However, that's only beginning of your problems. Your reverse merger public company must now find buyers, each quarter, for those past insider shares. Assuming you can maintain same $4 share price, estimated annual investor relations costs will be $12 million per year, in addition to any other shares in public float. This $12+ million investor relations cost will continue as long as company is public and trading at $4/share.

The cash price of an OTCBB (Over-the-Counter Bulletin Board) shell with 90% or more control is about $1.5 million. The primary advantage to a shell purchase is that buyers are certain that their shares will trade. The major disadvantage is that shell insiders often create shares for themselves and hide this fact from potential buyers. The industry axiom is that there is no such thing as a clean shell. Thus buyer also inherits future costs of finding buyers for those hidden shares.

There are alternatives to taking a company public whic cost less than $100,000. They don't create stock that enters float. If you are interviewing potential equity finance consultants, you should ask them for their low cost strategy and determine its odds of working for your company. You should also ascertain ongoing investor relations costs of any public company strategy.

Most professionals in equity finance business have far more interest in short-term profits than long term earnings. If your purpose in going public is to give your investors a "liquidity event," you'll easily find equity finance consultants who share your myopic vision. If you are going public to build your company, you should read my ebook Venture Capital Profits. It's formula for a win/win public company strategy. The public profits. The insiders and private placement investors maximize their profits.

About Author: Since 1981, William Cate has been managing Director of Beowulf Investments [http://home.earthlink.net/~beowulfinvestments/], a Merchant Banking and Equity Finance Consulting firm. He can be contacted at: Beowulfinvetments@Earthlink.net

How do venture leasing firms evaluate transactions? Venture lessors look closely at several factors. Two of main ingredients of a successful new venture are caliber of its management team and of its venture capital sponsors. In many cases two groups seem to find one another. A good management team has usually demonstrated prior successes in field in which new venture is active. The better venture capitalists have successful track records and direct experience with types of companies they financed. The best VCs have industry specialization and many employ individuals with direct operating experience within industries they finance.

After determining that caliber of management team and venture capitalists is high, a venture lessor looks at startup’s business model and market potential. During this evaluation lessor considers questions such as: Does business model make sense? Is product/service necessary? Who is targeted customer and how large is potential market? How are products and services priced? What are projected revenues? What are production costs and what are other projected expenses? Do these projections seem reasonable? How much cash is on hand and how long will it last startup according to projections? When will startup need next equity round? These, and questions like these, help lessor determine whether business plan and model are reasonable

The most important question facing a leasing company financing startups is whether there is sufficient cash on hand to support startup through a significant part of lease term. If venture is unable to raise additional capital and runs out of cash, lessor stands to lose money on transaction. To mitigate this risk, most experienced venture lessors require that startup have at least nine months of cash on hand before proceeding. Usually, startups approved by venture lessors have raised at least $ 5 million in venture capital and have not yet exhausted a healthy portion of this amount.

Where do startups turn to get venture leasing? Part of infrastructure supporting startups is a handful of national leasing companies that specialize in venture leasing. Like Connecticut-based lessor introduced to Waitley, these firms have experience and expertise in structuring, pricing and documenting transactions, performing due diligence, and working with startup companies through their ups and downs.

Most venture lessors provide leases to startups under lines of credit so that customers can schedule multiple takedowns during year. These lease lines typically range from as little as $200,000 to over $ 5,000,000, depending on start-up’s need, projected growth and level of venture capital support. The better venture lease providers also assist customers, directly or indirectly, in identifying other resources to support their growth. They help customers acquire equipment at better prices, arrange takeouts of existing equipment, find additional working capital funding, locate temporary CFO’s, and provide introductions to potential strategic partners--- these are all value-added services best venture lessors bring to table.

While Craig Berman’s story is only an illustration based on an actual financing, many venture capital-backed startups are discovering that venture leasing can leverage venture capital to boost shareholder value. These startups are then able to use their venture capital for growth activities that build enterprise value, like product development, bringing in management talent and expanding their marketing efforts. Since venture leasing is more cost effective than venture capital, requires no board representation or loss of management control, and usually results in little or no equity dilution, this rapidly growing financing for start-ups is reaching radar screens of many savvy entrepreneurs.