I have been self employed for a long time. In some regards, I am a founding member of the gig economy. I have worked on thousands of different projects and cases where I was brought in to lend my talents and experience to a team of other professionals. Along the way I have been fortunate to have worked with many people from whom I learned a great deal.
I never advertised other than publishing an article or two. My business grew as my reputation grew. A majority of my new clients were referred to me, often by other lawyers who I had never met. Referrals are still the source of most of my business.
I am currently helping companies raise money using equity crowdfunding. Writing the paperwork for a securities offering is relatively easy for me. I try to put in the time and take care to give every client the advice that they need.
I keep busy because equity crowdfunding has become less expensive. More and more companies appreciate the fact that they can raise capital on better terms than are available at any bank.
Equity crowdfunding is inexpensive but it not free. If you intend do it correctly you need a good lawyer to advise you and to prepare your offering paperwork. You also need a good marketing company to differentiate your offering from the many others that are out there and to get a lot of prospective investors to see it.
Free or Pay Later?
I have been getting more and more calls from people who want to hire me but not pay me. Some of the people who call me are just trying to figure out what an offering will cost them to raise the funds that they need. I am happy to quote a fixed fee for most crowdfunded offerings which seems to be well received.
Some people want me to take shares in their offering as payment. I tell them, politely, that I like to choose my own investments. I suggest that if their company is really having a problem raising cash they should take the shares they are offering to me and sell them to their uncle or family friend and just pay my fee. The fact that they are raising capital and are anticipating an influx of cash should make those shares attractive to someone.
“You mean I have to do a seed round to in order to pay for the financing round?” A lot of people seem to go through the funds they raised in their seed round to create an MVP and then run out of cash. Not planning on the costs of a second round when you raise your seed round is a mistake many start-ups make.
Then there are those companies that want me to wait for my fee until after they raise the money. They see this as some sort of guarantee that I think their raise will be successful.
With crowdfunding, because there is no stockbroker, it is not unusual for prospective investors to ask to speak with the entrepreneur on the phone. Not every entrepreneur is a great salesperson. “What if your campaign yields a lot of potential investors and you can’t close them?” I ask. “Is that a risk I should take?”
There are also those who seek a discount on the fee and promise me a “fat” monthly retainer thereafter. I question why they would not want to see the quality of my work on the offering documents before they hired me for the long term.
I speak with a lot of securities lawyers and marketing companies working in crowdfunding and many have experienced something similar. For some reason it seems to be on the upswing. There seem to be a lot of people who think they can get by without paying for these services up front. If you want to hire people who actually know what they are doing that is not likely to happen.
We are in the midst of a raging bull market. A lot of people have jobs and there seems to be a lot of disposable income floating around. Just try to get tickets for Hamilton or check out the long lines at any airport or Apple store.
There is certainly more money around that is available for investment in start-ups which is another reason crowdfunding is becoming easier and easier. Yet for some reason a lot of start-ups do not seem to have two nickels to rub together and no one that believes in them enough to loan them money to raise the capital they need to take them to the next level.
I have a colleague who edits these blog articles.
When he read this one he asked: what set you off this time? Funny he should ask
A few weeks ago I got a call from a patent lawyer who wanted to introduce me to a client of his who had multiple patents. The client wanted to set up a series of companies for the different patents, raise some money for each and hire people in each company to bring the products to market. The lawyer thought that since I was looking at multiple raises for multiple companies and multiple fees he should get a referral fee from me.
I spent an hour and a half on the phone with the prospective client. He had done some research on crowdfunding before the call. He asked a series of intelligent questions.
In the aggregate he anticipated that he would need to raise about $20 million spread over 6 different offerings. He was confident that his products were going to “disrupt” at least two very large industries full of Fortune 500 companies. He could not resist telling me how his “brilliant innovations” would net him billions.
When I declined to work without a retainer, he started yelling at me and calling me names. He told me that I was ignorant because I could not see how successful his products would be.
“Let me get this straight”, I asked him, “if only one of the six companies you want to start takes off, you are confident that you will make millions, yet you do not want to invest what little it takes to raise the money to get them started?” He hung up on me.
Assholes a Plenty
You really have to be on this side of the conversation to understand that
, just like some lawyers, some entrepreneurs can also be assholes. I do not have to share your dreams to provide competent work and good counsel. I should not have to take the risk that I will do the paperwork well and you will turn off investors with your inexperience or arrogance.
I should not even have to be writing this article but I do know that once published I will get a thank you from lawyers and marketing companies that also work with start-ups. I suspect that other freelancers and not just those who work for start-ups experience something similar.
I do not want to discourage any entrepreneur.
If all you want to do is pick my brain then please just be upfront and say so. I am happy to read your pitch decks, take your calls and help to get you ready to raise capital for your company. I don’t charge for that.
But before you get on that road, you have to put gas in the car. It’s just a fact of life.
If you’d like to discuss this or anything related, then please contact me directly HERE
Or you can book a time to talk with me HERE