The Dos And Don'ts Of Ip Os On The Web

Casting a public offering into cyberspace doesn't guarantee virtual success. Here are some points to keep in mind when you're considering raising cash on the Internet.

Prepare a prospectus. This means hiring a lawyer and an accountant and applying to the Securities & Exchange Commission and each state where your shares will be sold to the public. "The same rules apply to Internet offerings as to those on Wall Street," says Brian Lane, director of the SEC's Corporate Finance Div., which just created a web site for digital IPO aspirants:

Now the easy part: Create a World Wide Web site. That can cost just a a few hundred dollars to set up and $100 a month to run if you do it all yourself--from writing the text to furnishing the art and copying a program from a web-design guide. Spring Street Brewing Co. gave the prospectus and some snappy facts and photos about wheat beer to Interport Communications. The access provider charged $500 to put the page on its server and $150 a month to run the site. More elaborate sites, involving ad agencies and vast disk space, could cost $1 million to get up and running and hundreds more every month.

SWAP MEET. The site should prompt prospective investors for their names, addresses, Social Security numbers, phone numbers, and the number of shares sought. The data will be stored on the access provider's server. The investor mails a check to you, and after it clears, send the stock along.

But don't assume investors will find you. Getting them to the site is the hardest part. Here are some tips from Spring Street Brewing Co. President Andrew Klein: Alert Web search engines such as Yahoo! and computer magazines. Set up a reciprocal link with a related Web site. Also, advertise in a newspaper. "Do what you'd do if you were selling anything," says Bruce Strzelczyk, a New York-based accountant with Internet-related clients. In cyberspace, as in the real world, you have to hustle to get people to your door.

Before it's here, it's on the Bloomberg Terminal.