Venture investors tend to invest in growth potential and teams, whereas Growth Capital providers invest in established and proven business models.
Growth Capital attributes:
- Will support a partial founder liquidity event
- Valuations based on ARR metrics
- Often have operational teams who will actively support growth initiatives
- The strategy is to partner with founders to drive significant growth
- There is an expectation to exit at much higher valuations after 3-5 years
- Valuations are typically driven by historical revenue and customer retention metrics
- Control oriented. Often require board seats, approval rights, and the ability to make changes
- Ownership expectation typically in the 25-80% range with $20M minimum investment
Growth Equity requirements:
- $5M minimum ARR, but ideally greater than $8M ARR
- ARR growth > 35%
- Excellent customer retention metrics (both net $ retention and logo retention)
- Large addressable market size (> $1B)
Our Growth Capital and Exit plans are offered with monthly or annual billing depending on your goals. Our effort and time investment is typically highest during the first 4 months, thus we can offer substantial savings with an annual plan.
Our monthly plan is likely the best option if you want to raise money or exit as soon as possible. The annual plan may be a better fit if you have a longer time horizon and want to meet with a large number of investors before starting a formal fundraising or exit process. Annual plans are also best for customer who have no immediate exit plans but want to build investor relationship while opportunistically evaluating offers on an ongoing basis.
The Venture Capital offering is provided by an experienced CFO who will join your startup on apart time basis. See more details below.
Every deal is different, but the following timeline gives you an approximate idea:
Step 1: Investor lead generation and relationship building (2-6 months)
We recommend you build investor relationships as early as possible before starting a formal fundraising or exit process. The more time you allocate to investor sourcing and relationship building the better.
Step 2: Competitive investor selection process (1-2 months)
Investors need time to review your data room and go through their approval processes. We will help you set up a structured and competitive process, so you can select from multiple offers. Additional time is needed to negotiate the best terms with the most competitive investors.
Step 3: Diligence to closing process(1-4 months)
The post-LOI phase varies greatly between investors and the fundraising type. Growth Capital rounds can move very quickly while a strategic buyer could take 3-6 months.
Typical Range: 4 - 12 months
The following examples can be used to estimate your potential savings:
Example 1: $75M Exit
- Typical Terms: 3 -5% with $1M minimum plus $70k retainer
- Est. Total Cost: 4% * $75M + $70k = $3,070,000
- 6 months x $12k/ month + 1% *$75M = $822,000
Your Savings: $2,248,000
Example 2: $60M Growth Equity Raise
- Typical Terms: 3 -5% with $1M minimum plus $70k retainer
- Est. Total Cost: 4% * $60M + $70k = $2,470,000
- 6 months x $10,000/month + 0.75% * $60M = $510,000
Your Savings: $1,960,000
Example 3: $100M Series B Raise
-Typical broker Terms: 3-5% on capital raised
- Estimated total cost: 4% * $100M = $4,000,000
CFO referred by us:
- 6 months @ $8,000/month = $48,000 + 0.25% common stock grant
Your Savings: $3,952,000
The Kick-off Engagement consists of a series of calls with you and your team to understand your company and goals. It also includes a detailed review of your pitch deck, financials and products. Based on this information, we will craft a summary of your business (also called a "teaser") for investor outreach purposes.
"Professional Services" is time spent on activities that go beyond the scope of included services. This may include activities such as joining management meetings with potential investors, developing a financial plan for your pitch deck, responding to investor questions, helping you think through your negotiate strategy, etc.
Our Growth Capital and Exit plans include an allowance of Professional Services hours. Time spent in excess of your monthly allowance is billed at $350 per hour. We always give you full transparency of billed hours and you can stop hourly billing at any time.
We generally work with growing technology companies looking to raise capital or exit. While every client is different, our service will be most valuable to companies with the following metrics:
Established Companies (Exit or Growth Capital):
- $5M minimum ARR
- High revenue growth rates or a history of consistent profitability
- We only work with customers looking to sell between 25-100% of the company and raise capital from sophisticated institutional capital providers such as investment funds, family offices, etc.
Startups (CFO Referral):
- Series A: $1M minimm ARR
- Series B - C: Market and product traction consistent with the funding round sought
- Venture capital raises from institutional investors only (CFOs referred by us do not support angel, seed, convertible note, or crowdfunding raises).
Monthly plans (Exit and Growth Capital):
Our monthly plans have a 3-month minimum term and are invoiced at the beginning of each month. You can cancel at any time. Professional Services hours (beyond the monthly allowance) are invoiced every month. Commission Fees are due on the close date of any transaction.
Annual plans (Exit and Growth Capital):
Our annual plans are billed upfront and renew every 12 months. You can cancel at any time. Professional Services hours beyond the annual allowance are invoiced on a monthly basis. Commission fees are due on the close date of any transaction.
We can refer a fractional CFO to you who will join your team as your part-time employee. The terms of the part-time arrangement include a base salary of $8,000 for the first 20 hours per month. Additional hours are compensated at $300/hour. In addition, the CFO will receive a common stock grant equivalent to 0.25% of your fully diluted share count. The grant vests over 12 months with a 30-day vesting cliff and acceleration upon termination.
Our commission is due on the closing data of a successful Growth Capital raise or Exit event.
0.75% commission on the total amount raised payable at the closing of the transaction.
1.0% commission on the full enterprise value of the company. Payable at the closing of the transaction.
All of our engagements have an 18-month "tail" period. This means that our commission is still payable if you raise capital from an investor we introduced to you within 18 months after you cancel and our work ends.
We only charge a commission if we are legally allowed to do so per SEC rules for business brokers.
We recommend startups work with a fractional CFO to raise capital. We can refer a qualified fractional CFO to you. The fractional CFO will join your team as a part-time employee and support your existing finance team.
The fractional CFO can help you improve your Finance organization and lead your fundraising process. In addition, the fractional CFO can help you with strategy and finance initiatives beyond fundraising. Fractional CFOs are not limited to helping you with fundraising and you can work with them after the fundraise is completed.
If you already have a CFO, we recommend using titles such as "VP Corporate Development" or "Chief Strategy Officer".
We provide a technology-enabled managed service. We use our extensive proprietary database of tech investors to identify and reach out to the most likely investors for your company. Our deal process is efficient and "digitalized" using modern technologies.
Our service allows you to run your own fundraising or exit process, so you can avoid expensive broker commissions and keep a higher share of your proceeds. We will also never pressure you to accept any offer. We can charge very low commission rates because we cover most of our cost with subscription fees.
The capital market for growing tech companies is highly competitive. We believe the market will set the valuation given a competitive process. Our service allows you to run a fundraising or exit process yourself and avoid expensive broker commissions.
We are happy to work alongside investment bankers and can completely hand over at any time if desired. We can also refer you to investment bankers from our network who may give you a commission discount in the amount of our fees.
If you decide to hire a banker, we recommend you do so 2-3 months after engaging us. By then, you will likely have multiple interested investors and possibly a number of offers. Investment bankers will often give you a significant discount if there are already offers on the table.