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Navigating a Private Placement Memorandum to Unlock Your Fundraising

You want a PPM that’s personalized to your business AND compliant with SEC Reg-D.

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“My lawyer quoted me $25k and a 4 week turnaround to get the Private Placement Memorandum I need to raise capital…”

That’s a quote from a founder we talked to last week – we hear it a lot.

You know your new business needs capital, it’s the fuel you’ll use to hire amazing employees, build your new product and grow your business.

If you’re raising that capital from family, friends or angel investors a well-written Private Placement Memorandum (commonly referred to as PPM) can increase the chances of receiving your first check, and ensure your company remains compliant with SEC regulation.

The problem is…

A Private Placement Memorandum is typically a complex document with lots of legalese and a very high price tag.

Your PPM needs to include:

  • A summary of your private offering
  • A term sheet along with a description of the securities offered
  • The terms relevant to the offering
  • Your cap table with the names and equity stakes of each shareholder
  • Information about the capitalization of your company
  • The risk factors potential investors should be aware of based on your business
  • Bios and headshots for each of your founding team members
  • Details of your company history, performance, products, and goals
  • How your company intends to use the capital raised
  • A detailed description of all compensation taken by founder
  • Instructions for investing in the offering
  • An investor questionnaire
  • A subscription agreement
  • Copies of your company bylaws or operating agreement

It can be difficult to understand what a PPM should look like, and what should be included. Some content seems very standard, some is very custom. Maybe only 20 words in 1000 need to change the trouble is you aren’t sure which 20.

A PPM provides the peace of mind you need to focus on your business, and your investors will love you for it.

As soon as some founders see everything that’s included in a PPM and how much it costs from a lawyer, they want to bail.

They decide to invest hours of their valuable time modifying a free template that doesn’t really fit their business. Worst of all they open themselves up to myriad of legal battles if things go wrong.

Good thing that’s not you.

You know a PPM will provide the peace of mind you need to focus on your business, and raising capital will be easier if you have one. But, wouldn’t it be nice to have a guide.

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Here’s a road map to building a PPM

We recommend you collect the documents outlined in the checklist below and set aside one hour in your calendar to put it together.

Collect your required documents.

To ensure you get your PPM as quickly as possible, make sure you have the following company documents in hand before you get started.

  • Cap Table
  • Business Plan
  • Recent financial statements
  • Team bios & headshots
  • Company bylaws/operating agreements

Who’s behind the PPM guidance?

Nth Round is focused on making founder’s lives easier by simplifying the fundraising process. We know all too well how difficult it is to start a company. Finding the capital to do it is half the battle. On top of that, knowing how to properly issue securities is anything but simple. We’re leveraging our experience navigating the legal and regulatory minutiae to help others do the same, giving them more time and money to focus on what really matters: their business.

Beyond PPMs, we help connect founders to the right investors, and keep them happy as shareholders. Our software makes equity ownership transfers and investor relations dead simple, leaving everyone with more time to focus on what matters.

We’re always happy to chat!