation or securities offering.
CAPITAL READINESS ASSESSMENT™
BEFORE YOU PURSUE CAPITAL, UNDERSTAND WHERE YOU STAND.
Capital readiness begins by examining the business from several different perspectives—not simply asking how much money the owner wants.
BUSINESS READINESS
THE FOUNDATIONBusiness structure, ownership, governance, licenses, business model and organizational readiness.
FINANCIAL READINESS
THE NUMBERSRevenue, expenses, cash flow, banking, financial statements, tax records and available financial history.
CAPITAL READINESS
THE REQUESTCapital amount, use of proceeds, business need, potential repayment considerations and ownership implications.
OFFERING READINESS
THE STORY & DOCUMENTSBusiness plan, management information, financial projections, supporting documents and risk identification.
CAPITAL PATHWAY
THE DIRECTIONEducation around debt, private capital, crowdfunding and other potential capital sources appropriate for further evaluation.
THE AOCBA CAPITAL PROCESS
FOUR STEPS FROM CAPITAL QUESTION TO CAPITAL PATHWAY.
A structured capital process helps the business owner move from simply needing money toward understanding and preparing for the capital decision.
ASSESS
UNDERSTAND THE BUSINESSReview the business, financial condition, capital objectives, existing documentation and current stage of development.
PREPARE
BUILD CAPITAL READINESSOrganize business information, financial records, projections, capital request, use of proceeds and supporting materials.
STRUCTURE
UNDERSTAND THE PATHWAYSLearn how debt, equity, crowdfunding, private placements and other capital structures differ.
CONNECT
MOVE TOWARD CAPITAL SOURCESWhen appropriate, connect with third-party lenders, registered securities intermediaries or other capital resources.
CAPITAL PATHWAYS
CAPITAL ISN’T ONE PRODUCT.
Different businesses, stages and objectives can require different capital structures. Understanding the differences matters before choosing a path.
BUSINESS DEBT
Potential sources can include banks, CDFIs, commercial lenders, lines of credit, equipment financing and other forms of business financing.
Debt generally involves repayment obligations rather than selling ownership in the company. Eligibility, pricing and terms depend on the provider.
REGULATION CROWDFUNDING
Regulation Crowdfunding can allow eligible companies to offer securities to both accredited and non-accredited investors, subject to applicable requirements and investor limits.
Reg CF transactions must take place online through a single SEC-registered broker-dealer or funding portal.
REGULATION D
Rule 506(b) can provide a private-placement pathway without general solicitation and permits sales to accredited investors and, subject to requirements, a limited number of sophisticated non-accredited investors.
Rule 506(c) permits general solicitation when all purchasers are accredited investors and the issuer takes reasonable steps to verify accredited status.
REGULATION A
Regulation A provides a public capital-raising exemption for eligible issuers.
Tier 1 currently permits offerings up to $20 million and Tier 2 up to $75 million during a 12-month period, subject to applicable requirements.
BEFORE YOU TAKE THE MONEY
THE WRONG CAPITAL CAN CREATE THE WRONG PROBLEM.
Capital is not simply money entering the business. Different forms of capital can create different costs, obligations, risks and ownership consequences.
HOW MUCH CAPITAL DOES THE BUSINESS ACTUALLY NEED?
WHAT SPECIFICALLY WILL THE CAPITAL BE USED FOR?
WHAT WILL THE CAPITAL COST THE BUSINESS?
WHAT OBLIGATIONS OR OWNERSHIP RIGHTS COME WITH IT?
CAPITAL READINESS PACKAGE™
WALK INTO THE CAPITAL CONVERSATION BETTER PREPARED.
Different providers and capital pathways require different information. The objective is to organize the business before the conversation begins.
BUILD THE BUSINESS CASE BEFORE YOU MAKE THE CAPITAL ASK.
Depending upon the company and capital pathway, the readiness process may involve organizing business, financial, management and capital-request information.
Required documentation will vary according to the provider, transaction and applicable legal or regulatory requirements.
BUSINESS STAGE MATTERS
CAPITAL LOOKS DIFFERENT AT DIFFERENT STAGES.
A startup and an established operating company may approach capital from very different positions.
BUILDING THE CAPITAL STORY
- Founder resources
- Startup budget
- Business plan
- Financial projections
- Use-of-proceeds plan
- Ownership structure
- Business model
- Capital strategy
BUILDING FROM OPERATING HISTORY
- Historical financial statements
- Operating cash flow
- Revenue history
- Existing obligations
- Business performance
- Growth requirements
- Expansion plans
- Capital strategy
THE JOBS ACT & CAPITAL FORMATION
THE PRIVATE CAPITAL MARKET CHANGED.
The Jumpstart Our Business Startups Act of 2012 helped create and expand pathways through which eligible private businesses can pursue investment capital under federal securities-law exemptions.
ACCESS THE CROWD
UP TO $5MEligible companies may raise up to $5 million through Regulation Crowdfunding offerings during a 12-month period, subject to applicable rules.
PRIVATE PLACEMENT
NO GENERAL SOLICITATIONRule 506(b) provides a private-placement safe harbor and generally prohibits general solicitation or advertising.
ACCREDITED INVESTORS
GENERAL SOLICITATIONRule 506(c) permits general solicitation when all purchasers are accredited investors and the issuer takes reasonable steps to verify their accredited status.
PUBLIC CAPITAL PATHWAY
$20M / $75MTier 1 currently permits offerings up to $20 million, while Tier 2 permits offerings up to $75 million during a 12-month period, subject to applicable rules.
CAPITAL ACCESS WITH CLEAR BOUNDARIES
PREPARATION AND SECURITIES EXECUTION ARE NOT THE SAME THING.
AOCBA Capital™ is designed around capital readiness, business preparation, education, navigation and appropriate connections.
PREPARE & NAVIGATE
- Capital readiness education
- Business readiness review
- Financial-information organization
- Capital-request preparation
- Business planning support
- Capital pathway education
- Capital navigation
- Connections to appropriate third parties
EVALUATE & EXECUTE
- Registered funding portals
- Registered broker-dealers
- Banks and commercial lenders
- CDFIs
- Other authorized capital providers
- Applicable investor processing
- Applicable securities transactions
- Provider-specific underwriting or evaluation
THE HUMAN GUIDANCE LAYER
MEET YOUR CAPITAL NAVIGATOR.
Capital can involve business decisions, financial decisions and, in some situations, legal and regulatory considerations.
The Capital Navigator helps organize the conversation so the owner can better understand the business’s current position, preparation needs and potential capital pathways.
THE AOCBA BUSINESS-TO-CAPITAL PATH
CAPITAL READINESS STARTS WITH BUSINESS READINESS.
AOCBA Capital™ does not sit outside the Business Academy. It extends the business-building journey.
AOCBA CAPITAL FAQ
UNDERSTAND BEFORE YOU PURSUE CAPITAL.
Does AOCBA Capital™ guarantee that my business will receive funding?
Is AOCBA Capital™ a crowdfunding funding portal?
Can a startup pursue capital?
What is Regulation Crowdfunding?
Can AOCBA Capital™ determine which securities exemption my company should use?
What should I do before pursuing capital?
Where should I start?
AOCBA CAPITAL™
DON’T START WITH
“WHERE CAN I GET MONEY?”
START WITH “AM I READY?”
Build the business. Understand the numbers. Define the capital need. Prepare the information. Understand the pathways. Then move toward the appropriate capital conversation.