GET Investor Ready
Capital Raising through equity or debt finance is another option many Australian entrepreneurs consider to fund an innovative product launch or business acquisition. In an equity investment, you buy into a company and your profit is related to the performance of the company. Entrepreneurs seek additional support with funding in exchange for selling a percentage of their business. In a debt investment, you loan money to a person, a business, or a government institution and your profit is not directly related to the performance of the borrower.
Capital raising as an alternative financing tool.
- Implement a strategy which analysis the use of debt versus equity investment.
- Consider the benefits and costs of capital raising as debt is often cheaper than equity.
- The cost of the debt, i.e., the interest rate, is tax deductible.
- The ‘cost’ of equity is the earnings required to cover the non-deductible dividend payment.
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Capital Raising be ‘Investor Ready’
Is your idea or product innovative or disruptive and has the potential to be a game changer?
Is your business model an exciting market opportunity, can you navigate challenges and exploit them?
Do you understand your capabilities and willing to learn new skills to advance your business goals?
Do you have the appropriate structure in place for business development?
Is your speed-to-market and implementation strategy adaptable with your target customer?
Pre or Post revenue
Is your revenue growth model validated on actual sales or key assumptions?
Accrutus Capital supports growing business with alternative debt and equity funding solutions through all stages of the business cycle.
8 Steps to Capital Raising
- Evaluation of the business opportunity
- Getting the business model investor ready
- Key components of a successful Offer or Exit
- Professional presentation of your opportunity
- Reasonable valuation versus risk and reward
- Target the right investment channels for success
- Negotiating terms, shareholdings and exits
- Fulfilling your obligation to investors
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Capital Raising Essentials
- Proven business model & solid execution plan
- Unique IP and a clear competitive advantage
- Disrupt an existing market or create new one
- Dynamic and amenable management team
- Return on Investment of 25% of higher
- Exit strategy as trade sale or IPO in 3 to 5 year
Capital raising equity finance?
Over time, equity based investments will provide higher rates of return than debt based investments. Capital raising should include a mix of debt and equity to manage risk and return. Companies would raise capital for;
- start-up money to launch a new business
- development capital to expand an existing business
- venture capital for early stage companies focused on a technical innovation or disruption to the market
- retiring of debt by issuing new capital via rights issues, bonds, placements or conversion of debt to equity
Capital Raising Participants
The aim of investors is to secure a reasonable rate of return appropriate to its risk. Investing in equity funds provides a return in the form of income (dividends) and potential capital gain. Equity investors expect a return of 25% or higher within a 3-5 year exit. Debt investors typically look for a return of 8% to 12% per annum.
Typical Investor participants are;
- Institutional investors
- Coporate venturing
- Private or Individual investors which represent the following;
- the passive long-term investor
- the active hands on investor usually Angels
- the irregular trader
- individual venture capitalist or small fund
- mum’s and dad’s who may invest in public or unlisted offerings
- small scale offerings in unlisted companies
- rewards based investing via crowdfunding trading platforms
- peer-to-peer or B2B private funding channels
- Investor Ready Workshop
- Disclosure Document & Pitch
- Issue SME Bonds Debt or Equity
- Investment Coaching
- Full Capital Raising program
Capital Raising Stages
Founders / family / friends / followers
$100K – $300K
Proof of Concept
Individual / Angels / SME Bonds
$400K – $900K
Proven business model
Shows initial revenue
Break-even or negative profit
Sophisticated / VC / SME Bonds
$1m – $2million
Private Equity / Venture Capital / Peer-2-Peer
$2m – $20million
Trade Sale or Exit