The role of a capital raising company is significantly vital to the success of companies in growth, expansion, or transformation modes. There are several cycles, or modes, of expansion and contraction within a company and, when additional capital is needed, a prudent company will look for a capital raising firm, typically an investment bank, to bring essential funding to the company. There are various types of capital raise: debt raise, equity raise, hybrid raise, and SAFE raising. On the advice of your capital raising services, your company will choose a method of capital raise.
The argument is often made that everything needed can be done in-house without paying for capital raising services. And, this is true. A company in need of funds can raise capital without using a capital raising company; however, the immediacy of the need for cash outweighs the suggestion to take care of the process in-house.
Capital raising services offer the time and attention the subject deserves, as the process from start to finish can take weeks or months. Most often, a company in the middle of a changing mode does not have the luxury of such time. The capital raising firm begins and ends the process on an abbreviated basis, allowing the company owners and stakeholders to go about their daily business.
The six crucial components offered by a capital raising service are outlined in the paragraphs following. Consider the needs of your organization and the services offered as described; and, as a result, the capital raising process may become a fit for your firm, as well.
Component #1: A Company in Motion
There are several reasons behind the need for a firm to raise capital and each of these requires cash: company growth, product or service development, debt financing, or working capital needs, among others. The business may be in a stagnant, evolving, or rapidly ascending stage. Again, the need for capital raising may be based on any or several of these reasons. A solid capital raising service will see the need and tailor their capital raising efforts to meet that specific need.
Component #2: Potential Investors
Capital raising services focus on one thing: raising capital for your company. As such, the list of potential investors is extensive and loaded with potential. Further, the list is not general in nature; there are potential investors tied to your industry sector. This raises the interest of the potential investors because there is background knowledge before the actual presentation of funding needs. Much like getting the right people on the right seat on the bus, a capital raising service places the best potential investors in the best buying position at the best presentation. Altogether, the chance of funding becomes increasingly higher as the list of vetted investors grows.
Component #3: Total Value Unearthed
The value of everything, tangible and intangible, held in the business will be evaluated and priced. This includes any patents, trademarks or digital holdings, material holdings, assets, land, along with the value of potential future holdings, as well. The data and subsequent analytics will assist in creating an authentic total value of your firm. This procedure is vigorous, as the role of a capital raising company is to maximize the value of the company to the highest possible extent, as allowed by regulation.
Component #4: Advisory Council
An advisory council, typically drawn from inside the investment bank, will be formed to assist the company throughout the process. The advisory council is a crucial element toward the successful funding being sought because the communication is thorough, ongoing and consistent during the gathering and assessing of materials and analytics for the presentation.
Component #5: The Task Force
Much like any well-developed organization, the advisory council will assign duties to members within. These individuals will be assigned to tasks related to the raising of funds. For example: all necessary data research, resource gathering, materials preparation, and a variety of filings and actions to present the capital raise will be assigned. The advisory council will not attend or present the capital raise, as that is not allowed by regulation.
Component #6: Preparing for the Presentation
In this final stage, the advisors will prepare the complete package of documents and data, along with a visual presentation. The advisors will also offer counsel and suggested responses to the questions most likely to be asked by potential investors. This combination of presentation materials and verbal preparation offers the company owners the best chance of securing the needed funding.
Preparing and presenting a capital raise before potential investors is a challenge; however, it is also the most advantageous way to successfully take a company through a mode or cycle of change.