1

Hire an Experienced Attorney.

The purpose of your attorney is to properly advise your company and prepare it for the potential financing -- not just as a source of connections to financing sources. Unfortunately, more times than not hiring an attorney merely for alleged connections to funding sources will leave you overpaying for substandard legal services and none of the promised funding to pay your bill. This doesn't mean an attorney can't introduce you to potential financing sources, but make sure your primary purpose of hiring your attorney is their knowledge of corporate securities law and ability to give you quality advice in a way you understand; and not only for their alleged financing sources. Hiring an attorney experienced in corporate securities law will lead to your company being advised as to its different financing options, as well as ensuring any financing transaction is properly documented, which is just as important as locating financing in the first place.

2

Look the Part.

This is a multi-faceted step. First, looking the part means making sure your corporate documents and capital structure look like a company ready to take the next step. For instance, a company with 100 shares authorized and 100 shares outstanding with no bylaws, no organizational minutes, no annual shareholder and director meeting minutes, etc., makes a different impression than a company with 10,000,000 shares authorized, maybe 5,000,000 shares outstanding, with correct and up-to-date corporate documents and meeting minutes. None of these corporate formalities are make-or-break determinations when it comes to obtaining financing, and they can be easily remedied, but you only get one chance to make a first impression and sometimes a negative first impression is too difficult to overcome. The second, "looking the part" step is more important than the first and that relates to your company's financial statements. As opposed to corporate documentation deficiencies, which can be overco

3

Have a Plan.

This advice goes beyond a business plan, but that is a great start. Having a professional looking business plan or executive summary is where most funding sources will start their review of your company. Your business plan or executive summary should be short, succinct, and, most importantly, accurate. Providing a brief company overview, financial overview, future plans, and financial projections in one location that can be reviewed in a short amount of time is essential to obtaining financing. However, as important as your business plan is, it should not be used as your investment materials. Business plans have too much "fluff" to be used as investment disclosure. That disclosure is the exclusive purview of stock purchase agreements and private placement memorandums. Having an experienced securities law attorney is essential to keeping these two objectives and documents separate. Additionally, having a plan extends beyond a good business plan. Having a company story and pitch

4

Be Realistic.

In conjunction with your plan you need to be realistic about your company's needs and your expectations as to potential investments. You should only be requesting funding at a level that you can justify using to grow operations or expand. Take an objective look at your company, its products and services, your financial results to date, etc., view those factors from the prospective of a potential investor. If you can't justify the amounts you are requesting, or clearly articulate the needs for those funds, then an investor will also not be able to justify funding you that amount. Requesting a $10,000,000 investment when only $2,500,000 is needed to complete your planned expansion does not look good in the eyes of potential investors and may call into questions how you actually plan on using any funding you receive.

5

Know Your Potential Funding Source.

Funding sources are as varied as the companies they are looking to invest in. Not only due funding sources vary in terms of their target investment amounts, many vary in their investment protocol. In terms of investment amounts, some smaller (in terms of investment amount -- not number of investors) angel investor groups or funds are looking to invest as little as $250,000 to $500,000 while many larger investment banks and funds are in the $10 million to $25 million range. In terms of investment protocol, some financing sources are more akin to lenders and may offer straight loans, convertible loans, factoring, receivable financing, secured financing, while other financing sources are only interested in equity financing and taking an ownership stake in your company, and some offer a variety of financing options. Knowing what is right for your company in terms of amount of financing offered by a particular source, and knowing what types of financing options are available from certain

6

Develop Exit Strategies.

As good as your business may be most investors are not looking to be 10 year investors in your company. This tip primarily applies to private companies. Public companies have a built in exit strategy -- a public market for their stock. However, for a private company, with no real market for its shares, an investor is going to want to know how it will have an opportunity to not only make back the investment, but also a decent return on the investment. These strategies may include repayment of investment amount with a set return (normally structured as a loan with interest), dividends on preferred stock, the company or its assets being acquired, or the company going public. Although you may not have thought about your company in terms of an exit strategy, potential investors will have, and they will want to hear your plan. All investments have risks and investors understand this better than most, and what mitigates this risk is investing in companies that have thought about a plan a