Principle 4: Look Broadly and Build Relationships
Boards and management teams worry about how much time company leadership spends on capital-raising activities and away from the business, so they sometimes narrow the search for new investors, in an attempt to be more efficient.
However, going through a capital-raising process does afford management teams the opportunity to meet with a variety of financial investors and to tap into their portfolio company networks, as well as with corporate investors that could eventually buy or partner with the company commercially.
In the longer-term, companies with a network of relationships and partnerships are likely to have more strategic and financial options and potentially a higher probability of success.
So, take advantage and leverage the work and preparation of the process to reach out selectively to parties that can both have an immediate interest and/or represent a future relationship or funding sources, as well as potentially helpful strategic or commercial outcomes.
As a buyer of small companies for a large technology conglomerate, I noticed that familiarity with the company made a big difference to the business sponsors.
On more than one occasion, companies that reached out to us through a capital raise or a business development process tended to move up the priority stack for acquisitions, strategic partnerships, or mutually-beneficial commercial relationships. In some cases it made all the difference in the world for a companys future prospect.
Investors want to understand a company's market strategy and value proposition in addition to the financial statements.
The overall business plans represent the way the management team plans to use financial, human and fixed capital to execute its vision. Employing the four principles outlined in this article can help your business get the capital it needs to move forward.
About the author
Elias Mendoza, Managing Director of Investment Development and Strategy
Mr. Mendoza joined Siris Capital in 2013. Mr. Mendoza's responsibilities at Siris include identifying and evaluating trends within existing and potential industry verticals for investment opportunities, and assisting our Executive Partners in evaluating underlying business strategies of targeted companies and existing portfolio companies. Prior to joining Siris, Mr. Mendoza was a Partner at Union Square Advisors, where he served as its Chief Operating Officer and a senior banker across the firm's verticals. Through July 2011, Mr. Mendoza held various senior positions at IBM, including Vice President and Global Head of Corporate Development. In such capacity, he was responsible for identifying , executing and integrating all acquisitions, investments and divestitures for the company on a worldwide basis. Mr. Mendoza's previous experience includes over twelve years spent at Morgan Stanley & Co., most recently as an Executive Director in the Investment Banking Division. Mr. Mendoza received a Landegger Program Certificate in International Business Diplomacy and an MBA from Georgetown University. He received his AB from Princeton University.