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Key Idea: Find A Few Experts

David Porter is a stock broker who took on the task of using a Small Corporate Offering Registration to raise money for Blue Whale.  More...

Key Question:


Hire an expert to help you do a valuation which is the first step in the SCOR process.

Unlike the initial public offering (IPO) under the Securities and Exchange Commission (SEC), which includes a complicated and expensive process, the SCOR is a fairly inexpensive and straightforward way to attract investment capital.
     Q:  What does "nearly" do-it-yourself mean?
 David Porter said you need an attorney, an accountant and a stock broker. Tom Stewart Gordon estimated a total cost of about $30,000. The IPO process costs well over $1 million in underwriting, legal and accounting fees. If you are interested in investigating a SCOR further, start by obtaining the downloadable SCOR issuer's manual, SCOR, Small Corporate Offering Registration, How to Complete the Question and Answer Disclosure Document for Your SCOR or Reg. A Filing from the website of the North American Securities Administrators Association at
     This 100+ page manual has a soup-to-nuts description of what you need to know about the application process. Here's an excerpt from the beginning of the issuer's manual: "Part I of this Manual informs you of the general requirements to use and file the Form U-7, called the "SCOR Form."
     Part II of the Manual provides specific directions on how to fill out the SCOR Form. Once completed, the SCOR Form may be filed as the main disclosure document for offerings being registered in all states accepting SCOR." Part II has a separate section for each of the 50 questions of the Form U-7, making it a user friendly document when a number of different people contribute to the preparation of the prospectus. You could answer some of the questions yourself while employees and/or outside consultants answered others. That way you could minimize your cost and still produce a high quality disclosure document. At the same site, you can obtain the necessary forms for filing in MS Word, further facilitating the document preparation.


The SCOR was created for small businesses; it's a way of attracting capital to grow your business. In determining whether it would it work for you, don't be intimidated by the effort involved in completing the questionnaire. There are tools and advisors who can help you and the cost, compared to the benefit, is not high.

Think about it

How would you go about calculating the value of your business?

Clip from: Small Corporate Offering Registration (SCOR)

Austin, Texas:  The Securities Exchange Commission (SEC) instrument known as Small Corporate Offering Registration (SCOR), sometimes referred to as Reg D Rule 504, is a little-known, but important tool for small businesses.

Mandated by Congress, every year since 1982 the SEC has held an annual meeting for small business investors and owners called "Small Business Capital Formation Conference."   The first result of that conference was the Reg D Rule 504.

In 1992, ten years later, Deborah Bortner, the Securities Administrator for the State of Washington, led the way to simplify the registration by developing the SCOR document.

At that time Congress wanted to help small business owner who have a difficult time finding money.  Another aspect of the SCOR is use it as a liquidity model that forces a business valuation. It could also be used as an exit strategy.  The majority of small business owners do not have a succession plan and a SCOR would necessitate that such a plan be implemented.

Historically, out of every $100 in banks loan, small business gets about $7. Though contributing over 50% of the Gross National Product,  working capital is often difficult to obtain.

The SCOR has not caught on. There is very little publicity about it and just a few educational resources. It does require three years of audited financials. It does involve your CPA and a good securities lawyer. 

The SCOR could be used in the following ways:  (1)  A cornerstone of a succession plan and liquidity model for mature small businesses, (2) An alternative to an employee-stock ownership program, (3) A means for all those who already want to buy into a business to do so without going through an IPO and without necessarily being a qualified investor, and (3) An instrument to provide a conservative diversification strategy for pension funds, mutual funds, and private investors.

Because of the ubiquity of the web, Small Business School will promote any and all attempts to develop  mechanisms so the best small businesses are indexed against one another and the best among the best rise to the top and are immediately qualified to be selected by any investor to receive equity capital.

It will change business in America forever.  Small business can share equity,  learn about liquidity models,  understand our financials and key critical ratios, and then participate in the market just like any big business.

Go to all the key ideas and videos of this episode...

Greater Austin Chamber of Commerce

David Porter, Senior VP/Economic Development

210 Barton Spring Road, Suite 400
Austin, Texas 78704 , TX 78704

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Year Founded: 100

Find A Few Experts

HATTIE: Can I do this myself? Is this do-it-yourself? Can I go to the Internet and get what I need and just roll it out?

DAVID: That's a pretty common myth. That--I've seen a lot of places that would lead you to suspect that that might happen. But it's been our experience, at least in this state and in most of the other states of which I'm aware, that the people who've been successful in selling their securities to the public and making it all work have been people with extensive background in the securities business, or they--themselves--or they've gone out and they've hired a professional, such as myself or some other broker-dealer to assist them in that offering. Another essential element is going to be the hiring of a securities attorney, because a good securities attorney makes a very large difference in one of these offerings. And then, of course, they will also need a certified public accountant to perform the audit.

HATTIE: OK. One of our goals here is to raise money from the public without paying an arm and a leg to Wall Street, because, and let's go over those numbers again. It might cost me as much as what to go public?

DAVID: A common number that's thrown around is $500,000 to $600,000 in up-front costs, and even that doesn't include all of it.

HATTIE: OK. So $500,000 up to go public.

DAVID: Correct.

(Voiceover) : Deborah Bortner, the Securities Commissioner in the State of Washington tells us how the SCOR came to be.

DEBORAH BORTNER: I've been a big advocate of small business for the almost 20 years I've been in this business. In fact the State of Washington actually created a form, which we call, fill in the blanks offering circular and now it is known as SCOR. It really started in the State of Washington and other states were encouraged by the North American Securities Administrators Association to adopt that form.

We also worked on the form and in fact we're working on it now to make it easier for people to fill out. Later the SEC also adopted that form so people can actually use this fill in the blanks offering circular, known as SCOR or U-7 to raise up to $5 million dollars.

HATTIE: To access the U-7, come to and click on Steps. Then click on Step 7. You'll need a knowledgeable business person, a general business attorney, and a CPA to get through the process.

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