From the October 2007 issue of Entrepreneur

Question: I've met many investors but can't get anyone to back my idea. A friend suggested I look into a DPO, or direct public offering. What do you think of this option?

Answer: While not nearly as popular as IPOs, DPOs let entrepreneurs with big ideas and small budgets raise capital by selling shares directly to investors for less cost and with far fewer regulations than traditional securities offerings underwritten by brokerage houses. DPOs work for entrepreneurs with a following--e.g., a restaurateur with many loyal patrons or a startup entrepreneur with family serving as backup. DPOs can fall into three categories: Regulation D lets you raise up to $1 million every 12 months by registering with your state securities administration; Regulation A lets you raise up to $5 million every 12 months and requires registration with the Small Business Office of the SEC; and direct offerings have no ceiling. Once the deal is done, you have a public company that trades on the over-the-counter market, which lets you raise more money in the future. But, you need to market the shares yourself and hire an investor relations firm to drum up publicity. "The biggest issue is selling your securities to enough investors to form a trading market," says Stephen Furnari, a partner at law firm Furnari Levine LLP. He advises setting aside at least $100,000 for professional and filing fees.

Rosalind Resnick is Entrepreneur's "Advisor" columnist.