n the five years it took to develop energy-efficient lighting technologies and build Lumion Corp., a Wilmington, Delaware, holding company whose operations are in Toronto, co-founder Terry Mocherniak managed to raise a dollar or two. After an initial seed investment of $150,000 by Mocherniak, his brother and his father, he raised $600,000 more through two government grants. Another $1.7 million came from an institutional venture capital fund.
This money allowed Lumion to fund its production line, but by the summer of 1996, the company had shifted away from manufacturing toward a strategy of licensing its technology for electronic ballasts and lighting control systems. "The upshot was that to do this," says Mocherniak, "we needed $750,000 to $1 million to bring the technology to its completion."
Mocherniak had found that venture capital investors wanted too much hands-on involvement--they wanted to control the company's financial management--so he decided not to take that route again. With relatively modest capital requirements and a track record to match, a traditional public offering wasn't feasible, either.
"Our best bet, in light of Lumion's stage of development and the amount of capital we needed," says Mocherniak, "was to raise money through an exempt public offering."
David R. Evanson, a writer and consultant, is a principal of Financial Communications Associates in Ardmore, Pennsylvania. Art Beroff, a principal of Beroff Associates in Howard Beach, New York, helps companies raise capital and go public.