This is completely false.
I have been taking Small Businesses and Start-Up companies public as a consultant above 15 years now. And for 15 years I have been frequently asked in various ways " Can a small business akin to ours raise capital by going public? We just have a million dollars in revenue. Aren't we very small?"
The response has been and still is "Yes, you can go public. And no, you are not too small."
What is very small?
Well actually nothing. An organization who is bringing in one million in revenues would be no problem to take public. But it is in fact not regarding your revenues, it is concerning your business plan. If you are working on a development stage business plan and you are making progress, then we can possibly take you public with that alone. If you are making five, ten or twenty thousand per month that is helpful because it just indicates that you are executing on your business plan.
It has become tougher and tougher to take a company public with no revenue and no business maneuver since the SEC and FINRA are rightfully trying to eliminate micro cap scam, but yes it can still be accomplished. If you have no revenues, however, you will need to have patience, some money in the bank to guarantee you can survive for some years, and you will have to be making genuine improvement on your business plan to show the powers that be that you are a "real" company and not simply a "sham" set up for micro-cap fraud.
If you are a small business and you don't think to be mom-and-pop forever, then "Going Public" is something you must look into in the very early stages. "Public" money is generally a lot cheaper than "private" money.
I have noticed private companies who feel they are too small to "go public" give up half of their company for a small six figure investment. At times companies with revenues in the millions feel they are too small and taking the business capital route they raise ten or twenty million but end up with merely five to six percent of the company in a few years.
This kind of dilution is completely unnecessary. The similar amount of money could be increased by going public while maintaining 60-65% ownership
Of course there are drawbacks to going public early also, but most of those have to do with being preyed upon by non-professionals, swindlers, and others who really don't know what they are doing. If you look into your advisers and get advice and structuring and referrals from experts who know what they are doing, you can eliminate most of the downside of going public early.
And if you feel you are probably the next EBay or Google or Microsoft kind of company, going public early on without venture capitalist might be worth billions and billions of dollars.
Bill Gates only owns almost fourteen percent of Microsoft. Imagine how rich he would be if he owned sixty percent!
Now after the "Can I truly go public?" sort of queries the next set of questions I usually get are "How do I raise capital when I go public? Do I do a merger reverse? " or " I see ads that say - Buy reverse merger shell - must I do that? " But those are questions for another article. Stay Tuned.
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