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Capital Raising
Capital Raising for unlisted Australian companies via small-scale offers
Investor Ready Services
Acquisition| Property Development | Global Expansion | Leveraged Buyout | Investor Ready Program
Capital Raising through equity or debt finance is another option many Australian companies 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.
Management may invite additional skills to the executive team when capital raising in exchange for selling a percentage of the company. 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 and Investor ready services for unlisted companies is a cost effective way to raise $1 to $5 million.
Get Investor Ready
The essential first steps to raising capital for your business opportunity. Accrutus provides the necessary guidance, tools and compliance.
8 Steps to be Investor Ready
- Have a solid and proven business model that is scalable
- Be investor ready before you solicit or invite investment into your offer
- Understand the key components of your offer to attract right investment
- Offer a realistic and attainable exit strategy to investors
- Structure your management team to create confidence
- Present your proposal through a professional and compliant process
- Seek external legal and accounting advice before promoting your offer
- Engage a capital raising specialist that helps to achieve your goals
Capital Raising Services
Vital to getting Investor Ready, we will discuss your successful business model and understand your companies value and high growth potential for investment partners. Prior to the capital raising marketing, we then work with you to build the business plan around your unique business model so that the company attracts the right 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 being developed or sold. All investors want is proof of a ‘compelling investment opportunity’. They want to be convinced that their investment funds will be used to create a successful exit event so that they achieve a great return on their investment. A successful capital raising starts and ends with how the company is going to make investors money not produce the world’s best widget. The Investor Ready program will prepare your business for the investor due diligence process to establish key assumptions on how the company will be developed for scale and how and when the exit will be achieved.
Capital raising alternative financing tool
- Implement a strategy after careful analysis of the use of debt versus an 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.
- 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 VISA 188 Subclass
Capital Raising 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.
- Capital raising coaching
- Disclosure Offer Documents & Pitch Deck
- Issuance of SME Bonds Debt Securities
- Business Exit Strategies
- Full & Partial Capital Raising Campaigns
- Australian Acquisition Opportunities
- International Investors Network
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
- More capital raising details visit our FAQ page
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Quality of Management
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Size of the Opportunity
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Rate of Market Growth
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Competitive Landscape
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Barriers to Entry
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Stage of Development
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Current Capital Structure
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Equity and Valuation
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
- Essential that your business opportunity is investor ready
Capital raising for unlisted small-scale offers with proven innovations and demonstrated market acceptance.
Investor Ready programs that suit your stage of growth to attract the right funding.
Capital raising for small-scale companies
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 raise capital to
- 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 founders 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 risk versus return
The aim of 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 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
- investor ready services via business introduction agents
- rewards based investing via crowdfunding trading platforms
- peer-to-peer or B2B private funding channels
Capital Raising options to consider
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 investment to potential investors, such as;
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Capital gains tax implications
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Dividends vs. capital growth policy
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Exit strategy for investors over the medium and long-term
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Independent valuations
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Board representation
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Existing staff agreements
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Management or employee share options
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Performance options and bonus structures
Capital Raising Stages
Seed
Founders / family / friends / followers
$100K – $300K
Idea Development
Produce Prototype
Proof of Concept
Early Stage
Individual / Angels / SME Bonds
$400K – $900K
Proven business model
Shows initial revenue
Break-even or negative
Growth Stage
Sophisticated / VC / SME Bonds
$1m – $2million
Selling products
Maybe profitable
Expand market
Exit Stage
Private Equity / Venture Capital / Peer-2-Peer
$2m – $20million
Established market
Significant revenue
Trade Sale or Exit
Capital Raising success with 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
Evaluating similar companies with current valuation metrics, determined by market prices and applying them
Discounted Cash Flow Analysis
Valuing a company by projecting its future cash flows and then using the NVP method to value the business
Precedent Transaction Analysis
Looking at previous valuations for completed capital raising deals with similar industry and valuation multiples
Leveraged Buyout Analysis
Valuing a company by assuming the acquisition of the new company via a leveraged buyout assuming its rate of return
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
Introduction to Raising Capital
