In nowadays environment, there is more capital sought than deals. Also, this does not mean that all capital raises require the help of consulting firms, such as seed-stage capital raises under $5 million. However, in other situations, consulting firms are considered some of the best funds ever spent.
Most clients come to consulting firms with some level of recent interest. And most of the time, the interest doesn’t convert into a transaction. A list of terms or even a series of meetings is a far cry from completing a transaction. However, the right advisor will help to access a more accomplished level of execution. It will allow the CEO to understand the meaning of the negotiations and to make the right decisions for his future.
Indeed, a founder/CEO finds himself confronted with the multitude of existing investment funds, without knowing the language to adopt, the intentions to know and the latitude during the negotiation to achieve his ends.
When an organization needs a cash injection, raising capital can be a daunting process. But consulting firms help reduce this pressure by overseeing the entire process; even better by co-constructing an investment strategy. Consulting firms, with the help of funders and their network, explore various avenues for the business and assess their viability to achieve business goals. But they do so much more than find opportunities; they also do the work to help secure them. In the context of negotiations, they do not fail to take the lead. The firm reviews financial and legal documents and provides advice on deal structures. Although it is a long and detailed consulting process, the consulting firms know very well and know exactly what it requires, they speak the same language.
Some of the biggest myths in the world of capital raising are when an organization says they already have investors with capital who are willing to invest in their business so they don’t need an advisor. . At this point, it’s wise to ask yourself if the CEO understands his objectives and goals versus the objectives and goals of current investors. At this point, questions begin to arise such as “Are current investors ready to invest at a high value in the company? And is it in the CEO’s best interest? What are the return conditions? Will I keep enough power in my society? The right advisor will be able to understand the investor landscape and use their efforts to access different pools of capital and organize a method to optimize the terms and values of any investment they will be most capable of combining a strategy of investment in the interests of the CEO.
The above is not the only importance of advisory firms in the capital raising industry. These companies are also able to access pools of capital that are unknown to the CEO himself and more easily target investment funds capable of stepping in. Today, capital can come from a variety of sources and in many different forms. Talking and getting to know local venture capitalists is a good option, but the right investor can be just about anywhere in the world. Nevertheless, not only consulting companies are able to find the right investor from an economic point of view, but also the right cultural shape. Capital raising events help provide a certain percentage of liquidity to the founder; however, this is not an exit strategy. In this case, the founder’s wealth opportunity is likely in a subsequent sale transaction. For this reason, it is important that the CEO works well with his new investors with the help of his advisor to organize and implement the best investment strategy in line with his desire to help move the business forward. . Thus, a good cultural fit and a common strategic vision are as important as any economic term. However, the right advisor can help the company find a suitable partner on the right terms and at the right price, better still allow the CEO to see his company grow considerably .
Also, “managing an entire process can take time, but it is something that cannot be avoided, especially if the company wants to ensure that it optimizes values and terms. But the importance of consulting firms is emphasized here as they take a huge burden off the CEO by managing the whole process. Even if the involvement of the CEO is essential, he must rather focus on running the business, which is why the advisor will be a major support in the business development process” highlighted Mr Roux Di Gambatto.
It is quite common to find founders/CEOs placed in a difficult position when negotiating terms and value with a potential investor/partner/board member. This is because almost all investors want to feel like the preferred partner. For this reason, it is difficult for a founder/CEO to negotiate on their own. But this task is greatly facilitated with the help of consultancy firms which act as an intermediary to stamp the founder/CEO, the adviser is the right arm of the CEO in his negotiations, he is there to help the CEO and not the investor .
Also, it’s no surprise for founders/CEOs to learn that an investor’s terms list puts them in a 20-level line. But what is surprising for them is when they realize later that they have 80 meters to go. This includes the nuances of trading structure, due diligence and managing the entire process to achieve closing effectively and efficiently. But all of these roles are key roles for a good consulting firm. Thus, the CEO will have real support and will benefit from the expertise of the advisor to close the deal.
In summary, advisory firms play a crucial role in the world of capital raising. It doesn’t matter if the company is a start-up or a mature organization with years of experience. Savvy CEOs/founders know better than to raise capital on their own, which can lead to some rocky roads. But with the help of a consulting firm, the process is made much safer and smoother.
This is why Licorne Gulf, a international Advisory firm strive to put expertise and know-how to the benefit of customers with the firm intention of carrying out missions of support, advice and assistance over the long term. A watchword: “motivate the success of our customers”.
Assistance and support for fundraising / cultivation of micro-algaeto producing biofuel (3rd generation) /SENAGRI SARL M.Sénéclauze T. / Paris April 2022