Do I need a corporate adviser to raise growth finance?
I’m preparing to pitch to several venture capital houses for growth finance to roll out my retail business. So far I’ve used a local accountancy firm but have been advised I’ll be taken more seriously if I use a corporate advisor from one of the big firms to put together our financials. Is this true?
A. Katia Frank of Matrix Group writes:
It makes no difference whether it’s a large or small, local or national firm, but you will be taken much more seriously if you engage a corporate finance advisor with a clear track record of raising venture capital. Most venture capital firms have relatively small teams of executives and work with their networks of experienced corporate finance advisors who they rely on to ‘sieve’ initial proposals to ensure that they are not just investment ready, but investment grade and worth serious consideration. At Matrix, our rule of thumb is that if a proposal is any good, then smart entrepreneurs always engage proper advisors and therefore if a plan isn’t introduced to us by a known corporate finance advisor, then it’s probably not going to be up to the mark.
Venture capital and private equity transactions are highly specialised, increasingly complex and can at times be fraught with difficulties. An experienced corporate finance advisor won’t just help you with the numbers, they will guide you through this process and assist you in 10 key areas:
… Advising on likely success and key terms and requirements of an outside investor
… Appraisal and refining of your business plan and financing options
… Advising on the process, timescales and implications for the continuing smooth running of your business
… Understanding which VCs to approach, given the stage, size and type of transaction
… Using their personal contacts to effect targeted introductions, initially to a handful of suitable investors
… Grooming your presentation to address the needs of each target investor, clarifying any important issues in the business that need to be understood up-front, then arranging and assisting in handling meetings
… Short-listing all preferred external finance providers, based on chemistry, enthusiasm, approach, understanding and terms
… Negotiating the offer of finance to get the best possible deal and explaining its meaning and implications
… Co-ordinating the due diligence process including reporting to accountants, marketing and any technical consultants
… Project managing the whole transaction, involving all finance providers and lawyers, to achieve a timely completion This is a long and demanding list – clearly, if you’re serious about raising venture capital, you need to get a specialist advisor on board.