Capital Raising Australia

• 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

• 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

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.

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

• 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