In the case of Hahnemann Labs, Quinn had a natural affinity
group in his thousands of customers. Generally, people interested
in alternative medicine are not those typically interested in the
stock market, says Quinn. But his deal--which, in a way, was an
"alternative" public offering--seemed to have a unique
appeal to these investors.
Quinn sent out more than 35,000 offering announcements. The
announcements resulted in about 1,700 requests for prospectuses;
another 400 requests for prospectuses came from friends, family,
associates, colleagues and other acquaintances. Of the initial
2,100 prospects who received a prospectus, about 240 ultimately
invested.
Not that any of this was quick or easy. Quinn started drafting
his prospectus in July 1994, and 12 and a half months later, in
August 1995, he closed his deal's $400,000 minimum--with
investments to spare. Of his 240 investors, Quinn estimates that
just 15 percent, or 36 investors, sent in a check on their own
after reading the prospectus. To get the rest, Quinn had to dial
for dollars. In all, he figures he talked to some 700 to 800
potential investors over the telephone. Nor was any of this cheap:
Legal, auditing, printing and marketing costs totaled $102,000,
Quinn says.
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Parenthetically, it's worth mentioning that the process
described above underscores one of the primary reasons why
so-called Internet IPOs are difficult to get done. Says Field,
"Right now, the Internet works as a cost-effective delivery
medium, but it does not work as magic. The fact is, most people
will invest in an [offering] only if they already know and feel
good about the company."
Although the entire effort took valuable time and resources away
from his business, Quinn says it was not without benefits above and
beyond raising the money. "Sure, there were days when I wished
I would run into just one person who had $500,000," Quinn
recalls, but he says there was also a tremendous benefit to talking
to so many customers and finding out what their needs and attitudes
were. "Reaching out to so many people and telling your story
is never bad for a business if it's done with the right kind of
heart and attitude."
In fact, sales during Hahnemann's fiscal year 1996 were
$691,000--about $100,000 higher than sales for fiscal 1995. That
momentum has spilled into fiscal 1997, with sales of some $400,000
at midyear.

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