Sitting in Michelle Taylor’s home, observing trinkets from all over the world as I enjoy a spinach pastry hors d’oeuvre, she tells me enthusiastically about her background, starting from her first job as a Commodities Broker for Paine Webber and earning her Series 7 and then Series 24 licenses with the National Association of Securities Dealers. In the trading world, the Series 24 license is a high level of knowledge, which is reflected in her first start up, Vipont Pharmaceuticals, makers of personal toiletries, which sold to Procter and Gamble for $140 million after only two years in business. 

She is vivacious and fun and loves to share insights.  She's 62 years old and looks 30 something.  In her photo she reveals her playful creative side, but don't let that fool you; she means business.

Michelle is a text book 'fast start and move on' entrepreneur.   After Vipont Pharmaceuticals, she raised the private capital for Mesa Laboratories (MLAB-OTC) private equity funding to start the company; she then did a self underwriting of $3 million of stock in public offering. Mesa Labs currently trades on the NASDAQ for about $22 per share. She has started and raised funding for numerous other companies including the Mortgage Assistance Company,  Visual Ice Marketing, and is currently President of Iceman Rx, Inc.

w2wlink Question from the Editor, Jean Lewis:  Is there something that you’ve done when you’ve raised capital that you think maybe not everyone would think of doing that made a big difference to you?

Michelle Taylor:  Yes, I used a private placement memorandum, a document that provides information on a new security issue. It is similar to a business plan but includes more information.

w2wlink Question:  What is the difference between a private placement memorandum and a business plan?

Michelle Taylor:  A private placement memorandum includes specific terms of the offering and a detailed list of risk factors.

w2wlink Question:  Can I make a private placement memorandum with a good outline like I usually can a business plan?

Michelle Taylor:  You need a good Securities Exchange Commission attorney to draw that up for you.  Ask people in your networking circles for names of a good SEC lawyer. 

w2wlink Question:  What information or documents do I need to have before I see the attorney to make the most of the time?

Michelle Taylor:

1. Idea clearly articulated.

2. List ideas for terms of the offering.

3. Business plan with the blueprint of the operations being easy to read.

4. List of people involved and their bios.

5. List of risk factors.

w2wlink Question:  How do you be thorough in preparing a list of risk factors without being endless?

Michelle Taylor:  That’s a good question. You have a fiduciary responsibility to investors so you have to be very thorough. Investors can consider the list and become familiar and comfortable with the issues. Covering all reasonably possible risks is expected, and your lawyer will help fill out the list, but it is a good idea to have it as filled out as you can before you go to save time and money. The lawyer may modify language to be as clear as possible.

(See example Risk Check List Resource PDF created by w2wlink staff attached below)

w2wlink Question:  Do you have any advice about the terms of offering section?

Michelle Taylor:  Yes. There are three concepts to know walking into the attorney’s office that would help:

1. Convertible debentures: shares that can be converted from debt to equity after a specified amount of time, for example an initial investment of $60K could be made as a loan to be paid back with a specified interest rate, but after 90 days, the lender could opt to change that $60K in to equity. Have you used convertible debentures? Yes, in pretty much every deal; they’re good because they’re flexible.

2. Traunches: French for the word slice, are preplanned amounts of money to be raised in equal amounts as originally raised because it saves time and money to administer and leaves open the possibility of getting more funds for the entrepreneur and more opportunity to invest for the investors. I would advise offering the initial investors a preemptive right on future tranches so they can choose to keep their percent of equity the same should they want to because they have taken the biggest risk and it is only fair.

3. Mini-Maxi: State a minimum amount of funds at which that you have the right to stop fundraising if you are able to operate, as well as a maximum that you will aim to fundraise.

w2wlink Question:  Do you show the Private Placement Memorandum to the same people who see the business plan?

Michelle Taylor:  No. You only show suitable or sophisticated prospective investors, people who are SEC accredited, i.e. have a net worth of at least $1M U.S., or make at least $200K per year if single, $300K per year if married, and expect to continue to make more in the future. Yesteryear, only the ultra-wealthy families started companies. As of 1933 when the SEC made the PPM possible by defining a sophisticated investor among other things, smaller companies and investors were enabled to raise capital and start up.

w2wlink Question:  How do you meet these people?

Michelle Taylor:  Network, network, network. Networking is vital. It is the only way to meet suitable investors. The PPM is not going anywhere with out investors. All of my deals happened though networking. I just joined an entrepreneurial circle with w2wlink to share advice. I want to mentor entrepreneurs with ideas.

Ckeck back Sundays for more w2wlink.com C-Link Suite Interviews with the Editor.