Starting a Securities & PE Research Firm
I have thought about this idea and put some numbers together. Thus far I am happy with it and likely moving forward with it asap. It's obviously starting small and focusing on smaller companies in the nanocap range. I am a young entrepreneur looking for a little bit of guidance on this journey, so if there is anyone with experience who would be willing to send me a PM with some advice and to answer some questions I would be greatly appreciative.
BTW, I am expecting heat from all of the people who say I can't do it and question my credentials for such a venture. That's ok though. It comes with the territory.
Thanks
!) Customers for now would mostly be small microcap companies who are overlooked by big banks, but are still looking to gain exposure to the investment community. We would write and then disseminate the reports for them through several distribution channels. Individual and institutional investors could be potential clients as well. People looking for specific investment research help, whether it be securities, PE, assistance with PPMs, etc.
2) It's designed for microcap companies to pay for research on their company at any affordable price to help improve their investor relations and improve market efficiency.
3) I am actually 15, but people say I'm fairly mature for my age.
You're 15...I want you to kill it kid, I believe age should never be a factor in how hard you push yourself towards success. You just have to be realistic and realize that you will face massive doubt and uphill battles everywhere. I don't care if you're Warren Buffett reincarnated, people will only see age and inexperience. Figure out ways to get around the issue, show them with brute force of stuyding/writing/hustle and most definitely grit, and then MAYBE you will find yourself getting somewhere.
Best of luck
Thanks. Unfortunately my inbox is still empty :(
I would look very closely into the regulation around distributing investment advice. The last think you want is to end up in big trouble for some innocent entrepreneurship
This is more so what I want to know about "regulation around distributing investment advice." On a personal level I have already achieved a BS in Business, and I plan to align with other analysts who have a minimum of an MBA. However, I'm still not 100% sure about the regulations surrounding the distribution of this investment advice. Obviously I have the basic disclaimers in place, but I would like more information on regulations, especially since this is not a brokerage firm or investment bank. I was wondering if there are memberships to certain regulatory institutions that might benefit a fee based research firm.
I know what you're thinking...how does a little kid have a Bacehlor's degree....I'm a genius.
This is the disclaimer I use on my research reports for futures. You could use something like this.
BE ADVISED THAT TRADING FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND IS NOT SUITABLE FOR ALL INVESTORS. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. FUNDAMENTAL FACTORS, SEASONAL AND WEATHER TRENDS, AND CURRENT EVENTS MAY HAVE ALREADY BEEN FACTORED INTO THE MARKETS. THIS MATTER IS INTENDED AS A SOLICITATION TO TRADE FUTURES AND OPTIONS.
So, given your age, how do you expect your ideal clientele to take you seriously? Or trust anything you have to say? Not hounding on you (I started my own consulting company at 16), but it is definitely an uphill battle to get people to ignore your inexperience. Do you have a good history of returns / results from your research?
I really do appreciate your concern. It's not necessarily "me" that they are buying with the ongoing research, but an extended product to the service. I don't really want to get into the little specifics that I believe will make this company successful. But the worst case scenario is that I fail....and then I just pick up again and start all over. I'm not too worried. This is something I really want to experiment with for the time being.
Totally get that you want to experiment. But also useful to consider how potential failures now may impact your ability to get clientele / be viewed as a trusted analyst in the future. More power to you.
Oh yes. You are absolutely correct. That is certainly one of the biggest drawbacks, and I struggled with it quite a bit. I want you all to keep in mind that the majority of the research will be public fee based research paid for by the companies being covered. So the majority are going to be extremely small companies and the reports will be fundamental. The other side to it was to set up potential outsourcing of investor relations to some of these companies, however there is a conflict of interest that would come into play, and even if this company does fail, I want to run it with honesty and integrity.
You are a genius and you majored in business...
Ahhh stop. Business is only one of the subjects I majored in. But like I said, I don't want to toot my own horn....
Nice!
Haha it is a lot of work majoring in several subjects though, especially if the classes don't overlap. I wouldn't really recommend it. To major in something like Business and Economics is easy...physics is a different story.
Wow, thanks for the advice! What was your other subjects?
What is the point of this troll post? If you are 16 with multiple degrees then you should be able to figure out this problem on your own.
I had a feeling someone with a name like "joey joe joe shabadoo" would come here looking to start an internet confrontation. Therefore, I am not going to retaliate, but rather put this thread to rest. However, if there is anyone out there who can maybe help assist me with some information regarding regulations pertaining to the distribution of research reports, then I would greatly appreciate it if you could take the time to send me a PM.
Thanks
CFinance - To legally solicit investment advice, you'll need to take and pass a Finra exam, the series 66 (I believe the series 65 also gives a person the ability to give advice, maybe ex. insurance products). You'll likely also need your series 7, which is a general securities exam. However, required by Finra, a firm will need to sponsor you to take these exams. I'm not sure what the regs are regarding starting your own firm, but a person who is unemployed, cannot sit for these exams, they have to be sponsored.
Also, I started a business in a similar space that I worked on for a few years (think search fund, businesses with purchase prices from $1-10 million). One thing you'll have to deal with if you wish to operate in a similar space is unsophisticated business owners, businesses really without CFO type people. So, reporting/books can be inaccurate. So you'll have to figure out the best way to self-audit the info a company provides. Perhaps you can offer some sort of financial consulting services to sweeten the deal for them (many are looking for credit to expand, as a result, need clean financials).
Goodluck!
You should hang out with Dick Fuld. Bet you guys would get along smashingly.
Assuming this is not a troll post (it is). You do realize there are tons of companies like that that produce reports FOR the coverage companies as they want to be in the 'investor spotlight' so to speak. Keeping that in mind why don't you just reach out to people who work in this particular niche or worked in the past? My humble non-multi-degree opinion.
This is a strange mix of early awareness, humble brag, absurd overconfidence, and genuine initiative. I have no idea how this works. Good luck though, I wish you well.
As far as people sending you questions....a lot of the people here manage more money on one transaction than your entire firm is worth. Exactly what is anyone here asking you for?
iRead it like that at first too. What iThink he was saying was to answer questions he had.
Even though I don't have anything to add I have to say this was a rather interesting read. Good job to all those involved!
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