How standards help Investors, SMBs & Opportunity Zones?
How difficult would ordinary task be without standards? Consider if each electrical device maker had a different plug. Or, if every gas station had different sized nozzle on their pumps. The ordinary would become difficult and consume a lot of time. In business, one-way standards are used is to simplify information. One important area is Accounting with standards such as (GAAP & FASB). The goal of these standards is to present financials in a similar manner. Regulators require these standards for public companies. Nonpublic companies such as SMBs don’t have a requirement to follow these standards. Thus, making SMBs more difficult for investors to evaluate and invest in. What if there was a way to standardize SMBs and present this information in a marketplace? This is Halagard. We will be working with SMBs to take dissimilar information and create standardized offering documents allowing investors to evaluate SMBs side-by-side. Our process will work for SMBs inside & outside of Opportunity Zones (OZ).
Creating a standard for Investors and Qualified Opportunity Funds (QOF)
Halagard Screening Companies Step 1:
Identification of potential investable companies
- Companies apply via Halagard.com and provide basic background and financials
- In OZ’s, our partners such as local economic development & SBA field offices identify candidates
Triages the companies using financial ratios. We will group the companies
- A – likely to be a stand-alone security offering
- B – likely to be a bundled security offering (similar to mutual fund or ETF)
- C – could be an A or B in the future, business owners told of concerns
- D – financials are not strong enough for an equity offering
Companies in group A or B are invited to a full underwriting process.
- We gather at least 140 business data points & 160 financial data points
The Halagard underwriting process leverages traditional underwriting tools such as Credit bureaus and mixing in artificial intelligence (AI) tools to examine the companies.
- Issues and concerns are identified and investigated
Companies are given a score (H Score) and we determine which companies move forward to Investors.
- H Score is from 1 to 100,
- Group A - a score of 80 or higher required for a company to move forward as a stand-alone offering
- Group B – a score of 70 or higher is required to be included in a bundle (group of companies in a single security)
- Some companies that begin the underwriting process will not move forward to the offering stage
Investor Engage Step 6:
A standardized Offering document is created so investors/QOF can compare apples to apples. We place offering documents on a portal allowing investors/QOF to develop different filters so they can easily shop for investments that match their investment criteria. With over 300 variables, we can offer investors/QOF a wide variety of ways to filter a portfolio
- Companies in Opportunity Zones
- Only companies in x Industry
- Only companies in x states or regions
- Companies with annual revenue of x
- Companies in business for x years, in x industry and revenue greater than x
Halagard creates securities for the Offering & registers with regulators, as required
- Reminder, our marketplace is private and doesn’t have the burden of public markets
Interested investors/QOFs participate in a bidding process to establish the price per share
- Goal is a level playing field for Investors and companies
- Transactions are a win/win
All investor/QOFs can buy shares at the consensus price set in Step 8
- Capital flows to companies
- Investors receive shares in a company or bundle of companies
All securities must age for 1 years before they can trade
- Halagard will be building a matching engine / ATS for trading
- The secondary market allows for liquidity
Communication and Annual Reports for Investors
Ultimately, we expect Halagard to help identify and then facilitate capital flowing from the QOFs to SMBs. How can we help you? Let us know [email protected]
- Halagard will require business owners to communicate regularly with the shareholders
- Once a year, each company whether stand alone or included in a bundle must provide an annual report on their performance.
- Analytics and research is available to Investors / QOFs.