When you start out, the one thing you can be sure of is that nothing will go exactly to plan. There will be ups and downs, swings and roundabouts and in all likelihood it will take longer and cost more.
Most start-ups will go through several rounds of capital raising during their early years. To approach each capital raising with that in mind is often the difference between short term failure and long term success.
Transaction Execution
The 5 Essential Stages
Stage 1
In the first stage, we are doing an assessment of the company that needs capital, reviewing their strategy. What, what market, how strong the markets are that they’re addressing how strongly their products, address those markets, how compelling the value proposition is. As mentioned above, our Ten Squared methodology is an invaluable tool in this process.
This stage normally takes 2 to 4 weeks.
Stage 2
In the second stage we start thinking about who the most suitable investor(s) would be, and we create the investor documentation.
For a typical private capital raising, we would have basically three major documents.
The first one is a two to three page summary of what the investment propositions about everything from the market to the quality of product, the execution team. And, and the scale of the opportunity financially.
The second document is usually a slide pack style presentation or whatever technology you’re using, which explains in more detail, the investment proposition, and the potential returns.
The third key document is detailed integrated financial projections, including revenue projections and costings of resources required. The financial model also includes a valuation section where we can play with the variables and test different scenarios to create a sensitivity analysis of a potential value of the company.
We then prepare, so the, there are three basic documents we have.
Stage 2 typically takes four to six weeks and finishes with inviting potential investors.
Stage 3 & 4
This is where potential investor is meeting with the executive team. Discussions are held, follow-up meetings organised with investors showing interest in the proposition.
And if they decide they want to take it further, then they move in to a due diligence stage.
This stage can sometimes be quick depending on the numbers of investors, but may also be drawn out – especially for companies further down their development towards profitably.
Stage 5
This is the transaction execution stage. Following the due diligence, we start to negotiate on structure and valuation. We write a a term sheet outlining all the key elements and contingencies of the investment. Then there’s sometimes confirmatory due diligence and we start to draw up the actual legal agreements to close the transaction.
As your adviser we add value to each of these steps. We negotiate on your behalf, looking after your interests, seeking the best outcome for the company seeking capital, while ensuring that investor(s) have a clear understanding of both the upside and their risk.
This stage typically takes two to three months, but can take longer.
- Private equity and expansion capital
- IPO’s and follow on public raisings
- Extensive network of high net worth investors
- Strong International network of investors and strategic partners