What you need to know when preparing for a capital raise

  • Written by Snowball Effect
  • Published on

Are you interested in doing a capital raise for your company? One of the common mistakes we see many companies make when they approach us about undertaking a capital raise is a lack of pre-work. Taking the time to get your business in order, will pay dividends further down the line when your offer goes live. 

Snowball Effect will work with you across the various stages to ensure that you are well prepared to raise capital for your business.

Below we've outlined the four stages of a company's capital raise.

1. The importance of pre-planning

Before a company approaches Snowball Effect, we encourage them to spend some time defining their company goals and work out exactly how much capital you need to raise to achieve them. It might sound like an obvious step, but ticking this off upfront will help you later on when potential investors ask you what the funds you are raising will be used for

Once you have a clear picture of your company's goals, spend time exploring your capital raise options. At Snowball Effect we offer several raise options, including:

  • Public Offers;
  • Private Offers; and
  • Debt Offers.

Each offer type has its advantages, and our team is happy to help you identify which offer or combination of offers is the right fit for your business.

2. Preparing your capital raise

A common mistake that we see many companies make is financials and forecasts that are often not up to date, or incomplete. Ensuring that your financial projections are well thought through and realistic will save you significant time once you get into the capital raising process, and give you clarity on the amount of capital that you need to raise to fuel the growth of your business.

Once your finances are in order, spend time building out an engaging Information Memorandum that will appeal to potential investors. Put yourself in the investors' shoes and think about the type of information that they will be looking for to give them peace of mind and confidence ahead of investing. Include an overview, details on the company's leadership team, the product, strategy, why you are raising capital, what it will be used for, your financial information and details on the offer. Take a look at this free Information Memorandum template to help you get started.

Depending on how public your capital raise is, it may make sense to pre-plan your marketing and public relations activity during the capital raise period. Plan out the messaging and imagery you will have in social media posts and ad campaigns, and consider raising brand awareness through Google Ads and an investor event or webinar. Update your email database on the upcoming offer, and consider working with a PR expert to generate media interest in your capital raise.

Now is also the time to spring clean your company's digital presence. Ensure that the digital profiles of key company members and the board are up to date and that no controversial tweets or posts are visible that could cause unwanted publicity during your raise.

3. It's time to go-live

Once your capital raise offer has opened to the public or a group of private investors, it's essential to be prepared for investor questions and thorough due diligence. Ensure that you are showcasing your company's strengths, but also be honest about areas that you are working on and the steps your team is taking to combat the risk. Investors will generally be interested in finding out more about your business' story, company objectives, where the capital raised will go and whether your finances and financial forecasts are credible and well-founded.

If the offer is being made available to the public, we encourage businesses to set aside resource ahead of time to answer investor questions that come in through social media. It's also important to be visible during the capital raise at investor events or online webinars. Showcasing that you have a strong leadership team equipped to take your business to the next milestone will go a long way in building trust with new investors.

4. Post capital raise

Many companies think that once their raise has closed, and the funds transferred into their bank account that the capital raise process is over. However, we encourage companies to put in place systems that will allow them to continue to engage with investors, ensuring that they take them on the journey. Companies can do this through regular updates, which can be done by email or by using platforms like Orchestra, which takes the hassle out of investor communications and cap table management.

Interested in learning more about raising capital for your business? Our team are happy to answer any questions and can be contacted at [email protected] or by calling 0800 SNOWBALL.

To see how Orchestra can work for your business, request a free demo.