Capital raise headlines often leave us with the impression that it must have been quick and easy, but these overnight successes were probably 6-12 months in the making. We did once do a transaction in 6 weeks, “from handshake to close”.  Here are our tips for a sub-6-month raise in the current market, based on our experience.

It is all in the preparation, before you go out to prospective investors. We think of the storytelling at 3 levels:

• Pitch deck – the origin and growth story, value prop, GTM, vision etc.
• Financial model – must tell same story in the numbers
• Data Room – must also tell the same story through the commercial agreements, audited financial statements and the many other artefacts that make your story real

Consistency across these three stories is key.

A lot of effort usually goes into the Pitch deck story, which of course is crucial to attracting investors’ attention, so this should be the case.

The financial model needs to tell the story in terms of the historical numbers, current year’s budget/forecast and the projections, as seamlessly as possible between these phases. It also crucial to show how the current unit economics work (per product) going forward, and how the revenue and cost drivers scale, showing the relationship between historical growth and future growth.

We have seen weeks go by where an investor is doing cycles on the financial model, trying to understand the economic logic and relate it back to the pitch deck story, while the CFO is trying to recast numbers.

Tip1: Make sure your financial model  is well prepared and easily understandable/relatable, and tels the story in numbers, before you go to the investor market

Once investors have got their head around the business (and it still looks awesome), they can proceed to their Investment Committee and then issue a Term Sheet. At this stage you are probably feeling tired from all the investor chasing and engagements, and think that the process is almost over.

Alas, if your Data Room is not well prepared for the Due Diligence, you might be facing your most difficult and tedious phase. On the other hand if you have all the documentation ready, it can be a relative breeze, and you can save many weeks of delays and back and forth, while the investors or DD providers try to tease out the info from your team.

Tip 2: Preparing the Data Room can and should be done in the  preparation phase  when you are constructing the pitch deck and financial model stories. This will ensure consistency across pitch/financials/DD, and when you will have the most time to get it together.

Tip 3: Start your preparation phase earlier – give yourself 2-3 months to prepare properly, it will make the raise smoother and quicker.

You can literally save months off the capital raise by being well prepared. An experienced, regulated advisor is especially useful in helping you prepare, and to help you navigate through the pitfalls of the raise process.