Raising Money

The three major types of funding are:

Debt: loans or borrowings – mainly from banks, sometimes from individuals
Debt Alternatives: leasing, hire/purchase, invoice financing….
Equity: risk-sharing ownership

When Raising Money, first impressions count.

Get it right from the start, engage with professionals who have expertise with both raising and providing finance.

Where to start?

Find out which options are available to you, what is the best possible mixture and their impact

* importance of considering ALL options available to you

We have contacts with many funders and success in finance raising

* crucial to understand the implications of the different sources of raising money

We analyse and properly weigh up all costs and benefits

Questioning the obvious:

Are you raising the right amount?

* a sturdy business plan will answer this.

Can you afford this amount?

* You need credible future cashflows

* We model efficiently and effectively

Fully flexible charging options

Retainer

Pay a fixed amount (monthly/one-off)

Success-fee only

Pre-arranged fixed amount or % on successfully raised amount

Shared Ownership

Partner up with us in a Joint Venture: share all costs and benefits

Option 1 - Debt

Debt is the best understood source of money. You borrow an amount, with a commitment to pay back the amount borrowed (principal) and an additional charge (interest) according to the particular debt terms. There can be costs if you want to pay back earlier (breakage costs) or there may be covenants which will trigger the repayment of the loan (e.g. if certain ratios are broken). A debt provider does not truly share in the risks of your business. In bad times he/she still needs to be paid and in very good times he/she does not get anymore. Although borrowing from an individual remains an option and is covered by the same guidelines, the main source of debt remains the banks and to a lesser, extent crowd funding. This also includes platforms which offer Crowd Funding

Option 2 - Debt Alternatives

It is good to start by looking if your company has any hidden cash, because this is free. Other alternatives include:

Leasing / Invoice or Working Capital Financing / Hire Purchase: these are all tied to specific assets e.g. fixed assets such as vehicles, printers etc (leasing/HP) or current assets i.e. debtors (invoice financing)

Grants: The big bonus here is that they do not require any repayment – however, successfully applying for grants can be extremely onerous.

Option 3 - Equity

When raising funds through equity (selling shares) you basically ‘share ownership’ with the provider of the equity funds (new shareholders). This means that the equity investor shares in the risk and rewards of your business.

In comparison with all forms of debt, the risk to an equity provider is higher and consequently, the potential rewards are higher. It is essentially selling off a part of the business.

£200m+

Funds Raised

£22m

Largest single deal

68

Number of Deals

Frequently Asked Questions

1) What will a financier require from me?

Any arms-length financier will expect full technical competence in understanding how your business and industry works with a thorough grasp of your current and future finances. Additionally, they will obviously expect clarity on how they earn their returns. In terms of formal documents both these as aspects should be reflected in:

A credible business plan
An appropriate and detailed cash flow forecast supported by balance sheet and profit and loss statements

2) How long does it take to raise money?

If you offer considerable security (eg alternative assets which can refund a loan in full) and a proven ability to generate cashflow, its possible to raise money in a matter of days and pay a low interest rate on it or as the cliché goes – it’s easy to borrow money when you don’t need it!. At the other extreme, raising 100% finance for a new standalone business can take years with an extremely low chance of success.

3) What will financiers require after they have provided funding?

Financiers will want reassurance that good financial processes are in place with accurate and timely reporting an absolute must. They’ll closely monitor how actual results match up with planned forecasts, so you need the right systems and people in place at the outset.