Raising Investor Funds in 2016.
I started writing information memorandums, investor offer documents and prospectuses around 2005 so have clocked approximately 10 years.
Over this time I’ve seen the nature of investor offers change, market and industry fads come and go and money being funneled into all sorts of wild and wacky ventures and businesses.
Have the fundamentals changed? No, not really. Why is that? You see, the investor funding compliance environment has remained relatively unchanged over the last 10 years.
The next big wave of change may come upon the Australian investor funding industry by way of the legalising of crowd funding and being a supporter of the crowd funding movement, I can only encourage its arrival.
What do we consider to be a compliant information memorandum?
The word ‘compliant’ is used loosely here as depending upon the nature of your investor marketing activities and the nature and number of your investors, not all investor offer documents are required to be lodged with the government regulator, ASIC. So not all information memorandums are not generally required to ‘comply’ with legislation.
However, all investors are able to seek recourse with ASIC on any matter relating to investment. In such an event, the contents of the information memorandum will generally be considered by ASIC in their overall assessment. ASIC may run a ruler over all words, phrases and images used in the information memorandum and look for misleading or false statements.
As we write investor offer documents that are submitted to ASIC for an assessment (prospectuses) we generally treat information memorandums in the same manner and assume, that ‘one day’ ASIC may run their ruler of these documents.
In all instances, our job is to present our client’s investor opportunity in the strongest possible light whilst being mindful of the risks (to both investors and directors) with regards to the use of words or statements that are potentially false, misleading or cannot be verified and the use of images that may misguide or misrepresent.
So does and information memorandum need to be a boring legal document?
Think of it this way.
- You want to attract people with money.
- People with money do not generally like to be ‘sold’ to.
- They have money because they have the ability to gather facts and make a calculated judgement call on where to place their money.
- They key here is ‘they gather facts.’
- So how do you make life easier for them?
- You present facts. Statements that are verifiable if required.
- If it can’t be verified, leave it out.
- Give them the facts and let them come to their own conclusions and make their own judgement call.
- Use assumptions sparingly and don’t stretch it to try prove a point
A final tip – If more than 2 qualified investors have turned your matter down, stop and regroup. Your offer is not competitive in 2016, typically by way of its valuation or level of complexity, and requires changing.
For assistance please contact The Financial Writing Company 1300 477210.