Finance and Securities Offerings
Every growing venture requires capital at various stages of development: for start-up costs, to grow infrastructure or staff, to increase sales and marketing, to enter new markets, to make acquisitions, to cover cash flow shortfalls, or to grow to scale. At Bromberger Law, we advise our clients on different types of securities and offer support for securities offerings such as private placements, social notes, mission-related investments (MRIs), and program-related investments (PRIs).
At Bromberger Law, we understand how to use finance and capital structures to support both social and financial objectives. More importantly, we understand that raising capital is both an art and a science; the art is in setting the terms of the deal, and the science is in documenting things correctly.
We have experience with a wide range of private financing transactions such as equity offerings, debt offerings, private offerings, and private placements, representing companies and investors alike. We understand how a social mission affects these transactions, how to balance economic interests with other interests, and how to document everything in ways that are clear and avoid misunderstandings.
Investment Rounds
Social ventures most often raise capital through private financings such as stock sales, loans, convertible loans, SAFES, and other kinds of profit participation arrangements. These are often done in “investment rounds,” where multiple investors provide capital at the same time on the same terms. For nonprofits, which don’t have owners and cannot issue shares, financings usually involve loans, restricted gifts, or recoverable grants. In hybrid structures, a social venture can have its cake and eat it, too, by taking tax-deductible contributions through a nonprofit, and investing those funds in the for-profit, in a joint venture alongside other investors, in another company, or providing loan guarantees or credit enhancements, opening up other possibilities for creative finance.
Range of Finance & Securities Offerings
Private finance transactions can be simple or complex, depending on circumstances. Small deals, such as private debt and equity offerings, can usually be done fairly simply and easily, but more significant transactions require greater time and effort. Federal and state securities laws regulate almost every aspect of these transactions, and compliance is critical, so experience and attention to detail are important.
We advise our clients through the entire fundraising process, from initial conversations with investors through negotiations, preparation of documents, and due diligence to closing and post-closing matters. We start from the premise that all parties want the venture and transactions to be successful. Still, they have different interests and needs to be accommodated, which happens through negotiation. Those negotiations often result in term sheets (including social term sheets), which in turn lead to letters of intent, offering circulars, private placement memoranda, and definitive documents such as loan agreements, convertible notes, share purchase agreements, subscription agreements, SAFES, and program-related investment agreements. The legal and financial arrangements described in these documents are the foundations upon which the venture is built, and they had better be right!
For Social Ventures
Because of our experience with social ventures, and our focus on “win-win” outcomes, we can recommend ways to strike a balance between the interests of the company, the founder and the investor that meets everyone’s needs, especially where a social mission is involved.
For example, we represent companies and investors in MRIs, which is an investment that furthers a charity’s mission. We also work on PRI‘s which are investments made by a private foundation primarily to further its charitable mission rather than to generate income. The recipient of these investments can be a nonprofit organization or a for-profit business enterprise. But because these investments are necessarily tied to mission objectives or outcomes, they have to be documented accordingly.
AT Bromberger Law, we know how to create legally enforceable obligations around mission while protecting everyone’s other interests as well. We work with the lawyers on the other side to make sure the terms are clear, the proposed transactions make sense, complying with the law and best practices and reflecting the parties’ agreements with no tricks or surprises. And most importantly, when it is all done, our clients are satisfied and can look forward to a bright future.