Motorcycle startup Confederate Motors->ke3303 is planning to raise $1 million through a private stock offering with the hopes of securing enough funding to increase the production of its motorcycles. It’s the first aggressive step initiated by Confederate Motors to increase exposure for its two motorcycles, the X132 Hellcat Speedster and the P51 Combat Fighter.

According to the company, a total of five million shares of the company’s stock will be made available for purchase with each stock unit priced a just $.20. There is a caveat, though. The offering will be made under the Securites and Exchange Commission’s Rule 506 of Regulation D, which stipulates that purchasing a stock in the company isn’t as easy as it looks. For an individual or a company to be eligible in purchasing the available shares, they must be considered as accredited investors by the SEC. That means that an interested party must be someone who has the finances to do it or is an actual financial institution.

Confederate Motors has given no timetable on when it plans to make its five million shares available for purchase, opting only to say that it plans to use the proceeds to increase the production of its models to two per day. That might not seem like a big deal, but for a boutique brand like Confederate Motors, it’s the next step towards establishing itself as a player in the niche motorcycle segment.

Continue reading to learn more about Confederate Motors’ plan to raise $1 million through a private stock offering.

Why it matters

A start-up company like Confederate Motors will almost always go through this route, especially if it needs more funding to continue its operations. There are a myriad of ways to do it too and offering shares to companies is one of them. The company could also talk to an angel investor who will swoop down with boat loads of cash to give to Confederate Motors in exchange for ownership shares in the company. But these processes are neither here nor there because the important thing is that Confederate Motors appears to be ready to take that leap.

The more important question is whether the company can find takers for its shares. $5 million may seem like a lot of money for you and me, but that’s peanuts to a financial institution that may be looking into investing in a company like Confederate Motors. Certainly, the boutique motorcycle brand must have a long-term plan in place if it hopes to convince an investor into taking his money. That plan is so far being kept under wraps, except for the announcement that it’s going to use a majority of the proceeds from the private stock offering to increase the production volume of its bikes.

That’s a good way to start expansion, but the company must also have a vision in place on what its targets are if it wants to convince people and/or financial institutions to make that financial leap.Otherwise, these investors would be putting their money to fund a company that has yet to prove itself capable of battling some of the segment’s top dogs. Hopefully, Confederate Motors gets its money, only because I want to see if its two models are all they’re made out to be.