Differentiated Capital for
Owners Seeking Growth
As a long-term partner with aligned interests, we selectively provide and source differentiated capital for owners seeking growth. We also help our clients obtain capital for acquisitions, liquidity, or going-private transactions.
Strategic Ways to Raise Capital
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BOOTSTRAPPING
This refers to starting a company using personal savings, borrowed funds from close friends and family, and small income from initial sales reinvested into the business. Essentially, this method involves not relying on external sources to kickstart a business and doing so self-sufficiently.
FRIENDS & FAMILY
Although friends and family are self-explanatory, they are described as early individual investors who take a chance on a startup with aspirations of the initial investment multiplying and yielding very high returns. This is usually the very first source of funding a startup receives.
CROWDFUNDING
Using popular platforms such as Kickstarter, Indiegogo and CircleUp, startups can gain funding through a large sum of people who usually invest small amounts. Investors using crowdfunding can receive returns on their investment in the based-on equity or rewards. This is also an effective method to spread the word about the startup, especially if the business is B2C and values promotion. Moreover, a successful crowdfunding campaign is very attractive to employees and can increase their loyalty towards the company.
LOANS AND GOVERNMENT GRANTS
This route is usually a harder one to take, since banks are hesitant to lend money to startups as it is generally seen as a risky investment and receiving a bank loan heavily depends on the strength of the company’s up-to-date financials and projections, and the business model. In some cases, governments have specialized funding projects for startups, commonly referred to as venture debt. Startups can also hire specialized loan/grant management companies who work in exchange for a success fee. This is a good way to receive additional financing without the distractions that come with it.
VENTURE DEBT
If a startup has advanced through the early stages of funding, but faces a cash flow issue to cope with rapid growth then venture debt is an attractive source of raising funds. This can be done through specialized banks and even non-banking financial services. Venture debt usually has a 15-25% equity kicker and a 1% fee when the loan is approved. The interest rates vary depending on the yield curve and the prevalent rates in the national market during the time of fundraising, but they usually range between 8% and 12%.
PRIVATE EQUITY
Private equity firms invest in well-established and predictable companies, usually profitable and with positive cash flow. Private equity is known for acquiring several companies in an industry and merging them to benefit from synergies and economies of scale.
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ANGEL INVESTORS
An individual usually with an existing portfolio of investments and startups who backs early-stage startups with funds in exchange of equity. They also tend to take on an advisory role and act as mentors to the founders and help navigate their way into making a successful business. Find the most suitable one for your business by checking their investment track record and the connections you have in common on Linkedin.
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VENTURE CAPITAL
VC’s usually look for high growth and technology related businesses, often expecting high returns when a company goes public. However, it is important that while seeking VC investment, the founders do research on the profile of the potential investor to see if they have experience or expertise in the relevant industry. VC firms usually have a very specific thesis in terms of stage (pre-seed…), market (B2B, B2C), industry (travel, marketplaces, SaaS…) as well as technologies. Before reaching out to all of them, take your time to study their portfolio and investment criteria.
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INCUBATORS AND ACCELERATORS
This can be very valuable for startups as they provide founders with the necessary resources and support in the form of working spaces, exposure to other investors, learning workshops and networking events. They also have tie-ups with services such as lawyers and accountants and can provide them for discounted rates. In return, they typically take equity as a return on their investment, but also provide options of debt financing or other methods of risk and reward. This varies between incubators, locally and globally.
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NON-DILUTIVE LOANS
This method of financing is very attractive to startup founders as it allows them not to give up equity in the company. Interest rates are usually around 6%, and repayment may be directly deducted from your revenues.
Professional Investor Path
Raising capital from professional investors is not the only path, but it is definitely the most common one if you want to create a multi-billion dollar company. Money comes at a cost, usually a 15-25% dilution in every funding round and huge expectations, which if it is not followed by fast growth, can mean the death of the company.
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On top of money, professional investors can help the company professionalize certain areas of the company like reporting and finance, bring new opportunities through their extensive network, or advise on tough decisions.
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If you choose the professional investor path, you will need:​
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Ambitious Team: Investors know only 10% of the startups will survive, so when they invest in a company, they are looking for outliers in the form of good teams able to create a multi-billion-dollar company.
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Big Market: Unicorns are built in big markets, and the market size is one of the most common discussion points in early stage companies. Ambitious teams tend to attack big opportunities.
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Pitch Deck: Investors will ask for a pitch deck, or a short presentation highlighting some key topics of your company, team, market, and financials.
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Clean Cap Table: Investors pay a lot of attention to the cap table, looking for red flags like too many small shareholders or a former founder holding too many shares.
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Shareholders' Agreement: Professional investors will definitely ask for a Shareholders’ Agreement to reflect new obligations, and usually create new share classes to protect their investment.
