ADVOS | Strategy + Law 

Thought Leadership

Roadmap to a Successful Capital Raise

By Lauren Weisman on 09.25.2020
Map with three push pins in it

Raising capital may be desirable or necessary at various stages of your company’s lifecycle. Pre-revenue firms often look for cash infusions to support research & development, build a product prototype, or support payroll, while companies in a growth phase may require capital to complete strategic projects, make acquisitions, or taxi the business to the next echelon, generally.

Whatever the reason for your financing, the following roadmap will guide you through essential (but non-obvious) planning and decision making that will simplify and expedite your capital raise so you can get back to business!

ADVance Due Diligence

  • Well before you have started down the path toward raising capital, gather your key documents and information in a secure, online data room – and keep the data room updated along the way.
  • Know the gaps and risks in your business, and either solve for them, or know how you’ll address them. Savvy investors will ask, and you need a ready, effective answer.

Assemble the Team + Appoint the Deal Czar

  • Before you start making key decisions about your capital raise, gather your key internal and external team members (including your key advisors – CFO, legal team, investment banker, etc.), and discuss the deal as a team – not in separate conversations. Be sure the team works well collaboratively, and that they have the capacity to manage the transaction. Capital raising can be a full-time job, but a great team lightens the load.
  • Appoint someone to be the Deal Czar. This person will not necessarily lead negotiations, but will be sure the deal stays on track, and that efforts and communications internally and externally are well coordinated. This should be someone who has significant experience with this type of transaction.

Strategic Planning: Begin with the end in mind

  • Do the work on the front end to be you and your team are clear about why you are raising capital, what the acceptable parameters for the raise will be, and what imperatives (must do, or must not do) exist – including timing, deal terms, and type of capital.
  • Based on the intended size of the capital raise, the anticipated types of investors, and method of solicitation, determine the applicable securities exemption(s) – note that you may need to modify the size of raise, type of investor or manner of solicitation to fit into the desired exemption. This is a MUST so that you can pitch safely, without running into securities violations.
  • Remember that cash has character, and investor relations starts at your first communication (intentionally or otherwise). You’re setting a tone for the long term, so you’ll want to think ahead about what you expect from your investors, and what they should expect from you.
  • Your deal documents send a message – make sure it’s the right one. Think a few steps down the path, and whenever possible, have documents ready ahead of time.

Let the Games Begin!

  • You’ve done most of the work by this point – now, it’s time to pitch, negotiate and close the deal. Here’s to your successful capital raise!