The Capital Raising Process – what’s involved.

Gaining investment is crucial to the growth of your business, therefore you want to ensure that you are prepared.

As a first step we recommend you book in at an Angelic Drop in clinic for general help in preparing for capital raising, You’ll spend an invaluable 20 minutes talking to one or more business angels or capital raising professionals who have a wealth of expertise and want to help guide and help you, offering advice and connections regardless of what stage you are. This is a great way to engage with angels whether you have just an idea, a team and first validation, or recurring revenue and need money to scale.

Preparing Documentation

To be investment ready you need to have prepared all information ready to present to potential investors.

This information should be

  • A 1-2 page summary of your business.  We encourage you to use our template here, however as long as the same information is provided, you can use a different format.
  • A pitch deck/investor presentation – check out Key Ingredients to a Successful pitch
  • Further In-depth information ready for our members to undertake due diligence report. – see our Due diligence checklist template Please note: This is intended as a guide only as DD needs are altered on a deal-by-deal basis i.e. areas outlined on the document not relevant for every company. We will work with you to make the DD process as streamlined as easy as possible.

When you have this information, we encourage you to send your application through to Enterprise Angels.

After you have applied, what can you expect?

Enterprise Angels evaluates all funding applications it receives, but due to the volume of enquiries, we only respond to those that meet our basic investment criteria and those that will interest our investor database.

Screening Committee

If you pass the initial application screening, we may seek further information from you. When we have necessary information, we will put you to our Screening Committee who will select the companies to present at our Pitch Night.

The committee evaluates each application to determine whether the investment opportunity has been sufficiently prepared and whether there is likely to be enough investment interest to lead the deal to completion.

Pitch Night

If the screening committee decides in your favour, you will be invited to present to our membership and potential investors (an audience of around 50-70) at our next pitch night (refer here for upcoming dates). The event will also be live streamed and recorded for those members who are unable to make it to Pitch Night in person (for more about the Pitch night format read here.)

Our pitch nights give our investors the opportunity to see you and your business first-hand. We cannot understate the importance of this in the success of your capital raising.

Pitching to Angels is your opportunity to “set the hook” with prospective investors.

Details shared during the presentation and Q&A session should remain high-level and need to cover the following points:

  1. An introduction to the business
  2. A discussion of the pain you are solving and the size of the opportunity
  3. An outline of progress to date
  4. Information about the competitive landscape
  5. Explanation of your IP position
  6. Financial projections and COGS, key assumptions, pricing etc.
  7. Detail on the management team
  8. An outline of “the deal” including:
    a. the quantum of funding sought
    b. the company’s pre-money valuation
    c. how you will utilise the money

Your pitch should be a maximum of 5 minutes, and is followed by a 5 minute Q&A session.

Check out our blog Key Ingredients to a Successful pitch

Due Diligence

Following Pitch Night if our members have indicated there is sufficient interest both in the terms of the investment and participation in due diligence, a follow-on meeting is arranged between yourself and the group of interested investors. This enables the investors to gain a better understanding of the opportunity and move forward with due diligence and finalising investment terms.

If due diligence has not already been completed by another Angel Group or lead investor, then a team of Enterprise Angels members will undertake a comprehensive appraisal of the opportunity. This is to verify and fully understand the various aspects of the business and evaluate the risks and potential benefits.

  • Initial Meeting – We will arrange a meeting with a team of 4-6 members, yourself and other key parties to agree a process, roles and timelines – typically 2-3 weeks.
  • Data Room – You can either share a previously prepared data room with us, or we will set this up for you and get you to upload the required information.
  • Draft Report – When the various sections are complete, we will compile a draft report and provide for your feedback.
  • Due Diligence Review Meeting – When you are happy with the report, we will arrange another meeting with interested investors so they can gain a full understanding, and you can answer any further questions they have.

 Deal Development

After Due Diligence has been completed and accepted, we will work with you to agree a term sheet which forms the basis of the legal documentation required for settlement. We have template term sheets and investment documentation to streamline this process. We will work with you and your lawyers to finalise this.

Call for Commitments

Once the Deal terms are finalised, we will call for capital from those who have expressed interest in investing. The initial offer will be made to our members, and then subject to round availability, our wider network of wholesale investors, and co investors including other Angel groups and Funds.

Enterprise Angels has strong relationships with other investment groups throughout New Zealand (and internationally) and will actively work with you to attract further high-quality investment if this is required.

Settlement

We work with your lawyers to prepare necessary documentation, collect funds and compliance information from investors, and pay funds on to you.

Post Settlement

Once you have received our funds you will need to register our holdings on the Companies Office.

You should then maximise your post-investment relationship with your angel investors.  Communicate regularly including providing quarterly shareholder updates, and consider them when you need expertise, contacts and more. The more engagement they see the more likely they are to support you in follow-on rounds of raising capital. They want and are aligned in your success! More details can be found here.

 

The capital raising process is not an easy one and length of time it can take from start to finish can vary on a variety of factors. To understand in more detail some of the key components that drive efficiency check out our blog Elements of an Efficient Capital Raise

Get in touch!

We welcome engagement from anyone interested or involved in the early stage investment market – Investors, Angel Members, Strategic or Corporate Partners, Founders, Incubators or Accelerators, Deal Referrers, Acquisition Partners etc.