Capital Raising Australia
Capital Raising for unlisted Australian companies through small-scale offers. Investor ready services from $2 to $20 million
JV Property Development
Experienced property developer seeking AUD $12.5 million equity investment for 32% in SPV. High returns 24% to 56%. Exit IPO 5 years.
DEAL FUNDED
Acquisitions Manufacturing
Co-investment of AUD 1.25 million for 20%. Acquiring highly profitable targets in the industrial fabrication sector. Exit IPO 3-5 years.
Computer Systems Designs
Seeking AUD $5 million to scale globally. Bespoke solutions in Cloud-based software for Local Councils & Utilities based on Oracle Modules.
Debt and Equity Investment
Raise Capital
For your proven innovation, first to market strategy via an unlisted small-scale offer. Investor Ready programs that suit your stage of growth to attract the right funding.
Management may invite additional skills to the executive team when raising capital in exchange for selling equity in the company. In a debt investment, you loan money to a business, or a government institution and your profit is not directly related to the performance of the borrower.
In an equity investment, you buy into a company and your profit is related to the performance of the company. Debt finance is a strategy many business owners consider to fund growth or acquire another business.
Over time, equity based investments will provide higher rates of return than debt based investments. Capital raising should include a alternative finance mix of debt and equity to manage risk and return.
Get Investor Ready
- Provide a scalable and proven model
- Be investor ready before you promote
- Understand who your investors are
- Offer a realistic and attainable exit
- Structure your management team
- Promote through a compliant process
- Seek external legal & accounting advice
- Engage a compliant capital raising advisory firm to avoid the pitfalls
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
- Expected return on Investment of 25% of higher
- Exit strategy as trade sale or IPO in 3 to 5 year
- Essential that your business opportunity is investor ready with high barriers to entry
Capital Raising Process
- 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
- Targeting the right investment channels
- Negotiating terms, shareholdings and exits
- Fulfilling your obligation to investors
- Raising capital programs
- Disclosure Offer Documents & Pitch Deck
- Business exit and restructure strategies
- Full & partial investment campaigns
- Business Innovation and Investment 188
- International investors network
Unlisted Small-scale Offers
Why Raise Capital?
- acquire another business to grow market share, or franchise the successful business model for scale
- strategically execute the new business model, or launch new products or services
- fund research and development around innovative products or disruption existing markets
- retiring of debt by issuing new capital via rights issues, bonds and placements
- management buyouts or business owners who want to liquidate their shareholding
- fund property development projects from private investment
- secure alternative finance, however, understand the 5 best ways to raise capital
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Capital raising Financing Tips
- Implement a strategy after careful analysis of the use of trading debt versus an equity investment.
- Consider the benefits and costs of raising capital 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.
- Consider an Investor Ready program to determine if debt or equity is your best financing tool, then
- Analyse small business trends to understand the market for unlisted small-scale offers
- Business Innovation and Investment accessing foreign investors via the VISA 188 Subclass program
Small -scale offers
Capital Raising Considerations
Different funding options impact on a number of important areas. Which needs to be considered carefully before making a final decision on the best capital raising structure for your company. While offering an attractive return on the investment, such as;
Capital gains tax implications
Dividends vs. capital growth policy
Exit strategy 3-7 years
Independent valuations
Board representation
Existing staff agreements
Management or employee options
Performance options and bonuses
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Create a ‘Compelling Offer’
For your capital raising to be successful, resulting in an IPO or financial trade sale, we must demonstrate the potential to sustain the revenue and current profit levels to provide a good return on the investment. Your investor ready program must satisfy some capital raising basics showing high growth potential criteria, such as;
- Identifiable Customer – Proven customer implementation strategy to reach your target customer with a compelling need
- Global Opportunity – A growing market with significant global potential which is fragmented and where demand meets supply
- Growth Strategy – Demonstrate that your company can achieve the levels of revenue and profit within 3-7 years to meet the investors ROI
- Execution Strategy – A robust business strategy and cash flow risk management that secures investment and ensures the expected returns to the investor
- Barriers to Entry – A proven product or service that has clear customer acceptance and sufficient or high barriers to entry
- Management team – Demonstrates the skill and experience to execute the growth strategy, and a willingness to sell the company in 5-7 years
- Purpose of Funds – A well defined capital raising plan for the use of investment funds with a clear and measurable target which in turn supports the exit strategy
- Realistic Valuation – A team willing to negotiate a realistic valuation, and the level of scalability or development of new products and services to generate new revenue
- Exit Strategy – For a capital raising to be successful the company must demonstrate the potential of a probable exit through a strategic trade sale.
Quality of Management
Size of the Opportunity
Rate of Market Growth
Competitive Landscape
Barriers to Entry
Stage of Development
Current Capital Structure
Equity and Valuation
Small-scale offers
Raising Capital Risk versus Return
The aim of private investors is to secure the highest rate of return appropriate to the risk, due to the high level of risk if a company goes into liquidation. Equity investors expect a high return between 25% to 50% within a 3-7 year time-frame or longer. Debt investors typically look for a return of 8% to 20% per annum over the short to medium term as debt ranks higher than equity.
Capital Raising participants are;
- Institutional investors
- Corporate finance within the Banks
- Private or Individual investors which represent the following;
- the passive long-term investor
- the active hands-on Angel Investors
- the irregular trader
- individual venture capitalist or small fund
- family members of the business owners
- investment & business introduction agents
- crowdfunding trading platforms
- peer-to-peer or B2B private funding
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Capital Raising Services
Vital to getting Investor Ready, we will discuss your successful business model to determine your company value and growth potential. Prior to commencing the capital raising program, we will work with you to build the business plan around your unique business model. To ensure the company attracts the right private investors to help you realize its full potential.
The investor is not that interested in your business, your product, market or what customers think of the product or service. Importantly, investors want proof of a ‘compelling investment opportunity’. Private investors must be convinced that their investment funds will enable a successful exit event. Therefore achieving the expected return on their investment. A successful capital raising starts and ends with how the company is going to make investors money. The Investor Ready program will prepare business owners for the investor due diligence process to establish key assumptions. Important to demonstrate ‘how’ the company is prepared to scale and when the anticipated exit will be achieved.
Capital Raising Stages
Produce Prototype
Proof of Concept
Shows initial revenue
Break-even or negative
Maybe profitable
Expand market
Significant revenue
Trade Sale or Exit
Capital Raising success through valuations
Successful capital raising is about alignment with your potential investors starting with the management team and growth strategy to scale the business. The most common reason for unsuccessful capital raising negotiations is the valuation and agreed method used to determine the value. A thorough investor ready analysis before going to the market to raise capital is important to determine “How much is your company worth?”
Comparable Company Analysis
Discounted Cash Flow Analysis
Precedent Transaction Analysis
Leveraged Buyout Analysis
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When raising capital the 3 most common “valuation concepts” used are:
Enterprise Value – the total value of the company’s net operating assets
Market Value – the value of the company’s issued shares of common equity
Book Value – expected value of a company’s assets after paying off all existing liabilities
