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 and provide basic background and financials
    • In OZ’s, our partners such as local economic development & SBA field offices identify candidates
Step 2: 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
Step 3: 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
Step 4:  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
Step 5: 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
Step 7: 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
Step 8: 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
Step 9: 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
Step 10: 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

  • 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.
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]  

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