Many of the owners who have appeared
on Small Business School (and also on the two
prior productions, Small Business 2000, and Small Business Today)
have done some kind of direct public offering of the equity in their business to people outside of their family.

PRIVATE PLACEMENTS: We have done episodes about Angel Capital and Venture Capital. In September 2004 introduced Stephen Watkins who proposed taking private businesses through a validation process just as if they were going to go public. This development, even though Steve has been working on it for years, is still in its early stages.

ESOPs and the 401K Plans: An Employee Stock Ownership Program is formal and structured means to become liquid, vest employees, and create a succession plan. We studied it in depth (as much as practical on television) in a show simply titled, "Employee Ownership." To go to our working reference page for ESOP information, click here. Several of the modified employee-ownership programs discussed in these episodes are really robust 401K plans.

DPO. A Direct Public Offering is regulated by the state securities commissioners and falls under the jurisdiction of the SEC through the Securities Act of 1933. That Act, often called "Reg D" or Regulation D, comes in three forms, Rule 504, 505, and 506. Each uniquely restricts the number of investors and/or the "qualifications" of the investors. Here are a few stories about direct public offerings:

1. Boston Duck Tours: Learn about Andy Wilson's use of the offering memorandum. It is much like a SCOR.
2. The French Laundry: 48 highly-qualified investors who love to be able to say, "Sure, I own a piece of The French Laundry; let's go for diner!"
3. Jagged Edge Mountain Gear: There are flags down on the field. This business is in some heavy transitions.

IPO. An Initial Public Offering, then opens the way to many additional rounds of public funding. If you are up for the long march, and you are going to do it, you would be well-served to review the study guides of these stories: , , and They have all been successful. There are many more stories -- case studies -- coming.

1. XTO aka Cross Timbers Oil: You will not believe it. These fellows really understand money.
2. Medallion Funding (SBIC - Small Business Investment Company) Another incredible story.
3. UroCor (a biotechnology research firm): A classic case study.

SCOR. You will become familiar with Rule 504 of Regulation D of the Securities and Exchange Act of 1993. Since 1982 small businesses can sell equity in their business to outside investors without going through the expense of an IPO. It is called a Small Corporate Offering Registration (SCOR).

If you are heading in this direction, you would be well-served to to review the stories in this special show about the SCOR instrument with the founders of the Texas Capital Access Forum and Deborah Bortner, Securities Director for the State of Washington:

1. U-7 - This document looks a little like a typical prospectus or offering memorandum for investors. It is, but it has been simplified by Deborah Bortner (above) and a team of State Securities Commissioners.!
   
   
2. North American Securities Administrators Association (NASAA): Get to know your state's securities commissioner (who is a member). Or, click on Resources (always on the left side bar), then click on your state. You should find your securities administrator in the list at the top.
   
   
3. Securities Exchange Commission (SEC): Advisories for small business owners.

Have a great story to tell? Does it teach us something more about one of these ways of raising money? Let us know and we will publish it here.

There are no two business owners who are alike. No one formula works for every one and ultimately the decision rests on the abilities and leadership of you, the founder/owner and chief executive officer. Your board of advisors can help, but the decision is yours.

Please review the show that we did about Staying Power, especially the case study guide.

As we continue to add capabilities to this site (see the Future), these could become hot pages. Eventually we will schedule events so you can meet investors and drop off into individual chat sessions. We are just beginning this project. Help us out! What resources have you found to be useful? What resources and interests do you have? Send us a note.