Imagine an entrepreneur at the end of the equity fundraising process. His startup’s name on the front page of the newspaper “Startup X raises 100 million euros”. And you who are reading this article are thinking “I want to raise 100 million euros too!” But, are you prepared for the equity fundraising process? Indeed, i equity fundraising is a marathon of 3 phases: a preparation phase, a fundraising phase and a celebration phase.
Advimotion is a financial consulting firm that assists startups and SMEs in obtaining non-dilutive financing and equity fundraising. We also act as advisors in corporate divestiture transactions to best represent the interests of sellers.
We offer strategic consulting and outsourced CFO services to ensure the financial and operational monitoring of your business. Finally, we take care of the drafting of investor documentation: business plan, pitch deck, creation of reporting files and valuation calculations.
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The preparation phase of equity fundraising
The preparation phase lasts on average 2 months. A good preparation is very important before contacting investors.
For this, we give you some advice.
Beforehand, we recommend that you update your website with a presentation of your company, your products, your offers and your references in order to provide investors with a clear and precise vision of your company and its activities.
You should also ask yourself who will be at your side during the fundraising process. You can turn to former entrepreneurs and business leaders who will be able to provide you with valuable advice from their experience. You can also opt for an accompaniment by an expert such as a fundraiser for example.
The drafting of financial documents is an important step that should not be neglected. Indeed, this step makes all the difference when raising funds: it serves to present your project, it must reassure investors and demonstrate why it is interesting to follow you and invest in your project. The main documents to be written are the executive summary, the pitch, the business plan as well as additional documents useful during the due diligence.
In order to be best prepared, it is advisable to spend 1 month writing the financial documents (pitch deck, business plan…).
Then comes the search for investors. For organizational reasons, we recommend that you draw up a list of target investors according to their investment criteria or the stage of maturity of the companies in which they invest. Once this list is established, you can send the executive summary to the selected investors, the business plan to the interested investors and finally plan a meeting with the investors who wish to go further.
It takes between 15 days and 1 month to get a first answer from an investor. For the research of potential investors, 1 month of preparation is more than enough.
In most cases, in order to be more productive and save time, entrepreneurs delegate the preparation phase to consulting firms such as Advimotion to stay focused on the core business.
Once the financial documents are finalized and potential investors are targeted, the entrepreneur goes on a roadshow ! In the case of a standard fundraising, during 3 to 6 months, the entrepreneur will meet the investors, make presentations of his solution and then negotiate and exchange with the investors. The entrepreneur must keep a constant pace during the roadshow phase as in a long distance race.
For a very fast fundraising roadshow, the duration can be 2 weeks maximum to simplify the fundraising process as much as possible. In this case, it is necessary to be extremely confident about the dynamics of your company and your business.
The completion/celebration phase
The last phase of the equity fundraising process is the audit phase. All accounting documents are verified. Then comes the signing of the legal documents. They accompany the entry of investors in the capital and attest to the finalization of the operation. We can mention in particular the pact which is a document having for role to govern the life of the future associates or shareholders to find a balance between defense of the rights of the historical shareholders, the investors and the interests of the company.
Finally, there is the closing which concerns the moment when the financing is realized by the investor.
The finalization stage represents the moment when the runner is in the last mile of his race and sees the finish line in the distance. For the entrepreneur, this phase lasts between 3 and 5 months.
Thus, for an experienced and well-prepared entrepreneur, the equity fundraising process will last a minimum of 6 to 9 months.
Indeed, there are several steps:
– The first one, which is the preparation of the documents and the pitch, can last on average 3 months.
– The second stage is the meeting and discussion of the project, which can last 3 to 6 months.
– The final stage of negotiation and finalization of the operation can last from 3 to 5 months.
The entrepreneur must be psychologically prepared for his marathon to last at least 6 to 9 months.
If you wish to be accompanied in this process, do not hesitate to contact Advimotion.
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