Direct Hit
With direct public offerings, entrepreneurs can take financing into their own hands.
Michael quinn's dilemma was a common one, but his solution
was not.
After 10 years in business, Quinn wanted to go national. But his
Hahnemann Laboratories Inc., a San Rafael, California, company that
manufactures homeopathic medicines, needed to become a Food and
Drug Administration-licensed pharmaceutical manufacturer if it was
going to market its product across state lines. Where would Quinn
get the capital to outfit a new facility?
"I went to a commercial bank, and they said `No way,'
" recalls Quinn. Investment bankers weren't offering much
hope, either. But Quinn had an epiphany when he realized that if
just 200 of his more than 28,000 customers invested about $2,000
each, Hahnemann Labs would have the equity capital it needed.
Content Continues Below
What Quinn did next was an end run around traditional
brokerages. He marketed common shares directly to individual
investors in what is known as a direct public offering, or DPO.
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