We are fully convinced that a successful fundraising transaction needs appropriate preparation. That preparation is the sound base, which will enable us providing confident and convincing responses to the questions of the selected and desired investors when we are meeting them. We need to know exactly when and how the investment will return, what type of exit we are planning for. There must be credible answers to these questions.
When working on our Clients’ capital raising projects, we aim to create a situation where investors are „standing in a queue” and eager to invest into the company. This leads to a very competitive process where the best offers are received. In order to achieve this, a very thorough and professional planning and preparation work are necessary beforehand. With the experienc e of dozens of such projects, closing many successful transactions with local and international investors, we lead our Clients step by step towards success.
The capital raising process means:
- completely new and so far unknown challenges to the company, the owners, and the management,
- the preparation phase includes strategy formation, business planning,
- identifying and listing the appropriate investors,
- developing the equity story and the traction plan, preparing the documents needed to approach the investors,
- then managing the contacting process, the discussions, the negotiations and the longlasting Q&A procedure,
- followed by the term sheet negotiation, due diligence process, the investment documentation negotiation,
- through the SPA / SHA signing and transaction closing – until the funds from the investor(s) received.
Then a new adventure starts…
The capital raising process typically lasts for 6-9 months excluding the preparation phase.
It requires time and energy from the company, but an experience advisor can provide clarity and guidance in the unknown areas and can help to give the right answers to the questions.
We firmly believe that it only worth starting to realize a dynamic growth project if you have a sound business plan behind it. The business plan is the „best friend” of the owner / management as well as the common basis for the cooperation with the investor.
The first step, however, is the strategy. What, why, when and how? The strategy serves as a basis for the business planning. It is broken into detailed operational tasks in order to the company can achieve the planned growth. Different stage in the company lifecycle means different challenges. Startups and scale-ups obviously require different strategies. Similarly, if a company is well-experienced and is a regional challenger then different strategy is needed as if it was not familiar with the international markets and competition.
The business plan impacts the company valuation as well as it determines the required capital amount.
We support our Clients in:
- harmonizing the growth strategy with the business plan, supporting the business planning procedure,
- enhanced focus on the competitive advantages, the sales and marketing strategy, including testing and validation if needed,
- sucessful business models and benchmarks based on the experience of multiple thousand of business plans,
- bottom-up planning, top-down validation, sensitivity analysis, scenario analysis,
- company valuation, pre-money valuation
- checking the business plan from investors’ requirements and expectations and modificiations accordingly.
The investors – when we approach them – are very likely do not know your project in detail. They need to understand exactly for what they would give capital. A professional company is able to introduce itself and its activity in a structured manner, similarly as it is able to introduce its products and services to its customers.
The following documents are needed for the successful meetings and negotiations. Absolvo’s advisors with their significant experience are ready to help in the preparation of these documents:
- a 2-3 page long teaser presenting the investment story / opportunity (it is usually prepared in the last part of the preparation phase),
- investor presentation (investor deck) – that is not the same as the so-called pitch deck,
- business / financial plan with appropriate details in the required format, supported by the necessary explanations and a written business plan (if needed), supporting documents, benchmarks,
- traction plan for the duration of negotiations,
- learning the typical investment terms, discussing the Client’s preferences regarding deal terms and deal structure,
- process letter in case of certain transactions.
Is it possible to contact and negotiate with investors without such documents? Theoretically yes. But the entire process will definitely be longer, the investors might prefer other – better prepared – companies to invest in, or if they still choose us, we are not going to get the best possible terms from them. Therefore it is not advisable at all to contact the investors without the appropriate preparation and documents.
During the preparation phase it shall be thought over what kind of investor we need. Who will ensure that size of capital we need, whom it worthwhile starting the negotiations with.
We recommend to examine whether they invest in the volume we are looking for, is there any synergy with us (e.g. they have other portfolio companies in the same industry, etc.), are the investors familiar with our industry, do they have already a portfolio company that would compete with us? After clarifying these question we can continue the process with:
- creating the list of those local and international investors, which are fitting to our capital need and to our future goals. We provide our Clients with detailed information presenting also the potential synergies,
- then the appropriate contacting messages getting prepared as well as the right method of contacting is determined,
- we start the contacting process, organizing meetings / video conferences, support the preparation for the meetings, and take part in each meetings with the investors,
- support answering the investors’ questions, and update – if necessary – the business plan,
following which the investor provides us with a term sheet containing the main terms of its investment intention.
You may feel you are done with the project after you received the term sheet. But are those terms “middle of the road” or rather investor friendly? What should be the standard and fair terms? Which are negotiable and which are must in a VC deal?
There you need an experienced advisor who can help you answer these questions and lead you through the process. Our seasoned advisors are ready to support you
- reviewing the term sheets, negotiating the terms with the investor (personally, skype etc), advising on fair deal terms,
- in due diligence, preparation of data room, managing other involved experts,
- negotiating investment and syndicate agreements (SPA/SHA),
- signing, closing support to really get the investment you wanted!
An experienced advisor not just lead you through a process you may never met, but makes it possible to close the deal within the planned timeframe and at fair conditions. Meanwhile the entrepreneur has more time what really matters: the core business, the company itself.
The real adventure starts after the investment round is closed. You are there to realize what you planned. With experience of strategy execution, we are here to help you, so you can leverage hundreds of lessons learned.
Dynamically growing businesses may need further – next round – financing. Our advisors are eager to support you
- identifying next international investors and initiating communication with them right after the first round,
- updating the business plan with the results of the execution, modifying the plan in case it is necessary,
- in preparation for the next round of transaction, harmonizing the Founders, existing and new investor’s interest, support in creating a win-win deal structure.
Want an experienced partner in the cockpit?
Contact our Colleagues who are eager to support you in further growth!