Going public is a powerful tool if used properly. As a public company you gain a great deal of prestige and credibility that you don’t have as a private company. This prestige and credibility can make it easier to raise capital.
Public companies typically get huge valuations; so, when you’re raising capital as a public company, not only is it easier because of the credibility, but you can give away a much smaller percentage of the company for the amount of capital you raise because of the increased valuation a public company receives when compared to the same exact private company.
We introduce our clients to our network investment funding sources, institutional funds, and investment banks. Most investment banks and funds will not invest in private companies. Going public gives you access to public capital. Raising money as a public company is a much better deal because of the higher valuation the public company usually receives. Venture capital and private equity capital are the most expensive in that they want a larger percentage of your company.
As a public company, if you follow certain guidelines, including registering stocks with the Securities and Exchange Commission, you can even advertise to the general public for investors to buy your stock. This is prohibited for private companies. This levels the playing field and makes it easier to raise capital.
There are over 15,000 public companies. Many people think going public is an unattainable and far away dream. Any company, including a start-up, can go public. If you trade on the Over-The-Counter Bulletin Board you simply have to be audited one time per year and file a quarterly report. On the Over-The-Counter Pink Sheets you do not have to file quarterly, and you do not have to have a yearly audit.
As a public company, you can create investor awareness by advertising a properly registered offering. You can also trade stock in a public company for all kinds of assets and services. You can even trade your stock for free advertising with large groups that barter millions of dollars worth of advertising. They are highly motivated since TV, radio, magazine, and newspaper ads are only good up to a certain time; so, if they can receive some publicly traded stock, they are highly motivated to do these types of transactions.