ICON’s Role:
9 Steps to Raise Capital
We have an intimate knowledge of the hot investment sectors, where the new money lies, what whets investor appetites, and the most active funds in each tech vertical—all to ensure you achieve exceptional success.
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Crafting your business plan
Does your plan convey a business rather than a concept? Have you sold an investment story? Can your management team deliver? Are you speaking investor’s language? ICON will help ensure you tell a…
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Step 1
Crafting your business plan
Does your plan convey a business rather than a concept? Have you sold an investment story? Can your management team deliver? Are you speaking investor’s language? ICON will help ensure you tell a compelling investment story.
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Targeting the right investor
All investors are different, they have different sector preferences, investment preferences, track records and management styles, knowledge of the individual firms and the teams within them means we…
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Step 2
Targeting the right investor
All investors are different, they have different sector preferences, investment preferences, track records and management styles, knowledge of the individual firms and the teams within them means we can specifically identify and fast track you to the right investors.
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Meetings
It’s important to remember that investors spend their lives meeting management teams, they sit through meeting after meeting with potential new businesses. To be successful, you will need to show…
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Step 3
Meetings
It’s important to remember that investors spend their lives meeting management teams, they sit through meeting after meeting with potential new businesses. To be successful, you will need to show clarity of vision and strategic thought, great knowledge of the market and why you believe you have what it takes to create a successful business. ICON will help increase your chances of success by helping you articulate a compelling business proposition.
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Valuation
Getting the right valuation is critical to the success of the deal as it sets the platform for the future wealth of the shareholders. Fundamental to achieving the right valuation is negotiation…
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Step 4
Valuation
Getting the right valuation is critical to the success of the deal as it sets the platform for the future wealth of the shareholders. Fundamental to achieving the right valuation is negotiation expertise and the establishment of the right platform for these negotiations.
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Negotiations
The investor knows how your business operates, the market and the technology. They may well have had an industry expert to take a close look at the sector and the technology. If they like the…
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Step 5
Negotiations
The investor knows how your business operates, the market and the technology. They may well have had an industry expert to take a close look at the sector and the technology. If they like the technology, then it’s all about the market and the routes into the market, the pricing model and what existing customers think. If this stage goes well then it gets to the term sheet – ICON knows how they make these decisions and we have the ability to change a good deal into a great deal.
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Term Sheet
This sets out the investors indicative offer and terms. ICON will assess the valuation, deal structure and deal terms. Skill and innovation in deal structuring counts but remember a term sheet is not…
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Step 6
Term Sheet
This sets out the investors indicative offer and terms. ICON will assess the valuation, deal structure and deal terms. Skill and innovation in deal structuring counts but remember a term sheet is not a completed deal.
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Selecting the preferred investor
The principle objective of running the process is to end up with the cash required to develop your business, with the right investor on the right terms. There are also other critical factors to…
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Step 7
Selecting the preferred investor
The principle objective of running the process is to end up with the cash required to develop your business, with the right investor on the right terms. There are also other critical factors to consider, subjective issues like, does the chemistry feel right between the investor and the business, are there lengthy internal procedures on the part of the VC which could add risk into the deal completing, are they over-promising on what they can deliver on, where is the value add, how remote or how involved as investors do they become, how will they be through tough times, what do other investors think of them. The reputation of the VC could have implications for attracting new investors into the business, are they a good name to have on the shareholder register and do they have deep pockets for further funding rounds. ICON will assess the different ramifications of the potential investors and advise you.
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Due Diligence
Once you have made the choice of investor the pendulum of control swings in favour of the VC. Up to this point they have been courting you to get preferred investor status. Once they become the…
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Step 8
Due Diligence
Once you have made the choice of investor the pendulum of control swings in favour of the VC. Up to this point they have been courting you to get preferred investor status. Once they become the preferred investor they get a period of exclusivity in which to complete the deal. From here on in to completion they have the power. If you fall out of bed during this final run in, it may be very difficult to go back to the other investors as they become suspicious of why the deal has not gone through, or they may be pre-occupied with another deal.
What can go wrong at this stage? Unfortunately quite a bit – ranging from a market shift in sentiment, some poor due diligence, bad references on the management team, disagreement over the raft of legal documents which underpin the deal, a decline in the trading performance of the business, a new unknown competitor emerging, problems with the development of the technology, alliance partners or reference customers not coming through as planned, problems over protection of the IP, key employee decides to leave – there are a huge amount of things that can derail a deal between choosing the preferred investor and closing the deal. The trick is to close a deal as fast as you can between choosing the VC investor and completion. This is prime risk time, heavy diligence is now being paid for, legals are kicking off, you are getting deal fatigue and just want to get back to your business, so it’s a time for toughing it out, keeping focused, determined and above all calm. ICON will manage all these issues for you, we are there to keep you focused, determined and above all calm. We will keep momentum in the deal and steer you through to completion. -
Completion
Completion date set, reams of documents to be signed, money sent to your bank, then back to the real task and the hard work of turning the cash invested into a hugely successful business. ICON will…
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Step 9
Completion
Completion date set, reams of documents to be signed, money sent to your bank, then back to the real task and the hard work of turning the cash invested into a hugely successful business. ICON will manage and orchestrate the completion process, keeping momentum in the deal and steering it through to close.
Client Comment:
"Gratitude to all stakeholders who helped make this transaction happen, with special thanks to ICON and IMBC for their pivotal support. This marks a significant leap towards turning WASTE TO VALUE and make a fair and transparent localized circular economy in emerging markets common place.”
“We’re excited to team up with Octopus Ventures, they resonated with our ambition from the start to revolutionize the cloud data market. With this funding we aim to triple our revenue by 2025.”
“TravelLocal has performed very strongly again coming out of the pandemic as people travel extensively – and increasingly with a strong desire to do so in a more sustainable, meaningful way, that supports local people and economies. Our unique business model enables everyone to do just that. This funding round reflects the excellent growth opportunity we now have, and the first class team we have built to tackle it.”
Timeline:
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Preparation
The Chase
Delivery
- Appointing specialist advisors
- Preparing Investor deck and executive summary
- Identification of investors
- Compile due diligence materials
- VC meetings
- Due diligence
- Negotiations with the investors
- Selecting preferred investors
- Heads of Terms
- Legals
- Completion
- Managing the business
FAQs:
How long should my business plan be?
Typically keep it concise and to the point and make sure you are conveying a business and not a concept. Page wise try and keep it to about twenty-five pages.
How do I get my business plan noticed by Investor's, VC's and CVC's?
Deal with advisers who have sector knowledge and a track record of successful transactions. They will get you noticed.
What do VCs look for?
- Strong & well balanced management team with track record
- Technology that shows ROI for customers
- Businesses to which they can add value
- Market dynamics
- Products/Services differentiation
- Barriers to entry
- Strategy to deliver on your business plan
- Compelling financial story
VCs will always tell you, ‘we invest in management’. In any new or early stage businesses often the only thing a VC can really hang his hat on is the calibre of the management team. The better the track record of the team the better the prospects of getting funded. It is also important to get this message across to the VC and often in the business plan, management teams understate their past performance. For instance, the new entrepreneur looking for funding may have been the head of a division within an International Corporation and could have been responsible for growing the division from a team of say 30 people to 600, growing sales from £5m to £220m, or entering new markets in the US, Asia or Europe.
If this is the case, get the message across. You would be surprised how many people understate their track record.
How much equity will I have to give away to my investors?
You are not giving it away; you are selling part of the business to allow you to grow. Without it, you may not be able to achieve your goals.
What items are most often either missed or poorly represented in business plans?
- Firm orders and endorsements from real paying customers
- IP protection by patent, trade mark, copyright or registration
- Credible market research that identifies market growth potential
- Identification of USP + entry barriers
- Identification of Exit routes
- How long the business has been formed and trading history
- Detailed financials, costings, margins, break even analysis
- Details of the management team and relevant track records
- How much money is required and what will it be spent on
How does one choose an investor?
There are some fundamental considerations when targeting appropriate investors:
- Sector knowledge
- Size of investment
- Which round A, B, or C
- Depth of pockets for follow on funding rounds
- The value beyond the investment that they can bring to the company
- The VC’s reputation in the market
- Terms of investment – simple deal structures are the best
What is the secret of a good VC meeting?
There are 7 key points to a successful pitch:
- Be prepared – know your plan inside out
- Hook the investor with your opening gambit – your elevator pitch , what is special about your business
- Give a brief summary about the market, the technology, the team and the numbers
- Talk investor language, you are not selling a product or service – you are selling a financial return
- Be natural, confident, show you know what you’re doing and why
- Be brief – leave them wanting more
- Ask for the order – invite them to pitch on how they can help you.
How do I arrive at a value for my business?
Do not put a value on your business, the market will decide with the help of a strong negotiating platform and compelling business case.
What are the most common mistakes management teams make when dealing with VCs?
- Unrealistic forecasts
- Unrealistic expectations of the investment process
- Insufficient knowledge of the market sector and competitive landscape
- Lack of knowledge of ‘go to market’ strategies
- Understating the calibre of strategic and management relationships
- Misunderstanding the investor’s perspective